There is a problem in our country today, and that problem would be debt. So many people find themselves in debt over their head, and once they get into the financial situation, they find it extremely hard to get out of it. The biggest problem is the more you struggle with debt as an adult and parent, the more you are teaching your kids bad financial habits.
There are some debts that are impossible to avoid, like home mortgages and car loans. Managing them properly is certainly not the problem. The problem comes in through high interest debts that do not give you much room to pay them back, like credit cards.
The Credit Card Vicious Cycle
Once you owe money on a credit card, you have entered a vicious cycle that can continue to haunt you for decades. The problem is that credit cards have extremely high interest rates, but they reel you in through low interest promotions. Once you start using that credit card and if you only pay the minimum payment on it, you will be paying it back for years, and spending thousands of dollars on interest. You may find yourself struggling to make the payments, which could lead to you using the credit card for other expenses. It becomes a vicious cycle. You cannot afford to pay the credit card without adding more debt to it. It is a cycle that can be virtually impossible to get out of.
How to Avoid the Credit Card Trap
Of course, the ideal would be to never have a credit card at all, but that is virtually impossible for most people as well. However, you can limit the number of cards you have. It is best to only have one credit card. When you have more than one, it is so easy to just charge expenses when they come up.
If possible, put away that credit card and do not carry it with you in your wallet. If you have that card with you, it is all too easy to use it. Keep the card stowed away and only use it in an emergency.
Pay off the bill each month. If you do use the credit card, make sure you pay it off before you start getting charged with interest. Even if you carry a small balance, you will be dishing out big bucks to the company for the interest fees. It is just not worth the cost, and the more you carry a debt, the easier it is to start letting it build up and get out of control.
Getting Out of the Trap
If you find yourself in a credit card trap, you will need to work quickly to put together a plan so that you do not owe on it for years. Here are some things you can do to get out of the trap.
- Cut up that card and do not use it again.
- Pay more than the minimum each month. Even if it is just twenty dollars, it will make a big difference.
- Pay on time to avoid any late payment fees.
- Call the credit card company and ask about negotiating a lower interest rate.
- Budget as much money as you can to go toward the debt, even if it means cutting out frivolous expenses.
Remember that you are always an example to your children. If you are in big credit card debt, then you are teaching your kids to do the same thing when they are older. It is best to avoid getting in debt over your head with the tips above, but keep in mind that you can get out of that debt too with smart financial decisions.
Clay Piggy is a virtual world gaming environment which teaches children basic money management skills and the concept of Earning, Spending, Saving, Investing and Giving in a fun and social way. Clay Piggy users choose their avatars by selecting and customizing their characters. Users earn virtual money by working at a job. Users also learn concept of credit score, different kinds of bank accounts, deposit money in bank, write checks and use debit / credit cards.