by Bruce Townsend

Created on: September 10, 2009   Last Updated: September 11, 2009

With the pressure of the current economy, the worse since the Great Depression, many people are struggling with credit card debt or concerned that the uncertainty about the wellbeing of their jobs will make debt management more difficult.

The data about credit card debt indicate that approximately 20% of all credit card holders had credit card debt in the $6,000 to $15,000 range, and 6% had credit card debt that exceeded $15,000. Even if you still have a job, it is feasible that your employer may reduce your hours or salary as they renegotiate labor costs to keep the company solvent. That reduction of earnings will place many families behind in their payments, reducing their FICO credit score and make future credit much more arduous to obtain.

Debt consolidation is often presented as a solution, but this can be deceiving. The consolidation loan appears fine because the payment may be lower, however, this is usually because the term of the loan is extended thereby keeping you struggling with debt much longer. In addition, the debt consolidation fix is very temporary. 75% to 80% of the time, the borrower will find that the debt has grown back very quickly. Their credit cards will once again max out, plus they are also paying on the consolidation loan! They have compounded their miseries.

Debt is not the root obstacle but only a symptom. Debt is the symptom of overspending and not enough saving. The therapy for the problem is creating new financial habits. Here are few steps to reducing credit card and other debts.

Cease incurring more debt.

Some people propose you cut up your credit cards and cancel your accounts. However, if you are not in default, canceling your account will actually affect your FICO credit score negatively. You will buy a new house or refinance your house, or maybe need to apply for a car loan in the future. Your credit score in part depends upon your credit history, so the longer you have maintained credit in good standing, the better it is for your score.

Instead, lock your cards away and don't carry them or use them.

Set short and long-term goals.

The old adage is that if you don't know where you are going, any path will do. You can't hit a target if you don't have one. If your goal is to become debt free, you need to design out how you will reach it.

Establish a budget.

Your budget is the primary tool to complete your goals. It is a major part of your plan. If you fail to plan, you are planning to fail. That is why so many people experience financial stress. It is the result of poor or no planning. A plan gives you control.

Acquire a financial education.

The people that succeed in this or any other economy are those who act to raise their financial intelligence by reading and study. A good source for an education on debt relief and management is this free report you can receive by clicking here.

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