credit card problems


Credit Cards in a Bad Economy - Living Within Your Means

In a bad economy, you see the advice everywhere you look - "live within your means".  What are your "means"?  If you are counting anything as "spendable" that is not real income, you may be digging a hole you can't climb out of.  Credit cards are useful when faced with unexpected emergencies or to spread out the cost of an annual expense but using them adds costs to those expenditures.  Many of us have become used to charging normal purchases and paying off the balance when the bill arrives.  That's fine unless your personal economic fortunes take a tumble.  If you are charging daily expenses and purchases without the income to pay that bill, time to make some changes.

If you think of your credit lines as part of your "means" you need to rethink and possibly rework your budget.   Current practices of the large credit card lenders don't encourage consumer confidence and don't provide any security for customers.  If you are buying or paying bills with a credit card, you are getting services without the "pay now" associated with budgets.

Overuse of credit has allowed many of us to live beyond our true means for years.  With stable incomes, we knew the bills would get paid either this month or next and we always had that option of stretching out payments to the "minimum".  A bad economy, tightening credit markets, disappearing jobs and lenders who know they will be restricted by law from some current practices in 2010 - is our new reality. 

Changing times and fortunes require us to change the way we use our money and credit.  With lenders reducing credit lines and increasing interest rates on card holders, you may find yourself in trouble before you know it.  Don't wait for a crisis.  Make plans to pay off as much of your debt as you can and stop adding to those balances. 

Buy what you can pay for.  Look at your recurring bills for telephones, cable or satellite TV, internet provider, etc to see where you can make cuts to reduce your monthly bills.  Do you use 400 TV channels or 30 movie channels?  Do you use all the bells and whistles you pay for on your house and cell phones?  Do you really need a home phone line or the "super fast" internet service?  Use grocery sales pages to plan your meals rather than buying whatever catches your fancy.  Avoid shopping trips altogether unless you have a specific item you need to buy - "just looking" leads to buying again and again.

Credit cards are not part of your "means" - reserve use of them to absolute emergencies and expenses you can't plan for (that doesn't include shoe or sporting goods sales, folks).  Set a time period of 6 months to a year and dedicate every cent you can save elsewhere to paying down your debt.  Don't wait until a job loss or illness puts you at financial risk - do it now.  You can't control the economy but you can control your spending and make yourself as bullet proof as possible by reducing the debt you carry.