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It seems logical. An individual who is hundreds, thousands or even tens of thousands of dollars in debt should not look to borrow more money. Unfortunately, for millions of Americans, this happens every day. As hard as they try, they find themselves in debt but can’t stop spending.

Why Spending Doesn’t Stop

There are many reasons why someone may decide to put their grocery bill on a credit card or take that payday loan. For instance, the individual may have experienced a job loss or had his or her hours cut back at work. The landlord may choose to increase their rent, or it may be necessary to put the car payment on a credit card to cover a weekly or monthly shortfall.

In many cases, it may not be possible to pay the bills with cash alone and expenses simply can’t wait. Food, health insurance premiums, and other costs find their way onto credit cards as paychecks wait to be received and deposited.

For some, it is an unexpected illness or vehicle repair bill resulting in a person going to a lender for money. This may be true even if the medical condition or vehicle damage was caused by the negligence of another person. Although those expenses may eventually be reimbursed by whoever caused the financial damages, it may still be necessary to pay service providers right away.

Lastly, for many individuals, using credit has become a habit. With new credit cards, it can be all too easy to purchase everything from a new cell phone to diapers. However, eventually, the credit card bills begin to build up, reducing available cash, and further perpetuating the reliance on credit cards.

Statistics On Debt

According to the Federal Reserve, Americans have a combined $4 trillion in consumer debt. This includes credit card balances, auto loans, and student loans. A vast majority of debt is made up of credit card balances and student loans. With the pressure to pursue higher education, student loan debt alone is projected to hit $2 trillion by 2021.

In many cases, young Americans who have student loans and a part-time job rely on credit cards to get by. Even as they start to pay down their student debt, their credit card balances may become harder to manage. Credit card interest rates can be as high as 29.99 percent. Furthermore, credit card companies can impose fees for late or missed payments, adding to an already seemingly insurmountable debt pile.

How to Stop the Debt Cycle

There are a variety of ways a person can get out of his or her personal debt trap. The first step is to create a budget listing each debt balance and the interest rate attached to it. Simply understanding where debt is held and the cost of carrying the debt can be enough to change spending habits.

After identifying where debt is held and its costs, an individual can either start the path to becoming debt-free by paying down the debt with the lowest balance or the debt with the highest interest rate. Tackling the lowest balance will achieve a victory in reducing debt quicker while paying the highest interest rate balances first will reach the debt-free finish line sooner.

It may also be a good idea to put away the credit card in favor of a debit or prepaid card. This prevents someone from accumulating more debt on a card that has been paid off or is almost paid off. However, be sure to simply get rid of the credit card (break out the scissors) as opposed to canceling the account.

Having access to credit, but carrying zero or low balances, is more helpful for your credit score than canceling a credit card. It may seem contrarian, but keeping credit card accounts open, even without using them, helps your credit. Consumer credit reporting companies add more value to older credit accounts.

Using  a Debt Counseling Service

Growing up, every one of us took English and science classes in school. Unfortunately, few if any schools offer a general financial course to help us navigate one of the most important aspects of our lives – money management.

If you or a loved one is struggling with debt, contact Christian Debt Counselors today or apply online to see what kind of help you qualify for. Whether you have credit card debt, personal loans, medical bills, or even collection accounts, we can help. A debt-free tomorrow begins today!

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Debt Management with a Christian Perspective

Christian Debt Counselors understands that not every situation is the same, which is why we are here to help you choose the right program for you. We pride ourselves on being a faith based organization where confidentiality is key. Call now and find out how we can help.

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Christian Debt Counselors (888) 906-3328
200 W. Palmetto Park Road Suite 200 Boca Raton FL 33432