No one sets out to rack up thousands of dollars in debt. For most of us, debt is the result of poor spending choices, bad habits, or, in many cases, circumstances beyond our control such as unemployment or an extended illness.

But no matter how you ended up in debt, you likely made a few money mistakes that dug you in deeper. To avoid debt in the future, learn from these mistakes; even more importantly, learn why we make these mistakes in the first place.

Living Above Your Means

Too often, debt is the result of wanting more than we can afford. Whether it’s vacations, clothes, cars or even homes, we assume that because we can charge or finance something, we can afford it.

While it’s understandable to go into debt to buy a home or, sometimes, a car, the problem is when we buy more home or more car than we need. Why settle for a two bedroom, one bath home when we can get financing for twice that much space? Why a used sedan when a brand-new SUV is what we really want? Make sure you’re not using more finance than necessary, to avoid excessive debt.

As for other purchases, such as clothing or entertainment, stick to a simple rule — if you can’t pay cash for it today, you can’t afford it. Learning to buy what we can comfortably afford is perhaps the best lesson when it comes to avoiding debt.

Being Unprepared

Sometimes, it’s not wanting what we can’t afford that lands us deep in debt. Rather, it’s a small setback that snowballs into a financial catastrophe, such as an expensive car repair you took out a payday loan for, or a home repair you charged to a credit card. Relying on credit to cover expenses like this is the fast-track to debt.

Building an emergency fund of at least $500, but better yet, $1000 or more, can prevent an unexpected expense from becoming a debt that will haunt you for years to come. Start small. Aim to save $1 a day, or $10 a week, just until you’ve reached your emergency fund goal. Even if a surprise expense pops up before you’ve saved up to your emergency savings target, you’re still that much less in debt.

Ignoring Debt

Debt is often like a leaky faucet. We ignore the drip, until we’re faced with a gushing disaster we can’t tackle alone. If your debts started off small and grew unwieldy through neglect, examine the reasons why. Did you often forget to make regular payments? Did you let finance charges and other fees double or triple your debt? Were you simply unable to make payments because you didn’t have the money ready?

In the future, recognize your debt repayment problems before they grow exponentially. If you’re bad at remembering to pay bills, have your payments deducted from your checking account automatically. If you’re unable to pay your bills at all, call your creditor to make repayment arrangements you can live with. But above all, deal with your debt while it’s still manageable – ignoring it only makes matters worse.

The biggest obstacle standing between you and a debt-free life is the circumstances that got you in debt in the first place. Learn from your financial mistakes, and you’ll find it easier to get out of debt.

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Enter “credit card debt repayment strategy” into a search engine, and you’ll find thousands of results that claim to have the best debt repayment plan. However, just as there are no two credit card debtors who are alike, there is also no one-size-fits-all debt repayment strategy that will work for everyone.

If you’re ready to start paying down your credit card debt, but don’t know where to begin, here are a few repayment strategies that are proven to work – all you need to do is to decide which will work best for you.

Paying Down Balances Lowest to Highest

If you’re the type that needs almost instant results to feel you’re succeeding, then this may be the credit card debt repayment strategy for you. It works like this:

1. Identify the credit card on which you have the lowest balance
2. Dedicate any extra cash to paying that balance down, even it means making only the minimum payment on your remaining cards.
3. When that card’s paid off, apply the monthly payment you’ve been making on that card, plus the minimum payment, to the card with the next lowest balance.
4. Continue until you’ve paid off all your credit cards and any other debts.

Paying Down Balances By Interest Rate/Highest Balance

If getting the most from your money motivates you, then you may want to pay off the card with the highest interest rate first. Use the same steps as outlined above, but start with the highest interest rate card. If all your cards have comparable interest rates, then start with the card with the highest balance instead. Don’t forget to apply the monthly payment from the paid off card to the payment for the next card you tackle.

