Approximately 122 million Americans carry credit card debt. In fact, the average debt per household is $8,448. With interest rates averaging 14%, that means Americans are paying more than $1,000 in interest alone each year. Many consumers remain trapped in this cycle. Here’s why:
- Failure to create a realistic budget. When establishing a budget for yourself, it is easy to look forward and see how much you will spend. However, the most effective budgets are created by looking backwards, and understanding where your money (every last penny) went.
- Not making the tough decisions. Oftentimes, the right decisions are easy to calculate but hard to execute. For example, knowing your car payment is too high but not taking the steps to trade it in and purchase a less costly, slightly older model.
- Taking advantage of automation. It’s easy to automate your student loan and retirement payments, but what about your credit card payments? If you plan to become debt-free you can make sure the only money remaining in your checking account at the end of each month is your budgeted spending money. Data has shown that automation is the best way to achieve your financial goals.
- Convincing yourself the reward points, miles, cash back, etc. are worth it. Earning cash back and “free” flyer miles are a great way to put some extra money in your pocket. But if you are deep in credit card debt, those flights and reward points are costing you more than the perks.
- Trying to borrow your way out of debt. Debt consolidation and balance transfers can help reduce the cost of your debt, but if you have not dealt with your spending problems these tools can be dangerous.
If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.