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How to Avoid Credit Card Debts
“The rich rules over the poor, and the borrower is servant to the lender” – Proverbs
The plastic money that invaded the world including developing countries gave opportunity to people from the middle and a large number of working class to buy material things and enjoy the luxury of living. To some extent, due to competition and aggressiveness of credit card companies, an ordinary employee can avail more than one credit card at certain credit limit.
In the absence of discipline in utilizing the credit card, they have become deeply indebted, hence, affording themselves paying only the monthly interest.
How can one eliminate this type of debt? First thing to do is to assess current income versus expenses. Determine disposable income after expenses by subtracting monthly expenses from monthly income. The disposable income after expenses is the amount to spend or save.
The next step is to refrain from using credit cards. Pay cash for goods and services. With several credit cards on hand, consider transferring credit card balances to the one offering extremely low interest rate. The debt may eventually be paid-off by transferring card balances several times.
Consider selling items no longer needed or replacing expensive luxury items with a less costly one. Eliminating the luxurious cellular phones, multiple phone lines, cable television, high-speed internet access, multiple vehicles and seldom-used sports equipments will be of great help. Use the cash raised or saved to pay-off credit card balances.
After obtaining a favorable interest rate and eliminating costly luxuries, rank credit card in order of their interest rates and use the disposable income to completely pay-off the card with the highest rate, close that account and destroy the card. Then focus on paying the next card and continue doing the same until all the credit cards are paid-off.
It is much better to maintain only limited number of credit cards than carrying a lot. This is a preventive measure to keep out of bondage from debts. Seek to live a balanced life, putting finances into proper perspective.
Tags: aggressiveness, cable television, cellular phones, credit card balances, developing countries, disposable income, favorable interest rate, high speed internet, high speed internet access, luxuries, luxury items, material things, monthly expenses, next card, plastic money, preventive measure, proverbs, servant, transferring credit card balances, using credit cardsRelated posts
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