Paying By Payday

Those truly dedicated to paying off credit card debt may benefit from the payday debt repayment strategy. While most people make credit card payments once a month, working a payment into your budget each time you get paid, whether it’s weekly or bi-weekly, can help you make a dent in your debt faster. Plan to pay your minimum payment once a month; but each time you get paid, make an additional payment, no matter how small. Soon, you’ll see your debts drop.

Paying By Credit Card

Incurring more credit card debt probably doesn’t seem like a good debt repayment scheme, but if you’ve managed to hang on to your high credit rating despite racking up debt, then transferring high balances to zero or low interest credit cards may help you get rid of your debt. Here’s how it works:

1. Once a year, open up a credit card account with zero or low interest on balance transfers, and transfer your highest interest debt to the new card.
2. Pay as much of the transferred debt as possible –preferably all of it– before this honeymoon interest rate ends.
3. Repeat until you’re debt free. For convenience, choose cards with honeymoon rates that last at least one year – longer is even better.

Finding the right credit card debt repayment strategy for you depends a lot on your goals for repayment, and what motivates you. Think over these strategies and decide whether one might work for you.

Image by Images_of_Money

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If you’ve made getting out of credit card debt one of your New Year’s resolutions, but still haven’t made any inroads yet, don’t give up yet.  It’s easy to become discouraged with your chances of paying off your credit cards, or to become so confused by conflicting advice that you’re unsure how to begin. Don’t get disheartened. You can make a dent in your credit card debt this year — but only if you’re committed to doing so.

There are a million different credit card repayment strategies and debt payoff schemes to help you dig your way out of credit card debt. When it comes to the bottom line, it’s pretty simple: pay more than the minimum payment to reduce your debts.

While that may seem like simplistic advice if you’re drowning in credit card debt, it’s true. Until you can pay more than your minimum payment,  you’re barely reducing your balance — you may be paying off interest, but making little headway in reducing the debt. And if you keep spending, or miss a payment, that allows your debt to continue to grow.

That being said, there’s more than one way to attack that balance. Here are a few of my favourites:

Plead Your Case With Your Credit Card Company

If you’re having trouble making your credit card payments, or can only pay your minimum balances, you may be able to negotiate a deal with your credit card company. Before you attempt to do so, though, be ready to plead your case by letting your creditor know why you can’t pay as agreed. Unemployment, extended illness, natural disaster — anything that’s affected your life and therefore your ability to pay is important to note. Ask your creditor for any special repayment options they may offer, such as lowering your interest or giving you a period of time with no interest due.

Allocate Your Funds Wisely

One of the simplest ways to reduce credit card debt on multiple cards is by paying more toward the balances with the higher interest rates. Make more than the minimum payment on the card with the highest balance, sticking to the minimum payment on the remaining cards. When the biggest debt’s paid off, do the same with the card with the next highest balance, and so on until you’re done. This may work for you if you have cards with varying interest rates; if all your cards are high interest rate cards, then start with the card with the highest balance.

Transfer Carefully

Using low- or zero-interest credit cards to pay off high-interest cards may help you cut your credit card debt drastically, but only if you tread carefully. Make sure that the card offers the  low- or zero- interest introductory rate on balance transfers, and that any balance transfer fees are low enough to make it worth your while. Then, pay as much as you can off the debt during the introductory period, because, when it’s over, you’ll be charged interest on the remaining amount.

Earn More, Spend Less

The only sure-fire way to safely pay down your credit card debt is to earn more and spend less, so that you have more money to put toward digging your way out of credit card debt. However, this is easier said than done, but if you’re dedicated to getting out of debt, it’s possible.

Take on a second job or odd jobs, and put all or as much of your earnings as possible toward your debt. Cut your spending to the bare minimum, and apply the savings to your debt. Yes, you’re sacrificing both your time and creature comforts, but the result is knowing you’ve conquered your credit card debt.

Image by Images_of_Money

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Aussies spent 2011 racking-up their credit card balances. At year’s end, the average credit card holder Down Under owed some $3,321, bringing the country’s total to rise to $49.3 billion–a $2.87 billion increase from  2006, the Reserve Bank of Australia statistics estimates. With such large balances owed, over 70,000 Australians seek help each year with their credit cards through Debt Relief Australia.

