Paying Down Debt A Major Concern For Consumers

Considering the average credit card debt that American households carry – $10,000  – it is encouraging to see that a New Year online poll by the National Foundation for Credit Counseling (NFCC) held in 2009 showed that 76% of its respondents have made paying down their debts the number one resolution to make in 2010. With the way the economy is going, getting away from credit card debt is certainly a worthwhile goal to make for the New Year.

However, resolving to get rid of credit card debt and actually doing it are two very different things. As what most people know, keeping a New Year’s resolution is not very easy to do. For consumers who want to stay away from financial problems this year, keeping this particular New Year’s resolution is a must, however.

To get rid of credit card debt, the first thing that consumers must do is to make sure that they do not add to their already existing credit card debts. Thus, they have to stop using their credit cards and to focus more on using cash for their day to day expenses. If it’s just not possible, then they must at least have a concrete plan which will help them pay off any balances in full every month.

Assessing their debts is also another important step to credit card debt freedom that consumers must make. To do this, they need to gather all their credit card debt statements and figure out not only how much they owe, but also to whom and what interest rates they are paying to each of their creditors.

Once the detail of the debt has been figured out, consumers can then formulate a payment plan for it. They can either choose to target paying off the debt with the smallest balance first or to pay off the highest interest rate debt first. Either way, they have to be patient and persistent with their efforts so that they may finally be debt free one day. Also, while focusing on paying off one particular debt, consumers must not neglect to make the required minimum monthly payments for their other debts so that they at least minimize the impact of interest fees.

Since making consistent credit card debt payments will cost money, it is also a good idea for consumers to readjust their spending habits. The most important step is to define which expenses are needs and which are wants. Wants are non-essential expenses and should therefore be minimized. By freeing up some cash, consumers can pay off more of their debts every month.