According to TransUnions Quarterly Credit Card Analysis, “...the average bankcard debt per borrower decreased to $5,434 in the fourth quarter of 2009"[1]. That's over $5,000 per consumer, and these numbers are not encouraging. Even with a decrease, a husband and wife could easily owe over $10,000 in unsecured credit card debt.
With all of the debt come feelings such as depression, anxiety, being overwhelmed, anger, aggression, and denial. What recourse does the average consumer have? Take a lesson from Debtors Anonymous and confront demons and causes of overspending.
Confronting Your Demons
In this flailing economy, all of the odds seem to be stacked against consumers. They try not to make mistakes, but all too often end up borrowing money from their credit cards. The first step to recovery is to admit that there is a problem. Once there is an admission of guilt or a responsibility taken, consumers can start to rebuild their self-esteem, savings, self-respect, and also stop relying on their credit cards as a crutch that will eventually break them. How does a consumer start to rebuild their lives? The first step is to cut up their credit cards.
Overwhelming Debt but in Denial?
If a individual knows that they are unable to pay their overwhelming debt but still is in denial, there are several questions that they could ask themselves to realize the severity of their own particular situation.
Honesty is always the best policy. Do they owe more than they can repay in a year’s time? Do they value themselves by the possessions they own?
Do they get a certain "high" every time that they use their credit cards? Are they paying the minimum payments because that is all they can afford? Do they shop for necessity or want? Do they pay attention to their credit score and APRs they are charged? Do they research their purchases and weigh the outcome of overspending? If the answer to any of these questions bothers a consumer, then they have a problem with credit abuse.
There are several great resources for consumers to aid in the relief of credit card debt. Many financial experts, such as Atlanta-based Clark Howard, recommend that consumers use all of their available funds to first pay down their highest interest credit card first. When that card is paid off, the consumer should then focus on the next highest interest card until all credit card debt is paid off. If this is a workable solution for most, then it can be ideal. However, there are those that are so in debt, that this method may only prolong the inevitable.
What Resources are Available?
If a consumer owes more than $10,000 and has no additional income to pay down their cards, then alternatives should be considered. The first step would be to consult a credit card consumer debt specialist. Services provided by companies such as the National Foundation for Credit Counseling or NFCC, include a free analysis of consumer debt and assistance in lowering APRS and setting up manageable monthly payments. There are also companies that charge a small fee, such as CCCS or Consumer Credit Counseling Services, that also help consumers to lower their APRS and work directly with credit card companies to give consumers breathing room and assist in providing consumers with workable solutions to their debt.
Debt Consolidation
If a consumer qualifies and their debt is not too great, debt consolidation may be a positive solution. Consumers use their good credit score to secure a lower rate loan that consolidates all of their unsecured debt into a secured bank loan. The advantages include a single monthly payment, a low APR for the consumer, and satisfaction that all debts will be taken care of and paid.
This is only a solution for those consumers that are willing to stop using credit cards or re-train themselves to use credit cards wisely. If payments are not made or credit cards are continued to be abused, bankruptcy or foreclosure could be some of the negative repercussions that could affect a consumer.
If consumers need drastic help, it is available in the form of a twelve-step program called Debtors Anonymous. Debtors Anonymous is much like AA or Alcoholics Anonymous. It is a confidential program that directs consumers to meet with other people that also have racked up major debt with their credit cards numerous times. This program is suited for those consumers that need assistance learning how to permanently live without credit cards.
What if Debt is Out of Control?
Debtors Anonymous is located in most major cities and suburbs and provides a valuable service to those that have hit rock bottom. It allows debtors to meet with other debtors and form a camaraderie and also help these particular consumers to find a way out of debt for the long haul. Debtors Anonymous recommends "that all attendees attend at least six meetings for the program to actually be beneficial" [2].
All in all, there are many solutions freely available to consumers, however, they must be proactive and follow up with their payments, re-educate themselves to be financially responsible, and be willing to give up the luxury of credit cards altogether if they cannot make wise financial decisions.
Sources
Earthtimes.org, *"Average Credit Card Deliquency Rates Rise in the Fourth Quarter, Debt Goes Down" (accessed March 15, 2010).
Debtorsanonymous.org, *'Welcome to Debtors Anonymous" (accessed March 15, 2010).
Korie Schmidt - I am a former High School and Middle School English Teacher that decided to stay at home after the birth of my second child. I am a ...