Consumers in such a conundrum can find debt relief not only by using official government and private resources, but also from an ordinary can of Vegemite. Not that credit card companies will accept vegetable spread instead of dollars, but your wallet and pantry might benefit from getting back to old-fashioned budget buys.

The Credit Card Game

Credit cards let you sign on the dotted line, receive a plastic cut-out and use it to pay for goods and services now. The stipulation is that you owe for said purchases later, potentially with interest and possibly including a fee or two. If every consumer were to think about credit cards in this sense, balances would be substantially lower.

But the credit card companies are aware of the credit game all along. And play it well, they do. Sure, credit cards are a great resource if used responsibly all the time, but one slip-up and the free ride may come to a grinding halt. That one instance may be enough to pave the wrong road, from which there is often no quick return.

Crafting a Strategy

First, creating a coherent strategy for dealing with credit card debt is essential to success. Not having a game plan will only lead to confusion and will not help you to not make a significant dent in those balances. Having a strategy means aiming at a target and keeping the goal in mind.

Start with some good ole Vegemite and toast. Crackers are acceptable, if you prefer. Not literally, but figuratively: begin with cutting unnecessary costs from your grocery shop and other discretionary expenses. That includes clothing, dining and any other expense that is variable and isn’t an absolute necessity to keeping a roof over your head.

Then, gather all your credit card statements. The latest statements will afford the most accuracy, but a statement from a month or two ago is still useful. Add up your credit card balances. Then, add up your non-discretionary expenses. This means fixed payments such as your private health insurance, loan repayments, mortgage or rent, credit card payments and so on. With these figures calculated, you can now add your subtotal of fixed monthly expenses to your subtotal of credit card debt and any other debts. Now divide the new total by your gross monthly income. The result will be your DTI or Debt-to-income ratio. If it is more than 0.3 or so, your debts and fixed repayments may be too much for your budget to handle..

Start Small

Using the “snowball” method, first concentrate on the credit card with the smallest balance. If you concentrate on that account first, once it’s paid off, you’ll have more money the following months to pay off the next largest balance. Along the way, you might have to subsist on Vegemite and cut back on more lavish meals. In the event you find it difficult to pay off even the smallest balance, you may even go so far as to move into a cubby house in order to lower your housing costs.

Be Resilient

After paying off one or two credit cards, you’ll notice the development of a bit of a cash flow in your bank account. It’s quite tempting to many people to spend some money at this point, and off the game plan they go. But sticking with your goal is critical to obtaining independence from credit card debt.

To stay motivated, use debt progress tracking websites like Master Your Card to see how well you’re doing. It’s very encouraging to count down the days until you’re debt-free, or find out how much money you can save on interest by paying more than the minimum repayment each month.

Image by Gordon Wrigley

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On 16 January, The Sunday Telegraph featured a report on Australians racking up $49 billion in debt on credit cards. Unsurprisingly, the cause of the debt stems from the lure of loyalty programs, special offers and enticing advertisements that indirectly articulate what styles people should adopt. Deemed as scapegoats for many of our society’s extravagance, such commercial traps initiate impulsive spending amongst Australians, triggering a rise in credit card debt.

To make matters worse, many Australians are struggling to cope with their debt payment to fund their profligate lifestyles. This becomes a problem when people accumulate bad debt to buy consumer goods that depreciate in value over time and have to end up paying the interest charges way after the item has been purchased.

The next time you have the urge to swipe your credit card, think of the following consequences you could face as your debt accumulates:

1. Inability to save

The more debts you incur, the more time you will take to pay them off. This keeps you from accumulating savings for an emergency fund. What happens if you need extra cash to pay for urgent needs? You can’t rely on credit cards to pay for them if you’ve maxed out on your cards to purchase consumable items.

