In this unstable and uncertain economic environment, it is critical for individuals and their families to consider implementing an expense reduction and debt management plan. Below is a discussion of a few ways to manage debt and gain control of household finances.
Don’t Exceed Credit Card Limits
By law, credit card companies may charge a fee for consumers that exceed credit card limits. While these fees are generally low, repeatedly exceeding credit limits may trigger higher interest rates and accumulation of fees. The compounding effect of ever increasing fees and interest rates is what keeps many people in credit card debt for years, even decades. By staying within the credit limits as established by credit card companies, consumers can avoid the seemingly endless pursuit to debt reduction.
Pay Off Credit Car Balances in Full Each Month
By paying off the full credit card balance each month, at the end of a statement period, interest expenses are reduced as interest on credit card debt is generally calculated on balances that are carried over from one statement period to another. Paying off the full credit card balance monthly may save a significant amount of money and is a sound debt management strategy.
Set Money Aside
By saving money and securing it in a low risk savings vehicle such as a savings account, individuals can prevent the negative financial impact that an unexpected expense may cause. When there is insufficient savings set aside for such emergencies, the likelihood of turning to credit cards is increased. The practice of using credit cards for emergency expenses can perpetuate the debt cycle and make it difficult for a family to achieve financial freedom.
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