Wednesday, January 9, 2008

How Much Can Credit Card Debt Hurt Your Finances?

By Stephanie Foster

There are some very good reasons to carry credit card debt. Unfortunately, too many of us carry it for bad reasons.

But even when you go into debt for good reasons, it weighs you down. Limits you. Makes your life just that much harder.

Credit card debt is quite simply a strain on the finances.

I've been working for a few years myself trying to get out of credit card debt. I had been solidly on my way when we were slammed by some medical bills that wiped out all my progress and then some. It has taken a year to recover from that and get to where I feel as though I'm making progress again.

In the meantime, we've had to live more frugally than ever. Keeping up with all the bills becomes a struggle. The added debt was in a good cause, but dealing with it has been a strain.

What to do, what to do?

First thing to do is to live frugally as you try to get rid of the debt. Figure out what you can cut from your lifestyle to save money. There are many different ways to do this, such as eating out less, sticking to a paid-off car rather than replacing it, even cutting back on retirement savings.

With this extra money you need to work hard on paying off that debt. Do not pay the minimum. Even a tiny bit over that will be a help in the long run. The more you can pay, the sooner the debt will be gone.

Cutting back isn't enough?

It may be time for a second job or taking a chance on a home business. You decide. But in any case, bringing in some more money is a great way to pay down your debt faster. It's a big sacrifice, especially if your current job already takes up much of your time and leaves you feeling tired, but sometimes that is what it takes.

The home business option is not for those who need money immediately. There's risk involved. You probably won't earn significant amounts quickly. But it can also be a lot more fun.

Debt is a terrible thing in so many ways. It stresses relationships. It limits what you can do financially, even beyond what your current earning levels may do. It takes away money that you could use much more effectively. Once it becomes possible to rid yourself of debt, it is a very good idea to do so.

Stephanie Foster blogs at about credit cards and other financial topics. She offers more credit advice at her site.

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