Ladydebt

If youve ever opened up your credit card statement and been shocked at the balance staring back at you, youre not alone. More and more, Americans are stretching their credit to the max. The trend toward using credit cards to pay for regular expenses such as utility bills, grocery bills, gas, and fast food illustrates the increased dependency on credit. And credit cards are far from the only type of debt. Student loans, mortgages, IRS debts, and other indebtedness can leave you wondering how you can stay in control.

Know what you spend. When using a credit card, its quite easy to spend much more than you realize. Even small transactions add up rapidly into large balances with high interest rates. For this reason, it can be useful to keep a transaction register for your credit card similar to the one you keep for your checking account. Write down each transaction and add up your spending. If you want to make sure to spend no more than a certain amount per month or in total, write that amount in as a balance just as you would note the balance in your checking account. Subtract the transactions you make from that balance up to the full amount and then stop using the card until youve paid the amount back down. To make this work, you may need to take the card out of your wallet and put it away somewhere.

Know what you are really paying. How much debt are you comfortable with carrying? If you are unsure, ask yourself how much interest you are wiling to pay each month. Then calculate how much debt you can have at that level of interest by taking the number youve come up with and dividing it by the decimal form of the interest rate youre paying. For example, if you would like to pay no more than 25 in interest each month and your interest rate is 12.9%, divide 25 by .129. (For 9.9%, the decimal form would be .099. Dont forget to put in the extra zero for single digit interest rates.) Youll find you should carry no more than about 195 as a balance on your card each month to stay at this interest level.

This rule also applies when shopping for a home. The price tag on the house itself is only the beginning. Consider the total amount you will actually have paid by the time you own the home free and clear. The way interest is calculated for a mortgage is somewhat complex, so ask your loan officer to add it up for you before making a purchase decision. As a general rule, you should never take on a mortgage payment that is more than 30% of your income, and certainly no more than you get after taxes from a bi-weekly paycheck.

Remove the option to use your credit card if you need to. If youve tried several methods of controlling your credit card spending and find that you lack the discipline to stick with the plan, you may need to hide or destroy your card. Hiding the card from yourself may work if you can put it somewhere that keeps you from using it. If you find yourself frequently retrieving it and using it despite the fact that you had put it away, then it may be time to destroy your card to curb your spending. One solution is to put your cards in a bowl and fill it with water. Freeze the bowl and the cards, that way you have to chip away to get to your cards and hopefully any passing urges will be gone by the time your cards are thawed out.

Controlling your debt begins with being aware of it. Everyone finds it easy to pass the credit card across the counter, but when you know what that swipe will actually cost you, youre more likely to think twice about reaching for a card.

8 Danger Signals to foretell you are on the debt road

Danger signal 1
Your credit card expenses increase while your income is the same or decreasing. When this happens stop using your cards and manage on whatever cash you have available. Stop when the cash is finished unless there is a great emergency do not take out the cards. Diminishing income will suffer greatly if the bills of the credit card are added to it; get away from card shopping till your income stabilizes.

Danger signal 2
You are unable to pay more than your minimum balance on the card debts; this is when it should be obvious that cash problem has started; this is the time when you should leave the credit cards and try to pay off all your outstanding by wise financial management.

Danger signal 3
You find yourself borrowing on one card to pay on another. This is the message that you are entering unmanageable debt so take charge and control all unnecessary expenses right away. Try to pay off the debt of one card and use only one card that also only in acute emergency.

Danger signal 4
You observe that you have more than 5-6 credit cards. Ideally, you should not have or use more than two credit cards. There are many who advocate the use of only one card while if you have more you can keep the rest locked for any emergency. When you have too many operational cards, you can very easily over spend and find yourself in a financial mess.

Danger signal 5
You are finding that you are using your credit more and more for emergency payments and the emergency payments include grocery bills. The moment you include in the emergency payment list ordinary purchases, you should understand that something is seriously.

Danger signal 6
Your credit card payments keep you working overtime if you observe that you do not have sufficient funds to cover your credit card payments that means you are extending your income to your credit card limits this is a definitely a danger signal.

Danger signal 7
You are at limit of all your credit cards. When you find yourself to have topped the limits of your credit cards this obviously shows you that your income is not sufficient to take care of your expenses and or you are spending too much.

Danger signal 8
You are gambling and paying the debts with the credit cards. Never ever pay your gambling debts with the credit cards because this will really create an egg-and-chicken vicious circle from where you will never get out.