As much as we may hate it with every atom in our bodies, credit card debt is a reality virtually every one of us must deal with.
Obviously, everybody’s goal is to eradicate or at least minimize the debt, but that’s oftentimes far easier said than done, especially if your income is low enough that you need to use credit cards to pay off your bills.
America’s Credit Debt, on Average
The average American credit card debt is steep indeed.
According to the latest data, cobbled together from various government datasheets and statistics from the Federal Reserve, every US household owes, on average, $7,115 to this credit card company or that one.
While 7 grand is certainly not great, at least it’s not some five-figure (or Heaven forbid, six-figure) monstrosity, right? Hell, that amount sounds downright payable given the right amount of time.
Except that’s not the figure you should be looking at.
Instead, you should likely pay attention to the average credit card debt held by indebted households (the ones with unpaid credit card balances stretching out over several months or longer).
After all, there’s a good chance you ARE one of those households. When solely focused on the indebted, the average American credit card debt shoots up to $15,252.
And the worst part is, these averages have stayed roughly the same for over three years, meaning we as a people are no closer to telling credit card debt to go screw than we were in 2010.
More than likely, we will still owe roughly this much in 2017 and beyond.
How do we know this?
Because our average debt hasn’t been much lower than this in a long, long time, and the only time it changed was to go up.
Around January 2009, a few months after the market crashed and it became clear as day we were recessing and recessing hard, our average indebted debt was close to $19000.
By October of that year, there began a sharp, sharp drop in debt that spiraled downward until October of 2010, when it hit the 15K mark. It’s been hovering around that mark ever since.
So What Happened?
Did we suddenly get really good at managing our debt a few years back? And if so, why’d we stop at $15,000?
The answers are simple: no, and we didn’t.
That drop from late 2009 to late 2010 was largely due to banks writing off massive amounts of debt they knew was noncollectable.
Off the books, off the charts, and down go the numbers. But it’s all an illusion sadly, like a dream where you’re falling forever. You’re not falling at all – you’re in the same bed you always are.
But that doesn’t mean it HAS to be that way. Averages be damned, you can still slash your credit card debt and do so quickly. Here are a few tried-and-true methods:
The Debt Snowball
Made famous by economics guru Dave Ramsey, the Debt Snowball is a great way to drive down your debt while not overwhelming yourself in the process.
Simply put, you pay one thing at a time.
Pick a small debt and throw as much money as possible at it, while still maintaining the minimum payments on everything else you owe.
Once that small debt is done, move on to a slightly bigger debt, and then a bigger one, and then a still bigger one, until you’re debt-free.
Focusing on debts in this fashion will not only keep you organized, it will serve to boost your confidence.
If you start 2014 with six indebted credit cards and notice that in a couple months you only have 4, you will feel extra-powerful, and become extra driven to bring that number down to three, then two, one, and finally none.
Use Cash as Much as Possible, and Lock Away Credit Cards
Just because you have credit cards, doesn’t mean you have to use them. Take those annoying things and lock them away.
Don’t cut them up just yet, as you never know when an absolute emergency might come along where you absolutely, positively must use one.
For all other times though, keep them out of sight and out of mind.
Pay with cash as often as humanly possible (very few places are dumb enough to not accept cash), and work on reducing your debt without the temptation to add more.
Cut Back on Expendables
As much as we love going out to eat, or seeing the hot new movie in theaters, or having 900 HD channels at our disposal, the fact is that all of those things are ultimately useless, and very pricey.
If you want to climb out of debt, you’ll need to put your money toward doing so, and not on frivolous ventures.
So cut back on everything not necessary for survival – cook your own food as much as you can, wait for movies to appear on Netflix, cancel all but basic cable – and start taking debt slashing seriously.
You can still have fun with life, but it doesn’t have to cost a ton.
How about you? What’s your credit card debt like, and how do you plan to bring that number down?
Share your numbers and ideas in the comments below.
Mary Hiers is a personal finance writer who helps people earn more and spend less.