Paying down debt is often a major financial goal for families, however, it can often be difficult to determine a good starting point.  In upcoming articles, I’ll be discussing different types of debt, and how to go about eliminating of reducing debt.

How many of you remember being in college and seeing those enticing displays from credit card companies, giving away tee shirts, water bottles, and other promotional items?  For most Americans in our generation, I’d guess that’s how you probably got your first credit card.  Mine was a Citibank card with a $300 limit.  Credit card companies spend lots of money getting card holders, and can you guess why?  Because they are likely to make a whole lot of money from each one.

Credit cards can be a great thing.  In emergencies, it can provide you with the ability to purchase a necessity, and they are also extremely convenient.  However, the risk of falling into debt is so great, and credit card debt is extremely difficult to get out of.

Why is that the case?  First of all, minimum payments can often barely cover the monthly interest, making the payment of principle nearly impossible.  Second, interest rates on most credit cards are incredibly high.  Finally, many people are continuing to buy things on their card, causing an infinite loop of debt.

Step one of reducing credit card debt is to STOP USING THE CARD!  Immediately.  If you carry a balance from month to month, you are likely without a grace period, meaning that you are paying interest starting at day one.

Come back next week for Part Two of our Paying Down Debt: Credit Cards article.