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Best Way To Eliminate Unsecured Credit Card Debt

Mar 26, 2008
There are many attractions and advantages to using credit cards. They benefit the individual using the card, the merchants doing the selling and the financial institutions that control the credit system. So, since they benefit everyone they have become all pervasive and easy to get. To this extent, most people have at least one credit card in their wallet or bag. However, there is often a cost when things are too easy and in this case it means debt. People that don't manage their finances well can easily fall into large amounts of debt. This article will cover how to eliminate credit card debt without bankruptcy.

Credit card debt happens in two ways. People abuse the credit card to buy all sorts of things like new clothes and gadgets or eating out on the card all the time. They spend themselves into debt. Then they choose to ignore paying off the monthly interest charges on the debt because it doesn't look like much each month. However this soon build up and before they know it they have a huge debt on their hands.

As easy as it is, they have dug themselves in a big debt hole and they reach a point where they realize just how big the hole is. As the saying goes, the first thing you need to do when you realize this is to stop digging. In terms of credit card debt, stopping digging involves setting up a budget and sticking to it.

Creating a budget is not the most exciting thing to do in life but that's not the point. A budget gives you information that can help you make the right financial decisions on your spending habits and what to buy and not to buy.

So setting up a budget is easy. Simply subtract what you spend each month from what you earn. Hopefully this leaves a figure that is in the black. If it's in the red then you have to make some changes to your spending habits becuase, to continue the metaphor, you are still digging.

Work out how much you spend on essential items. These are rent or mortgage payments, car payments or commuting/public transport costs, utility bills, grocery bills. Basically, you need shelter, you need to eat and you need to work to earn money. All these things are essential. Take the total cost of these items away from your monthly income. What you have left over is money you can spend.

If you are in debt you should earmark some of this left over money to go to your debt. This is lifting yourself out of the hole, even if it seems agonizingly slow. You can even treat yourself with some of this money, just don't go into more debt to buy your treat. Setting a budget is about spending less than you make.

When you know how much you can spend each month you can make decisions on what you can and can't buy. Setting the budget is the start, but you have to be disciplined enough to stay the course and stick to the budget until your debt is cleared.

If discipline is a failing of yours, especially when it comes to credit cards, then think about getting a debit card instead.
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