2. Poor credit score

Having a bad credit score will have negative effects on your financial life. Firstly, you won’t qualify to apply for credit cards with the best rates. This results in having too much interest to pay which in turn leads to incurring more debts. Secondly, having a bad credit score will have an impact on the loan you may want to apply in the sense that the terms won’t be as favourable as you’d want them to be.

3. Higher insurance premiums

Insurance providers take into account your credit score before issuing you with your new policy. In this regard, there is a likelihood of higher premiums that accompany insurance policies issued to people with lower credit scores. You can make significant savings by maintaining a good credit score.

4. Fewer rental prospects

Discerning property landlords run a credit background check on their potential tenants to safeguard themselves before making a decision to choose their tenants. Having a good credit score will help you secure rental property easily as you won’t pose a potential ‘risk’ to your landlords in your monthly rent payment.

5. Lack of Employment Offers

In some companies, it is common practice for employers to run a credit check on all prospective employees as one of the factors that affect the decision-making process. Losing out on a role because of poor credit rating is a shame, especially if you could contribute towards the company’s success with your relevant skills.

6. Poor health and wellbeing

Last but not least, incurring debt will affect your overall wellbeing. The mounting stress and anxiety about not being able to settle your debts and pay for everyday expenses may result in depression. This in turn encroaches upon your social life and your relationship with your loved ones.

Incurring huge amounts of debts to finance an extravagant lifestyle can lead to detrimental effects on our lives. Start to take control of your finances by reviewing and changing your spending habits now, before it is too late.

One way to do this is to reflect on why you should buy the item you desire and whether you really need it.  Controlling impulsive shopping habits and leaving your credit card at home can help in gradually limiting your spending on consumables and delaying the accumulation of debt. Just remember that you will be better off with a healthy credit score in the long run.

Image by Vectorportal

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3. Warning Signs: Debt Consolidation Scams

Debt consolidation is a last resort for many people who are way over their heads in debt. The option has become an increasingly common way to lower interest payments and finally pay down out-of-control debts; however,there are some bad people out there that are taking notice of this concept.

Credit consolidation scams are on the rise as more individuals find themselves in need of services. These scams set up a fraudulent company and take advantage of people during their time of need. Several of these companies require an absurd amount of money as an upfront payment, promising miraculous debt repayments.  Others claim to be non-profit organizations either working for charity or the government.

If you find yourself considering debt consolidation, be wary of some of the following:

If They Use High Pressure Sales Tactics

Keep an eye out for high pressure sales tactics that make you feel like you need  to sign immediately. By the same token, you should be aware of anyone who offers guarantees. Learn this now: in the game of debt consolidation there are no guarantees because of the volatile nature of credit laws. Anyone who promises one is probably a part of a scam.

The road of debt consolidation takes a lot of time and patience. You cannot expect miracles, and anyone who promises them will probably take advantage of you.

If They Have Questionable Methods

While there are several different ways to consolidate your debt, some methods are just not ethically acceptable.  Before embarking into debt consolidation make sure to research your options. That way, if you are thrown a curve ball – like a suggestion that you take out another loan to pay off a debt – you’ll know when to just say no.

If They Charge Upfront or Hidden Fees

If the debt consolidation company you are looking into requires an upfront payment, you will be better off walking out the door. Payments are based on how they have been able to handle your credit consolidation, and they typically only require a percentage of the money you pay.

Before signing a contract you’re also going to want to look out for monthly service fees, sign up fees, a service fee based on the portion of total debt (they can get expensive) and hidden and voluntary fees that don’t make any sense. All of these things should be clearly explained in the contract, so take the time to read it over thoroughly before diving into anything.

If They Say They’ll Make Your Payments Now

There is a process these companies have to go through in order to take over your payments. This process may take some time and credible companies will not guarantee an immediate start.

Make sure to keep making payments to your creditors until you are positive that you have found a credible company and they confirm that they have taken the reins.

