Prevent Personal Bankruptcy By Getting Off The Credit Card Treadmill
November 13th, 2008
When you cannot prevent yourself from using the credit card despite best of your efforts and will just freeze it to give you some cooling off time. Such cooling off period will allow you to consider and analyze your expenditure status perfectly.
Your antidote to debt increase is savings. If you do not charge your credit card you will be saving more. Monthly savings could be your way out to pay dues and prevent personal bankruptcy to which you might be steadily heading. Savings will not only make you more lucid financially but also tone down your future debt loads.
Debt is always a dent on your future income. Hence when you receive the monthly bills pay the current charges and in addition also try to pay 5 to 10 percent of the older balances. Of course you should pay what you can afford meeting all ends.
Conversely, you can maintain a separate savings account to pay off bills. It will not only empower you with an account to meet your debt dues but also gain you some extra money in terms of the interests accrued. Once the account reaches zero level, you should quit further charging your credit card.
There is a most useful and time tested principle used by the mortgage lenders. It is called the 28/36 rule. It means your debt should not exceed 28% of your monthly income. Similarly, your total debt services including all the household payments should also not exceed 36% of your gross income.
“Cut your coat according to your cloth”, they say.