Credit Card Debt Denial

Do you honestly believe you can pay your debt down? Have you taken a look at how much you owe? The average person has between 6 and 10 credit cards, the average houshold carries in excess of $8000.00 credit card debt, don't forget this is the average and includes all the people that pay in full each month. For people carrying a balance the average is considerably higher.

We have become so used to living on credit, the buy it now and pay later mentality is becoming the norm, 10 years ago the average houshold debt was $2000.00. That is a massive increase, most people think nothing of carrying a $15,000 - $20,000 dollar debt pure plastic, no assets to speak of.

With the rising cost of living it's not hard to understand why we turn to credit to buffer the shortfall, there's always something, your kids need the latest shoes, you blew out the phone bill, you want to have a great Christmas. And it's just so easy, obtaining credit is a peice of cake, make a few repayments on time and you are offered even more credit. We are a consumeristic society, we are all about keeping up with the Joneses, but what happens when the wells dry up and it's time to pay?

When personal debt becomes this high, say $15000.00 - $20000.00, you are in extreme debt, this is typically the ceiling people reach before it becomes apparent that no matter how hard you try to pay it down, its like trying to fill a swimming pool with a bucket.

A $7000.00 dollar debt for example at 15% interest and a minimum payment amount of $120.00 per month, will take nearly 9 years to pay off, and you'll have paid $5600.00 in interest. If you upped the repayment amount to $200.00 per month, it would take 4 years to pay off and the interest would be $2,200.00.

At this point you are essentially in quicksand, you built up debt because you couldn't live on the money you had, now you have to find money to pay at least the minimum payment each month, and paying a little bit more each month doesn't really cut it.

You just aren't going to get out of debt by making little spending cuts, If you really want to get out debt you will need to make radical lifestyle changes.

Live in your car? (I had to add this one because people do do it :-)

Reduce the cost of your housing, move to a much cheaper area, share accomodation, rent out a room.

Get rid of a car, if there are two in one household and it's possible to share, then get rid of one, sell it to pay down the debt and save on servicing and registration.

Get a another job, not fun at all, but it can be just a small part time job, an extra $200.00 per month is $2400.00 per year that you can use to pay out your debt.

Quit Smoking, a $7.00 a day habit is $2555.00 per year.

Reduce your cost of living, don't eat out as often, buy cheaper clothes, DIY for everything you possibly can.

Basically you will have to live miserably to pay out your debt, there is no way around it. Let's face it there is no joy in reducing your standard of living, who want's to eat ramen 3 nights a week and get an annoying flatmate?  But if you are serious about getting out of debt then short of winning the lottery, the only way is to try to live on next to nothing and plow as much money as you possibly can towards it. You can use a free debt calculator to work out the time frames based on how much your paying each month, the sooner you can knock it out the less interest you'll pay.

If you've looked at your situation and there is no way you can pay your debt off in full in 5 years time, then you might want to consider other options, including bankruptcy. When you can't save for your future and are constantly robbing Peter to pay Paul, then options such as bankruptcy can offer you a fresh start.

Whatever you choose to do, understanding why you got into debt in the first place is what will give you much needed insight so that you don't ever fall into the trap again. It's an insiduous trap and one that is very hard to not get caught in, especially because it is becoming so normal to carry huge debt, everyone seems to be doing it. There are better ways to live however.