Good news on CNNMoney.com yesterday. Consumer debt is on its way down! Really. According to the report, this is the 6th consecutive month that the total amount of debt has decreased. This month the amount exceeded expectations and was down $21.6 billion dollars!
That is great news, but we have a long way to go. The new total amount of consumer debt is around $2.47 trillion dollars. Wow, how do we really start shaving that off? More importantly, how did we ever get there?
The getting there part was easy. We lived beyond our means. Credit in the forms of credit cards, extended payment plans, home equity lines and the like have allowed us to aggressively rack up the amount that we owe.
That same availability of credit has allowed us to purchase things that we could not afford and more of it more often. Yes, I did say more than we could afford. If we could have afforded it there was no need for borrow for it.
Today, as things get tight, it becomes more difficult to keep up the payments and is some cases we can not continue them.
What can you do?
- Get on an aggressive debt reduction diet.
- Cut up all plastic forms of debt
- Pay off and close all available forms of credit.
- Live on less than you make
Be careful using debit cards. In a related story this morning, the New York Times shows how people are being hit with big charges for exceeding their checking balance using a debit card. In one example, a $4.14 cup of coffee at Starbucks (see why I call them Fourbucks) wound up costing $38.14 after the bank fee.
Questions – what are you doing to pay down your debt owed? How are you managing without a credit card?