Credit Card Debt is Straining American Family Life

It can be challenging to stick to a budget in today’s economy, especially with the current situation and many families struggling. It is crucial to plan ahead so when you are in a tough situation, you are able to work around it. Having credit card debt is a difficult way to live because of the high-interest rates and fear of not being able to pay. So how can you plan ahead to make your life a little easier, while you get yourself onto a stronger financial path and out of credit card debt for good? 

So what do you do when money is tight, and you have mouths to feed or bills to pay? Unfortunately, the answer for many families is to use credit cards in daily life to extend the budget when they do not have the cash flow they need. The problem that comes with doing this is the high-interest rates that come with not being able to pay off the balance in full every month. Dealing with mounting bills can put a lot of stress on families well being. There are ways to pay down your bills or avoid the credit card bills altogether!

Put Some Money Aside From Each Paycheck To Spend On Things You “Want,” But Don’t “Need.”

Even if your budget is tight and you can only put away a few dollars from each paycheck, it is always essential to put some aside for your “wants” rather than only budgeting for your “needs.” Even a few dollars a paycheck can add up over time. A few dollars a paycheck will add up and allow your family to feel like you have the freedom to buy things that don’t fit into the typical budget. Knowing you have this backup cash is often peace of mind that will keep you and your family on your budget and stop you from spending too much on credit cards.

Balance Transfers

If you are having a difficult time keeping up with minimum payments, it can be complicated and stressful to deal handle. Balance transfers are often a good option if you want to consolidate credit card bills and have one low amount with a lower interest rate than you were paying before. This option is good for you if you have good credit, but multiple credit card bills that you can’t pay off every month in full before the interest starts to build.

The trick to remember with balance transfers is to pay off the total amount before the promotional interest rate is up! There is also a transfer fee to keep in mind when you set up a balance transfer. The one-time fee is still often less than you will pay in interest over time on high-interest credit cards, but make sure to do the math, so you know you are saving money with this transfer!

Debt Negotiation

If you have debt in collections that you cannot pay, debt negotiation is an excellent option to ease the tension of constant calls from debt collectors. First, you should compile a list of all of your debts to ensure you know what bills you have in collections. Now that you have an organized list with your account numbers and the amounts you owe, you can contact the debt collection agencies and start to negotiate your settlement amount.

If you feel you don’t want to negotiate yourself, some companies will do the negotiating for you and help you set up a payment plan to take care of the settled amount. Negotiation is possible because the debt settlement agencies buy the debt for pennies on the dollar, so any amount you arrange will be profitable for them. One crucial thing to remember when dealing with debt negotiation companies is never to allow the companies to bully you into not paying debt that is not already in collections. This will hurt your credit, and that is not the goal. The focus of this strategy is to take care of debt that is already in collections and achieve financial freedom.

Save an Emergency Fund

Having an emergency fund is an essential part of keeping yourself and your family out of debt, especially in times such as now. You never know when things will change financially, and it is essential to have a backup plan for surprise bills or loss of income that will help keep your family afloat without putting yourself and your family in debt!

When you are setting up your budget, even if it’s tight, make sure you are saving a small amount of money from each paycheck in an emergency account. You will be happy the money is there when the surprise medical bill or layoff you didn’t expect to deal with comes up, and you don’t end up putting anything on credit and making things worse and piling up interest on top of everything else!

Set a strict budget and stick to it!

Setting a budget and sticking to it can make it much easier to pay off any debt you have and stay out of debt once it is all paid off. It also helps if you have a sudden loss of income and need to change the budget due to that loss. Make sure you map out the payments you need to make throughout the month for your bills, set aside the money you need to live off of, set aside the amount for your emergency fund as well as your “wants” fund. Setting yourself up this way will help you stay organized and on budget, and that will keep you on the path away from credit card debt!

Don’t Shop Online, Even If You Are Bored 

-Window shopping can be just as much fun online as it is in person. Keep that in mind when you are bored and browsing Amazon or any other online shopping site, while you are stuck at home during this quarantine and trying to stick to a budget! It can be difficult not to splurge when you are stuck at home with nothing to do, but sticking to your budget during tough times and not overspending online is imperative or you will end up with credit card debt you will not be able to pay off.

Look out for price gouging!

The COVID-19 crisis has brought many difficulties that we have not had to deal with before. One of these difficulties is product shortages. Due to this crisis, many stores have been raising their prices on products that are hard to find. Make sure you are not paying too much! It is hard enough to stick to a budget without having to pay triple for basics.

Make sure you’re not paying for services you can’t currently receive!

Many businesses and services we once took for granted are currently unavailable because of the economic shutdown. You must make sure you are not still paying for services you can’t currently use, such as a gym membership or monthly salon service.

We all want life to go back to normal, and it will be fantastic when you can start using these monthly services again, but it does not make any financial sense for you or your family to pay for them during a time that you are under financial strain and also can’t use them. Go through your monthly expenses and make sure you cut out everything you can’t currently use.

Try to freeze any payments you can’t make due to financial hardship from the current crisis

The Coronavirus has brought on new challenges for many families that they have not had to face before. If you are under financial hardship and are in a situation where you can’t pay your bills, you don’t need to put everything on credit. There are other options out there to help support you, such as the ability to freeze specific bills such as minimum payments on current credit cards, mortgage loans, car loans, etc. Under the new guidelines, your credit score will not be affected by freezing these bills and will make sticking to a budget much more manageable