subject: Credit Card Debt Overload: How Did I Arrive Here? [print this page] With the rising costs of living, bills and taxes, it's no wonder why that Credit card debt has also increased and that many families and individuals are getting deeper into debt trouble than ever before. There are also several factors that do not help this situation, because of the recent economic downfall that many people have either lost their jobs or their income has drastically been cut short. On this thought, a lot of people who are used to living a certain lifestyle find it harder to readjust on a reduced income therefore continuing to live beyond their means. There is a point that most folks reach, when they realize the gravity of debt that the debt hole that they have seemed to have dug seems more like a bottomless pit find themselves wondering "How did I get into so much credit card debt?"
We can go on and rant on how to get out of debt, and give you great suggestions; but the short and skinny of it all: you have to do some serious financial brainstorming and budgeting. Now it seems quite a stupid idea, and meaningless, but if one actually sit down pen and paper (or software) and calculated exactly what the expenses are for that month, there are a lot of surprises. Of course there are some expenses that cannot be avoided; such as a car payment, rent or mortgage; but it's all the extras.
Budgeting is actually very hard; because most of us absolutely hate living with restrictions - especially when it comes to working hard for our money. After paying the taxes and the necessary living expenses, one would love to have the extra cash to do what we will. However, by continuing on spending more than one makes only reinforces the issue that one needs to rethink on how one lives. By planning a budget, you will certainly get a very clear idea on how your money comes and goes. The ideal way to plan one's budget is for at least 3 months so that the future of your expenses and income can become a concrete workable plan of action for the future. If you notice that there is little or no extra income, perhaps getting a second job may a solution just to have a little extra free money and not breaking your necks with overwhelming debt.
As mentioned, a huge reason why people find themselves in a huge credit card debt mess is because of a job loss, or the sudden inability to work. It is an alarming statistic that more than eighty percent of families and individuals do not have an emergency fund in place. The real meaning behind the emergency fund is the really have a back up financial fund just in case something bad was to happen and that this reserved can be used to get through the economic hardship. Ideally, this fund should be a separate saving worth of 3 months that covers most if not all the possible expenses during that period. One benefit from having an emergency fund is that it can gain interest instead of costing folks money. This really can be interpreted as a welcome addition to any financial readiness plan.
Overspending is also a huge reason that the majority of cardholders are in credit card debt. As time progresses and new things are becoming bigger and better, we tend to want these things, but not necessarily need them. We often spend on things that we really cannot afford for self-gratification or whatever the reason is which in turn puts us out of our financial means. One of the evil things that credit cards presents is the ability to spend now and pay later. If we're unable to afford something with cash, or debit, we have learned to take a loan for the product, or put it onto a credit card or other popular buy now pay later plans. These mistakes can cost folks hundreds to thousands of dollars in interest alone that only benefits the companies and not to the consumer.
All in all, this is certainly not rocket science or a medical mystery needing to be solved, but it does take some serious effort to sit down and put all of the expenses down and plan the budget and most importantly: stick with the financial plan.
