Digging Out of Credit Card Debt

Debt Guy · #1 (**permalink**) 07-06-2009, 07:27 PM

The secret to paying off credit-card debt is really very simple: All you need to do is earn more than you spend, and apply the savings toward paying down your debt.
So then what makes tackling credit-card debt so hard? Sadly, many seem to be losing the battle of the credit-card balance. Consider that 50% of all credit-card holders carry a balance, according to an industry tracker. And among families that have at least one credit card, the average balance is a staggering $8,637. Seven years ago it was only $3,472.
Part of the problem is that the credit-card companies have made it easier and easier than ever to carry a balance. However many fiscally responsible people can also find themselves woefully in debt after some sort of personal crisis, such as the loss of a job, a divorce, or a serious illness.
So what are the warning signs that your credit-card debt has changed from nuisance to crisis? For starters, if you think that you might be having a problem, then you probably do. Generally speaking, your debt-to-income ratio (not including mortgage payments) should not exceed 25%, which means that you should not be devoting more than 25% of your net monthly income to paying off credit cards and other non-mortgage debt. Other signs of trouble include:
· Only being able to make the minimum payments on your debt.
· Using credit cards for everyday purchases like groceries.
· Using credit cards to pay for things you know you can't afford.
· Worrying that people close to you will find out just how deep in debt you really are
· Frequently charging items with the intention of paying them off at the end of the month, but then finding that you're financially unable to do so.

If the creditors are calling or if your credit report is already suffering due to late payments or bills that you've been unable to pay at all, then you probably should consider talking with a debt reduction program and get the help that you need.