In this golden age of loans and credit lines, it seems like every adult in the United States has at least some credit card debt. While no one can completely predict their financial circumstances, the good news is that you can always work toward minimizing the consequences of an unexpected crisis.
- Lack of Budgeting Having a budget goes a long way toward reducing credit card debt. You should have a set amount budgeted to pay toward existing debt every month and control the amount that you charge to your cards. While writing a budget is worse than a trip to the dentist, looking at your credit card bills after a month of unbridled spending feels closer to a root canal.
- Poor Communication Being in a partnership or a marriage is rough on your combined finances, especially if your communication skills aren't 100 percent up-to-par. Couples who avoid talking about finances end up charging more to their credit cards and accruing more interest. It's crucial to have conversations about your financial goals and take steps to meet those goals.
- Failing to Save Money Keeping a respectable nest egg lets you avoid excessive credit card charges in unexpected circumstances. Sure, you could charge those car repairs or medical bills to your card, but if you have the money to pay it off right away, you avoid paying interest and skyrocketing your credit utilization or debt-to-income ratios.
- Unexpected Underemployment Lost your job? Got laid off? Had your hours cut? Unfortunately, this is one of those circumstances that's harder to predict. What you can do, however, is take steps to make sure that your financial game is as strong as it can be. Losing hours at work hurts no matter what, but it hurts a little less when you have a big savings account, a solid budget and a financial game plan.
- Financial Illiteracy It's amazing and terrifying how many people make it to adulthood without having a basic understanding of how to control their finances or use credit cards responsibly. Luckily, this one is entirely within your control. Whether you have a hefty credit line or barely any at all, you should know how to use it to your benefit.