Tackling Your Credit Card Debt

Do you watch the Super Bowl for the game or for the commercials?  For me, it really depends on which teams are playing, but I can’t deny that those million dollar ads often keep me in my seat through the commercial breaks.  This year, Comcast reports that advertisers will pay about $3.5 million for a 30 second spot, but that figure seems like a drop in the bucket compared to $798 billion…that’s the amount Americans now owe on their credit cards.

Recent released Federal Reserve data indicates that consumer borrowing is again on the rise.  With increased spending in the last quarter of 2012, U.S. consumer credit card debt has now reached a staggering $798 billion.  In my last post, I recommended that each of us should access and review our free annual credit report at AnnualCreditReport.com.  If your credit report shows that you have credit card debt that contributes to this enormous U.S. consumer debt total, now is the time take action!

In the spirit of the upcoming NFL Super Bowl, now is the time for you to tackle your own credit card debt.  Follow these steps to move you down the field and toward the goal line of a (credit card) debt-free future:

(1)  Huddle up. Assess your current credit card debt status.  Use your credit report to gather information on your outstanding credit card balances, interest rates, minimum payments and due dates.

(2)  Review your playbook.  Assess the minimum payments on all outstanding credit cards and make sure cash flow allows you to stay current; determine if/how much cash flow allows for more than minimum payments.

(3)  Narrow down your potential plays and make the call.  Check into the possibility of combining outstanding card balances to a card with a 0% interest or at least one with a lower rate.  Determine your strategy for tackling outstanding balances.  From a purely numbers perspective, you will end up paying the least by directing allowable cash  flow to making extra payments on highest interest rate cards first.  However, you must choose the strategy that keeps you moving forward, so if paying off the smallest card first (even if the interest rate is lower) makes you feel like you’re making the most progress, that may be the best strategy for you.

(4)  Keep moving forward by avoiding penalties.  Keep making payments against your outstanding debt AND avoid moving backwards by charging more.  Put your credit card spending in time out until your credit card debt has been paid down.

As Tim Wyman mentioned in his recent post about your Net Worth, one way to positively affect your financial wealth is to decrease your debt.  Set yourself up to score on your Net Worth and plan to tackle your credit card debt in 2012.


Source:  http://online.wsj.com/article/SB10001424052970203899504577130940265401370.html