You know your credit card debt is too high when
you have to spend more than 20% of your take-home pay towards
paying off the interest + original principal balances on your
credit cards. You must think of it in terms of your take-home
pay, because that is the amount you actually have to spend (after
paying off taxes). John Ventura, a Principal at Center for Consumer
Law (University of Houston Law School) quotes, "If you are
not able to pay a credit card off within 12 months, which means
making a lot more than the minimum payment, then you are not financially
sound in your financial dealings. You have too much debt."
He adds, "You have to take an attitude
of aggressively reducing it, and that entails sacrifice. That
means buying just what you need instead of what you want. You
have to be really aware of what you are spending -- going to Starbucks
or buying cigarettes."
Top 10 Indications that You Carry too Much Credit
1) You have to make garage sales down your basement
to raise money for credit card debt payments
2) You take a Cash Advance (Payday Loan type)
from one credit card to make a payment to another credit card
3) You're still paying for restaurant meals
that you cannot remember.
4) You have no money in any form of Savings
5) You rely severely on your credit cards to
help you save for retirement and put money in a 401k plan
6) You use your credit card to pay for groceries,
foodstuffs, utilities, clothing, etc.
7) You don't know how many coffees, teas and
cupcakes you purchase every week.
8) You don't remember what you purchased on
your credit card last month.
9) Your FICO score is less than 650.
10) You can't remember the last time you had
zero balances on your credit cards.
Do you indeed carry too much credit card debt?
Here are a few articles that will provide useful insight to help
you reduce debt:
If you are committed to reducing your debts
and are willing to cut down on unnecessary expenses, it is indeed
very possible to succeed in what's called a "Do It
Yourself Debt Reduction" plan. Why do you need to go out and pay debt counselors
or credit counselors big hefty fees when you can reduce your debts
on your own? In this page, we will articulate the steps required
for a successful debt reduction plan:
The fastest way for you to eliminate
credit card debt is to eliminate the big profit generator
for credit card companies, and that is, late credit card payment
fees and over-the-limit fees. Yes that's right, did you know that
in the fiscal year 2006, 31% of the the credit card industry's
profits or operating income came from late payment fees and over-the-limit
credit card fees? Are you part of an average American family?
Then you probably possess $8000 worth of credit card debt and
guess what? If you make only the minimum monthly payments required
on the debt, it will take you a whopping 30 years to pay off only
$8000 worth of credit card debt! What's more, you will end up
paying more than $22,000 in interest rate charges.