If you want to know which companies are worth it, you have to go straight to the source. Check with your credit card company and see if they work with any consolidation services. You can also check with the appropriate government entity, as most countries require that legitimate debt consolidation services be registered.

Image by Images_of_Money

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Debt consolidation is becoming a common phenomenon as more and more Australians find themselves deep in the hole. Higher cost of living, mortgage payments and even basic things like groceries are being put on plastic as salaries fail to keep up with price increases.

Australians have taken the lead when it comes to personal debt, as each Aussie owes roughly around $56,000 USD. That’s  $12,000 more in personal debt than their U.S. counterparts. In total, in 2010 Aussies as a whole are looking at a debt total of about $1.2 trillion – a 71% increase since 2005.

It’s not just individual Aussies that are having a problem though – the government also seems to have maxed out its credit card. The Australian government handed out about $42 billion in stimulus packages – the highest of any developed country – which left the government at a deficit. This deficit means less cash handouts to Australians and higher interest rates on loans and credit as Aussies living beyond their means already struggle to keep a handle on their debt.

Consequently, debt consolidation is looking really good to a lot of individuals Down Under.

If you are one of those individuals who can’t seem to pay off their debt, consolidation may be a good option for you. By essentially being the middle man between individuals and creditors, consolidation could pay an instrumental role in lowering your debts so that you can pay them off faster. However, choosing a debt consolidation service may not be as easy as you think, as many have proven to be scams.

The most important thing in these cases is to choose a credible company that can find the right solution for you. If you are seriously considering consolidation, keep in mind some of the following “red flags”:

When They Promise to Pay off Your Debt in 1 or 2 Years

Due to the volatile nature of credit laws, policies and settlements, it is highly unlikely that anyone with several debts to consolidate will be able to pay them all off that quickly. A credible debt consolidation service would make you aware of that, while those that promise an easy fix are probably a scam.

When They Aren’t Registered

By law, consolidation services need to be registered with the appropriate government entities. This makes it easy to look up the company’s history and decide whether or not it’s right for you. You may come across debt consolidation companies that flaunt their many connections, but if you can’t look them up through the appropriate means, then don’t bother with them.

When They Charge a Fixed Commission

Beware of companies that charge you a fixed commission based upon the amount of debt you find yourself in.  Credible companies usually only charge a part of the money they have helped to reduce.

When They Suggest Taking Out Loans

Any company that suggests taking on more debt in order to pay off your current debt is out of their minds. That’s how people end up in bankruptcy.

Debt consolidation could be a viable option for you if you find yourself in trouble. Keep a lookout for these red flags and make sure to pick the right company for you.

Image by lemonjenny

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Credit card debt is an epidemic.  It doesn’t spare any race or gender, and it doesn’t necessarily target those of a specific income bracket.  And, if anything, the shrinking of our world has made it worse; now we can get on our computers and order items a world away in a heartbeat.  Many of us do just that, whether we really need the item or not.

Sure, there have always been people who lived beyond their means, but credit cards make it easy.  Somehow, handing over a plastic card lets us feel less responsibility than handing over cash.  And in any event, credit cards, unlike cash, let us spend money we don’t have with no immediate consequences.

What can we do about it?  There are ways to get out of credit card debt: saving and paying off cards, consolidating, lifestyle changes.  They aren’t always easy, but you can do them.  The real question is why we keep getting in so deep in the first place.  Is there something fundamentally wrong with us?  Are we just programmed to be irresponsible?  Perhaps in a few cases, but that’s not the case for the majority.

Debt = Life

One problem is that debt is simply an integral part of our lives.  We take out loans to get through school, buy a car, buy a house or remodel a house.  You can have a payment plan on your appliances, your furniture, your electronics.  We have gotten accustomed to having now and paying later.  It’s an instant gratification world.  And we are used to it because it’s all around us, but credit cards are different.  Interest rates on credit cards are often extraordinarily high, and unlike other types of debt, making the minimum payment may not actually get you out.

