Reducing Credit Card Debt to Become Manageable

Anyone who’s ever had a big credit card bill knows how disheartening it can be to pay on it each month and not see the balance disappear. It can feel like the debt is never-ending. There are ways out, though, if two things are recognized:

  • There is a legitimate problem with the level of credit card debt, and
  • There is something that really can be done about it.

If both of these things are understood, it takes the limits off of a person and lets him move toward improving his financial health.

Do not be drowned in credit card debtProblems with Credit Card Debt Reduction

There are many different ways people can reduce their debt, but they have to be committed to it and willing to work to solve the problem. One of the main areas of debt for a lot of people today is credit cards, and many people are interested in a way to reduce that debt quickly. This is often because it seems, even though payments are constantly being made on the credit cards, the balance does not go down by more than a few dollars each month.

To reduce credit card debt quickly, however, much more than the minimum payment has to be made. Most people don’t realize this or don’t want to acknowledge what it means for them. The ones who do understand what they need to do don’t always think they have the money to change their circumstances.

There are always options, though, even for people who feel they have no chance to change their circumstances and reduce their credit card debt quickly. When people are involved with too much credit card debt, they have trouble meeting their other financial obligations as well, and due to this, they can struggle with depression, anxiety, and other difficulties.

Ways To Reduce Credit Card Debt Quickly

There are various ways people can reduce credit card debt quickly. It’s unfortunate that not many people are interested in doing so, or that they don’t feel like they have the means to do it. If more people were aware of what they could do to reduce credit card debt faster than they expected, they would be much more likely to work toward that goal.

In addition to paying larger amounts on the credit cards and finding cards with lower rates, there are other ways to reduce charge card debt quickly. One of those ways to reduce credit card debt in a short period is to refinance a home and use the equity created from that to pay off other debt, such as credit cards.

However, there are a lot of significant problems that can come about from home refinance, as well, so it’s important to be very clear about what’s being done and the amount of money being spent. Paying off the credit cards with equity and then using the credit cards again will only dig the person in deeper where debt’s concerned.

As with any debt reduction strategy, there are good and bad points to paying extra, getting cards with lower rates, and doing things like refinancing a home or taking out a personal loan to pay down debt. Consider the situation carefully to make the best choice, and see a credit counselor to help if necessary. There are also many online tools that can help with debt reduction planning.

An In-Depth Look at the Psychology of Spending

Spending is where personal values and aspirations meet the ancient practices of hunting, gathering, trade and a touch of sympathetic magic. Money is one of the leading tools we have for manipulating our environment. But while some spending is necessary for survival (and to stay out of prison) beyond that, there are choices to be made, and this is where psychology enters the picture.

Impulse buying using credit cards will maim you laterExploring our psychological and emotional relationship with money is a vast topic. But if you narrow the focus to spending or spending habits, it leaves the questions of how and why we spend, what we choose to spend money on and how we feel about it. It begins with that primary function of money – to control and change our environment.

The decision to spend or not to spend can relate to how we feel about the status quo. If you worry that your house is insecure, you buy a burglar alarm. If you feel in a rut, you might spend money on a new outfit or home decor. The act of expenditure alone can feel like movement and progress. Now that I’ve bought the book or the exercise machine the world is a bit different – I’ve DONE something.

Psychologically, spending has an advantage over other means of altering our situation because, as long as the funds and items are available, it has an excellent chance of success. I might never use the exercise bike, but at least I was successful in buying it. I didn’t have to apply to get into the shop or prove myself worthy. I chose when and where to make the purchase and how much to spend. I might have to struggle and compromise in other areas of life, but in the role of customer, I am king.

The link between spending and control isn’t limited to the physical environment. People also use cash to try and influence how they’re perceived, and it’s not limited to prominent status symbols like expensive clothes or cars. We can spend money to reinforce membership of a group. Teenagers, for example, often buy the same make and model as their peers to be seen as one of the crowd. But these youngsters are doing more than controlling the impression they make. They are also demonstrating a second psychological factor of spending – value.

The relationship between spending and value goes deeper than getting value for money. Making a sacrifice shows that something is important to us. We talk about valuing our appearance by spending money on it or being prepared to pay for quality. We send checks to causes we support. The willingness of the teenagers to part with money to follow the customs of their friends is a way of saying “I value my membership in this group.” Throughout the world, gifts are used to express care, appreciation, and respect because they say “I value you.”

But value is relative. We spend when we view the spending more important than having the money. This can work two ways – either the purchase or donation seems valuable, or parting with the money does not. A busy executive who buys family members gifts rather than spending time with them, for example, values time more than money. For some people, spending can be a form of a purge. They rid themselves of money they have mixed feeling about, or deliberately sacrifice it to ease feelings of guilt. It’s also why people often spend a windfall more readily than the money they’ve worked for.

Sacrificing financial freedom when impluse buyingCredit cards, layaway plans, and two-for-one offers play to this idea by making the financial sacrifice appear minimal or hiding it from view. But why would we want to buy things we don’t need in the first place? Because it’s such a great deal! This is the third of my spending psychology factors – consumer prowess.

Shopping is our modern equivalent of the hunt. We even use expressions like “bargain hunting” or “bagging” a bargain. And we all like to think of ourselves as good hunters. Coming away with an apparent bargain demonstrates our prowess as consumers. It makes us feel skillful. Similarly, saying “no” can leave us kicking ourselves for letting it get away, regardless of how much or how little use for the item itself.

These factors are some of our most powerful psychological spending buttons, as advertisers well know. Watch a few commercials, and you’ll see attempts to push them:

  • Create a discontent with the status quo (limp hair? Not enough closet space?).
  • Promise progress and improvement (still using the same old detergent? Have more sex appeal).
  • Appeal to values (kind to the earth, because you’re worth it).
  • Minimize apparent sacrifice (nothing to pay till….)
  • Make the purchase seem skillful (order now and get the steak knives free!)

Understanding the psychology of spending doesn’t help the sellers. The cleverest spenders are the ones who know that certain buttons can be pushed and keep a watchful eye on their own.