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Household debt in America has reached a level not seen since the financial meltdown of 2008. This means that U.S. households are carrying a staggering combined debt of $12.58 trillion. This is just below the peak in 2008 (see chart). Slow to flat income growth has not kept up with the rising cost of living over the last decade, causing many to rely on credit cards and other means of credit to get by. Because credit has been easier to obtain, especially in the last couple of years as banks and other lenders have eased lending practices, the problem will likely get worse.
7. Shop the thrift shops
Buying used items can save you lots of money. Learning how to bargain hunt can be one of the best ways to control your spending. Find a few good thrift shops in your area and browse them regularly. This is a particularly good place to buy children's clothes since kids grow so fast. Often times, children's clothes in thrift shops are like new, and you will pay pennies on the dollar compared to new.
Other items to look for in thrift stores are everyday items such as small appliances, furnishings, and kitchenware. Again, you will pay much less for these items compared to what you would pay in a department store.
Secondhand and consignment shops will pay you for items in good condition, so go through your clothes and household items and get rid of what you are not using. There are also several online outlets such as eBay and Poshmark that can help you earn money from things you are no longer using.
8. Formulate a plan to pay off your debt
It's important that through your budgeting and financial planning you work on a plan to pay off your credit card debt. There are several ways to do this, but all of them take a high degree of determination and dedication. Many utilize the "snowball method" to conquer their credit card debt, and it is highly effective if you stick with the plan.
You start with your lowest balance and pay as much as you can each month while paying the minimums on the rest of your cards. Once you have paid off the first card, you move to the second lowest, pay as much as you can, as well as what you were paying on the first balance, while continuing to pay the minimums on the rest. This continues until you have paid off all your credit cards. It takes time but is effective.
Another way to pay off your credit card debt is to utilize the three-year plan. On the front of your credit card statement each month is a box that shows you a couple of calculations. One shows you how long it would take you to pay off your credit card if you only paid the minimum payment each month. The other shows you what you would need to pay each month to pay off your credit card balance in three years, By setting up automatic payments in the amount specified, and making no more purchases, you would be credit card debt free in three years.
Sometimes, you can convince your credit card companies to be helpful in getting your credit card debt under control. If you have a good payment history, they might lower your rate or extend your due date to help you catch up. Other times, they may have additional solutions to offer such as debt consolidation loans or other personal loans that could help you get back on track.
Whatever your situation, if you are running behind on your bills, don't wait until things become critical before acting. Falling into a state of insolvency is a bad way to go. If you realize that you are in too deep with no way of climbing out of your credit card debt, there are debt relief companies such as National Debt Relief that can help. Debt relief companies help those in over their heads by negotiating settlements with credit cards companies. The process is not fast, but it is effective. Moreover, the impact to your credit scores is far less than that of a bankruptcy.
If you are in credit card debt, get control over your finances by utilizing some of the ideas outlined here. Get started today on getting your finances in order and set yourself on the path to a brighter, less stressful future.