Emergency Credit Card Use

Sometimes we find ourselves spending money that we know we don’t have on plastic, because we feel we have to.  After all, what are you going to do if your car breaks down?  You have to get to work, so if you don’t have the cash to fix it, you may put it on a card.  Your computer crashes, and you can’t imagine trying to navigate modern life without it.  You promised to be in a friend’s wedding… on the other side of the country.   So you pull out a card.

What You Can Do

The way I see it, having a card isn’t a problem, just like having a mortgage isn’t necessarily a problem.  If you pay it off in full every month, having a card helps you build good credit for when you need it.  The real problem is at the root of our society: we live beyond our means.  It is rare to find anyone who doesn’t.  Somehow, spending money you don’t have has become normal, average, common.

And that, to me, is the real issue with the situation.  What we all need to do to dig ourselves out of debt is to change our very perspective of the world.  Instead of asking, “Why shouldn’t I buy those shoes?” you should be asking yourself, “Why should I?”  If your car breaks down, talk to the mechanic about a payment plan.  Swallow your pride and carpool or get on a bus.  Don’t buy a car just to keep up with your neighbors.  Don’t buy a house that pushes you so close to the brink financially that you can’t even enjoy it.

Find happiness in your life, not in having the “best” anything on the block.  I’m not saying you should, or can, avoid all debt.  But we would all be better off if we thought long and hard before taking on a new debt.

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Many financial experts go on and on about the many ways to avoid credit card debt. They will tell you specific circumstances in which not to use your card, which cards you should be taking out, how to get around added fees, and detailed descriptions of little tips and tricks for improving your credit score.

In reality, using a credit card wisely is much less complicated than people make it out to be. With a little common sense and some good habits, you can avoid becoming one of the millions who have taken on way more debt than they can handle.

Know Your Due Date

Common sense? Absolutely. But you’d be surprised how many people get nailed just for mistaking their due date. It would be a wise decision to check up on your due date and perhaps even pay your card a couple of days beforehand. Checking periodically is best because sometimes credit card companies will change the due date. Just because your credit card bill is usually due on the 8th doesn’t mean it will stay that way.

Pay Online

It’s not all that uncommon for checks to get lost in the mail. It’s also been known to happen that credit card companies delay processing a check until after its due date, then charge late payment fees. While some big banks and companies have been prosecuted for this – they haven’t all been caught.

As a result, you should always make your payments online. This not only shows when you sent in a payment, but the bank or credit card company also sends an email confirmation. Paying online is easily the best way to avoid getting scammed on fees.

Set Up Automatic Payments

Want to make it even easier to pay your credit card bill? Set up automatic payments. Many banks and credit card companies now offer this, and it’s a viable solution to forgetting to pay your bill. It also saves you the time you would normally spend manually transferring money.

As a word of caution, make sure you have the necessary funds in your account the day that the money is supposed to be taken out. You can do this by adding up your usual bills and never going below that amount in your checking. You can also add extra cushioning in case there was a surprise expense.

Always Pay in Full

Using credit cards is one of the most expensive ways to borrow money. As a result, you should always pay your bill in full each month – and include any transactions since the statement date. This way you always know what your balance is, you won’t be surprised by your next bill, and you won’t get charged interest.

Not paying your bill in full each month seems to be the biggest pitfall for credit card holders. They don’t seem to realize that paying the minimum won’t make much difference if interest rates keep adding on to your balance. Simple common sense can help you avoid this problem. Just make sure not to put more than you can handle on your credit card.

Credit cards don’t have to be complicated. While it’s easy to fall into the “buy now, pay later” mentality that is promoted by credit card marketing, the cost of this logic is much more than it’s worth – literally.

Common sense? Absolutely. But you'd be surprised how many people get nailed just for mistaking their due date. It would be a wise decision to check up on your due date and perhaps even pay your card a couple of days beforehand. Checking periodocially is best because sometimes credit card companies will change the due date. Just because your credit card bill is usually due on the 8th doesn't mean it will stay that way.

