Credit card debt is on a lot of people’s minds this month, as the holiday spending bills are coming due. While in past decades cash was king, today’s generations have a hard time imagining a life without debt. The average American household today includes a $149,925 mortgage, $32,258 in student loans and a whopping $15,270 in credit card debt, according to Nerdwallet. Most households would add one or two financed cards to those totals as well.
January is the month were people begin their New Year’s resolutions, and paying down debt is often at the top of that list. It is often the act of facing those holiday credit card statements that causes the light bulb moment for those in debt, but digging out of that hole is not always easy and can seem overwhelming. The first step for some is getting a basic education in financial literacy. Understanding the difference between good and bad debt and learning how to budget effectively are two key tools in debt management.
For those facing unmanageable monthly payments and creditor harassment, however, more serious measures may need to be taken. Dealing with large amounts of credit card debt is stressful and can take a toll on the rest of a person’s professional and personal life. In some cases, filing for bankruptcy may be a way to discharge credit card debt and get a fresh financial start. Those considering bankruptcy may benefit from talking with an attorney who is experienced in bankruptcy law to get a clear understanding of the process and possible long-term effects.
Source: Observer-Reporter, “Holidays not the only factor in consumers’ massive debt struggles” Rick Shrum, Jan. 25, 2014