When it comes to managing credit card debt in our "borrowing nation," things have gotten pretty bad. When a credit card company or a mortgage company tells you to pay off one debt so you can get another one, you know you're in trouble.
There are now huge amounts of credit card debt. Maybe this is because credit card companies target students when they're just starting out on their own for the first time and don't have much money; it's like dangling candy in front of a child. At this point in their lives, these kids don't think much about how to handle money. This will become an even bigger problem for both consumers and credit card companies when the amount of debt compared to income is very high and nobody can pay or be paid.
It's not just about college students and their debts. It's also about people who put themselves in a lot of trouble on purpose by spending way more than their credit card limits and getting mortgage loans they can't pay back. It's not a stretch to say that this isn't the best way to do things.
One way, and maybe the best way, for us as consumers to start getting out of our current mess and stay out of trouble in the future is to learn to live below our means and spend less than we make. This isn't always exciting, and your credit card or mortgage company, which would be happy to take your assets if you stopped paying, won't tell you to do it, but it could save your future.
Making a good budget and learning to stick to it like glue will make this much easier. Most people think of budgeting as a bad word, but those who have used a budget and stuck to it swear by it. Your budget helps you figure out how to get out of debt. When you make a budget, you can see where your spending is getting out of hand, and like a self-guided missile, you can make small changes to get back on track.
Spending less and making a budget may sound like a painful way to live, but being in debt forever can put you in an early grave from stress.
