GUEST POST from Don: Credit Cards

CREDIT CARDS

If you are “normal” you have
Too many credit cards.
Too much available credit.
Too high an unpaid balance.
You rely on them for almost every purchase, without a thought.

The number of credit cards in your name is probably between 3 and 5.
The amount of your debt balance is somewhere between $3,000 to 9,500.

Everyone “KNOWS” how to get out of credit card debt, they think.  Simple, they think, spend less this month than you spent last month.  WRONG.  Most forget that they have to pay MORE THAN.

Actually, the only way to get out of credit card debt is to pay ALL new interest and MORE THAN your new expenses.

Bought $1,200
New Interest $200.
Break even is $1,400.  It gets you nothing.  You are in the same hole you were in last month.

So, if you want to remove $100 in debt you need to pay $1,500.

PLAN A:  Reduce the Number of cards.

If you have a balance on more than 2 cards your minimum payments are probably killing you.

You would do well to seek a consolidation loan to get your overall payment lower as well as a lower interest rate.

AFTER you pay off the cards, you should CANCEL one credit card.  Almost no individual needs 3 or more cards.  If you are married, you probably don’t need as many cards either.  (My wife and I went though this when we were planning to move.  Since we had to send address change notifications anyway, we notified 3 card companies that we wanted to cancel our accounts.  Now it is easier to know what is going on with our spending because there are no random expenses on 5 different cards*.)

[*Two days of phone calls and letters to double-check that every credit card , gas card, medical card, or retail store card we had ever owned, but no longer used, was absolutely cancelled.  We found one that had not been.  Another day to check on gift card balances…we tossed 6 which had less than 50 cents on them.  Our lives were much simpler knowing all these pieces of crap were gone.  I detest almost worthless gift cards.]  

PLAN B:  Lower the amount of available Credit.

How much instant credit do you need anyway?  Seriously.  How often have you made a $20,000 purchase?  Instead of putting that on your credit card, what if you had to get a personal loan at the credit union?  Would you give it a bit more thought?

So, your credit card provider will lower the amount of credit if you ask.  I’ve done that.  They wanted to increase it to $25,000.  I said “No!  We’d like it to stay where we are.”  

PLAN C:  Reduce the unpaid Balance.

The card companies love it when you can’t pay it off.  That means you should hate it.  They aren’t doing you a favor.  They are your worst “friend.”  You could do without “friends” like that.

OK.  Nothing new here.  I am encouraging you to reduce the amount of debt by real money every month.  How does one do that?

Never buy anything you can’t pay for.
Stop being sentimental.  Your child will live if he doesn’t get THAT Christmas gift.
Stop appeasing.  Your spouse will survive if you don’t blow $12,000 on an island getaway. Going to the Florida coast will cost less.
Be real.  If you don’t have it, you don’t have it.  There is no such thing as “Mad Money.”
Your neighbors do not care.  
It isn’t wonderful to live on the edge, it’s scary.

Best thing in the world is to find the peace that comes from knowing you can afford something because you don’t have all those other debts hanging over your head.  Then you decide NOT to buy it.  Ahhhhh!

[PLEASE NOTE that Don is always open to discussing the thoughts and opinions he shares here and welcomes comments as shared in the comment section. He doesn’t use other social media platforms and won’t see whatever you’d like to share with him if you post it elsewhere.
ALSO, Don is always open to offer his thoughts on various topics. If you have a specific request, you can let him know in a comment; he reads – and replies to – them all. ~ Sherry]

See more GUEST POSTS from Don!