Heavy Debts: Why Credit Cards Aren’t Meant for Daily Expenses
Posted on October 22, 2010
If your find that month after month it is becoming more difficult to meet daily expenses using only the cash you earn from your job, it can be tempting to rely on your credit cards to ‘make it through’ until the next payday. This tact is not beneficial to credit repair or debt relief and can find you under a heavier debt burden you can’t afford to pay.
In theory, it’s nice to have the backup resource of a credit card for things you need, using your credit card as an extension of your income is dangerous territory. If you can not afford the cash to pay for the items outright, you certainly can not afford the fees and interest incurred throughout a billing cycle.
You Won’t Get Ahead
The only sure way to use credit cards effectively is to make small purchases you can afford to pay off at the end of the billing cycle. You should have the cash budgeted to meet the full balance due. If you charge merchandise to a credit card without a payoff plan, you wind up carrying a balance over to the following months and will be responsible for paying the interest charges accrued. Additionally if you are late with your payment or miss one completely, you’ll get hit with late fees and penalties – all of which increase the balance due.
Many families are deep in debt because they began using credit cards to pay bills or buy daily necessities like milk and bread. While the charges are small at the time, they grew over the months when credit card balances were carried over. This also resulted in the FICO score of the card holder taking a hit for the worst. After just a few months of ‘living of credit cards’ families could barely even afford the minimum payments due, resulting in even more serious credit penalties and lower credit scores.
How to Survive
Stop Spending. If you find you have already started relying on your credit card to make ends meet, you have to stop now. It is the first step to getting your debts back under control. If you continue to spend, you continue to rack up debts you can’t afford.
Reconfigure Budget. If you haven’t looked at your budget or your expenses in awhile, it’s time to re-evaluate your finances. Start with cutting out the things you don’t need to survive including cable, entertainment, dining out, and other similar expenses. If the cutting down of expenses is all the fix you need to get back on track, put all the saved cash towards your credit card bills to reduce your debts as fast as possible.
Supplemental Income. If you find that even without extra expenses you still can’t make ends meet, you should reevaluate your income. Money earned from your primary job may not be enough to meet your family’s cost of living expenses. Consider asking for a raise or seeking a part-time job and devote all the additional income to pay down your debts.
Seek Out Assistance Programs. There is no shame in doing what it takes to support your family. There are federal, state, and local programs designed to help those in need with food, health care, housing and more. If you are in serious need of assistance providing basics for your family, seek out the help available. Confidentiality is typically assured and the help may only have to be temporary until you get back on financial track. At the very least, you can consult with a non-profit credit counseling agency that can help you budget your money, pay off your debts, and repair your credit in a shorter period time than if you did it on your own.
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