Pay Online

It's not all that uncommon for checks to get lost in the mail. It's also become a regular occurrence that credit card companies may be holding on to a check past it's due date in order to charge extra fees. While some big banks and companies have been persecuted for this - they haven't all been caught. As a result you should always make your payments online. This not only shows when you sent in a payment, the bank or credit card company also sends an email confirmation. Paying online is easily the best way to avoid getting scammed on fees.

Set Up Automatic Payments

Want to make it even easier to pay your credit card bill? Set up automatic payments. Many banks and credit card companies now offer this and it's a viable solution to forgetting to pay your bill. It also saves you the time you would normally spend manually transferring money.

As a word of caution, make sure you have the necessary funds in your account the day that the money is supposed to be taken out. You can do this by adding up your usual bills and never going below that amount in your checking. You can also add extra cushioning in case there was a surprise expense.

Always Pay in Full

Using credit cards is one of the most expensive ways to borrow money. As a result you should always pay your bill in full each month - and that includes if you made a charge after the statement date. This way you always know what your balance is, you won't be surprised by your next bill, and you won't get charged interest.

Not paying your bill in full each month seems to be the biggest pitfall for credit card holders. They don't seem to realize that paying the minimum won't really make much of a difference if interest rates keep adding on to your balance.Simple common sense can help you avoid this problem. Just make sure not to put more than you can handle on your credit card.

Credit cards don't have to be complicated. While it's easy to fall into the "buy now pay later" mentality that is emulated by credit card marketing, the cost of this theory is much more than what it's actually worth - literally.

Image by Ed Ivanushkin

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Sometimes, people are in debt so deep that they don’t know what to do. A recent article from News.com.au cited that Australians owe almost $50 million on credit cards because rising living costs are forcing them to put even small expenses on plastic, putting the average credit card holder $3321 in the hole. To make matters worse, about $36 billion is currently accruing interest.

The article also outlined the story of one Australian who was $450,000 in debt while living on a $40,000 salary. This particular person owned a grand total of ten credit cards and was using one to pay off the other. Consequently, this person went to Debt Relief Australia for some help.

This client isn’t the only one in that situation. According to Debt Relief Australia about 70,000 Australians visit their website annually.

If you find yourself in a similar situation and don’t know what to make of credit counselling, here are some basic things you should know.

What is Credit Counselling?

Credit Counselling is just one of the many ways that debt relief companies strive to help individuals get a handle on their credit under a variety of circumstances.

Credit counselling is a means of education to help individuals manage their finances, whether they are just a little behind on payments or living way beyond their means. The point is to educate and counsel you through a difficult financial time, so that you don’t make the same mistakes again

Credit counselling is suitable for a wide variety of situations, including debt management, debt elimination, debt negotiation, and debt agreements.

How Do I Know If I Need Credit Counselling?

According to Debt Relief Australia, there are some telltale signs that you may be in danger of racking up too much debt. Some of these signs include:

1. You sometimes put necessities like food on a credit card because you have no other means to pay.
2. You come too close for comfort on your credit limits.
3. You only pay the minimum balance on your cards each month.
4. You feel the only way you can manage your finances is by increasing the limit on your credit card.
5. You own too many credit cards to handle.
6. You have considered bankruptcy as a way out of your situation.
7. You do not know the amount you owe to creditors.

If any of the aforementioned apply to you, you may have a problem. Consequently, credit counselling strives to help you get out of some of the aforementioned situations.

How Does Credit Counselling Work?

When considering credit counselling you will most likely undergo a financial analysis. From there you will be asked a series of questions in order to pin point your exact financial situation and better serve your needs.

The kind of counselling you will receive may depend on your specific situation. For instance, credit counsellors can help you negotiate terms with creditors or even reduce your debt.

Above all, credit counsellors are trained professionals who can emotionally detach themselves from a given situation in order to assist those that are overwhelmed with their finances. If you find yourself in too deep and don’t know what to do, you should certainly consider seeking their help for your finances.

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