Northern California Bankruptcy Article:

Increasingly in our society, credit card debt is becoming away of life. Rare it is to find the young person who leaves his or hertwenties without credit card debt. It is so much easier to pay forthings, you have security, knowing that few companies anymore hold youliable for fraudulent purchases (cash cannot be recovered), and itallows you to purchase things you otherwise could not afford. The realproblem with credit card debt emerges as you continually spend, contentto pay only the minimum payment, while the money builds. Then one day,you look at your statements and realize that your two or three cardsare nearly maxed out, and you owe more money than you ever thought youcould owe. And you know how difficult it will be to pay back, becauseexpenses seem to be set, and you know that paying more than the minimumwill be almost impossible.

There is a way to reduce credit card debt, however. It is notparticularly fun, but it is practical and can help you well on your wayto financial independence. The main thing to do is to prioritize yourspending, and cut back on some things. There is always some unnecessaryitem that can be cut back on. Whether it is the daily cup of coffeethat you buy at the shop (can save $80 to $100 a month!) or by scalingback to 80 channels instead of having premium cable. And it meansoccasionally foregoing the DVD or book that you may want to buy. If youfaithfully keep track of all your spending for a month, it will becomeevident, as you review where your money goes, that there are somethings that you can do without. It becomes a matter of applying all, ora portion of, this money saved by cutting excess from your spending, tothe credit card with the smallest balance, while still paying theminimum on all of your cards.

When working to reduce credit card debt, it is important to note thatall such payments should be in addition to the minimum. Add your presetamount to the minimum payment, and you will see your debt slowly recede(it will go faster the more you can apply). After you have paid off thelowest balance, you move on to the next card, applying everything you'dbeen paying previously on top of your new target minimum. This meansthat if you determine to pay $30 extra each month on card A, which hasa minimum of $25, you pay a total of $55 per month on car A. When cardA is paid off, you apply the entire $55 to card B. You've been paying a$15 minimum this whole time, and now that card A is paid off, you addthe $55, making your monthly payment $60. As when card B is paid off,you continue with any other cards you have. As you go along, yourcredit card debt reduces at a faster rate.

There isa way out of credit card debt. It takespersistence and discipline, but you’ll feel better as you see thebalances fadeand disappear. And when you are done, you will have learned to live onacertain income and be happy to discover that you have a great deal ofextramoney—money that won’t be continually spent paying interest to creditcardcompanies!

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