What to Do When Credit Card Debt is Taking Over
Credit card debt can sneak up on anyone and before you recognize it, you can be buried under a pile of debt with no clear exit. Excessive debt can lead to lower credit scores, costly monthly payments, and in worst cases, bankruptcy. But, the good news is, it’s never too late to regain control.
Identifying The Warning Signs of Debt Trouble
Let’s start by understanding the warning signs that suggest you are on the path to debt trouble.
Your credit cards are at their limit: If your credit cards are maxed out or almost there, it’s a clear signal that you’re too dependent on credit for your daily expenditures.
You are not aware of your total debt: Not knowing the actual amount you owe on your credit cards can be dangerous. Without this knowledge, you’ll never realize when your debt starts spiraling out of control.
You’re buying things beyond your means: If you’re charging items to your credit card that you can’t afford to pay in cash, you’re setting yourself up for trouble. This type of spending often leads to long-term credit card debt.
You lack a debt reduction strategy: If you don’t have a plan to pay off your debt, you’re likely to remain in debt for a long time, which also means hefty interest payments.
You’re only paying the minimum amount each month: If you’re only making the minimum payments on your credit cards, it will take you years to clear your debt. For instance, if you owe $1,000 on your credit card and only make the minimum payment each month, it will take you over nine years to clear the debt.
You can’t afford even the minimum payments: If you’re unable to make even the minimum payments on your credit cards, it’s a sign that your credit debt is spiraling out of control.
Regaining Control Over Credit Card Debt
If you resonate with any of the points above, don’t fret. You can still regain control over your debt. Here’s how:
Take credit cards out of your spending equation: Remove your credit cards from your wallet and store them somewhere out of reach. You’ll find that after a brief period, you might not need the item you thought of buying on impulse.
Track your spending: Keep an eye on where your money is going. Include all the expenditures made by your family members as well, irrespective of how small they are.
Establish a family budget: After tracking your expenses for a couple of months, formulate a family budget.
Set spending priorities: If your family has common spending goals, it will make sticking to your budget easier.
Prioritize paying off your debt: Based on your budget, estimate the time it will take to clear off your high-interest credit card debt.
Pay more than the minimum amount: Start paying more than the minimum payment each month on your credit card debt to prevent your debt from growing faster than your ability to pay it off.
When to Seek Professional Help
It’s crucial to decide whether you can pay off your credit card debt on your own through careful budgeting. If it will take more than two years to clear your credit card debt, it’s wise to seek professional help. There are several good options available that can help you eliminate debt and lead a debt-free life. A free consultation with a Licensed Insolvency Trustee, such as Bankruptcy Canada, can help you explore your options and choose the best solution for you and your family.
If your credit card debt has already overwhelmed you, it might be time to seek professional help. A free consultation with a Licensed Insolvency Trustee can help you figure out the best way to get out of debt and regain control over your finances.
