Start With Debt Management
If you have control over your debt you may be able to avoid debt consolidation. Credit cards make it easy to rack up debt. You can spend, spend, spend and not realize how much you have spent…until your credit card statement arrives. Then it’s too late. Take control of your debt, before you are in over your head.
#1 – Limit the use of your credit cards.
Only use them for purchases too large to use cash. Set a maximum dollar amount for yourself. For example maybe all purchases over $500 will be put on the credit cards, anything less you will pay cash for. That dollar amount of $500 may seem too high to pay cash with, after all who walks around with that much cash in their wallet…go to #2.
#2 – Avoid carrying balances
Two examples of when you should use cash instead of your credit card would be groceries and filling up your car with gas. But for a $400 purchase, cash is a bit difficult to work with. So pay with a credit card, but, pay that balance off as soon as you get the statement. Do not carry credit card balances, the fees and interest on those balances are a waste of money.
Play with your maximums, work with figures that you are comfortable with. But if you cannot avoid racking up your debt, you may consider debt consolidation. Is debt consolidation bad?
What Is Debt Consolidation?
It’s when you combine your debt. You put all of your credit card balances onto one credit card.
Is That Bad?
You Decide: Here are the advantages
You get one statement, make one payment a month and only have to deal with one credit card company.
You can save money by moving the debt to the credit card that you currently pay the lowest interest on.
You can pay down your debt faster when you pay less in interest charges.
Here are the disadvantages:
If you use a debt consolidation company instead of handling the consolidation on your own, you will pay that consolidation company service fees. If your goal was to save money by consolidating, you may not be.
But if you are having a difficult time digging yourself out of debt, paying the fees may be okay in the long run.
Debt Drowns You
Being in debt, as you may already know, can bury you. Too much debt can affect your credit score, how much you pay for goods and services, how much you pay for your auto and home insurance and even your employment.
If you are in debt and see no way out, get help. There are many credit repair services available. They are there to help you not judge you so do not be embarrassed or feel bad…get help.