A New Year's Resolution for 2008 if you carry high-interest debt

With the New Year comes New Year’s Resolutions of course!

If you are one of the many people who carry high interest debt on credit cards or department store charge cards on a regular basis – the first thing you need to realize is that you are not alone. The second thing to realize is that there is no time like the present to really get a handle on things once and for all.

EmptyPockets.jpgThere are some people who do not realize just how much money they spend in interest charges just for carrying a balance on their credit cards from month to month. And there are people who just see it as habit and don’t think much of it at all. And of course there are many who would like to change the situation NOW, but don’t see a viable solution due to the compromises involved.

What I can tell you is that if it were easy, you would’ve done it by now. So understand that it will be a task that requires serious effort and sacrifice, but the rewards will be more than worth it. The alternative is to keep running around the same vicious cycle, and if the balances keep growing – perhaps lose your mortgage and file for bankruptcy one day. You need to make a stand NOW.

Let me put it into perspective for you: If you carry a $10,000 balance on your credit card and your credit card charges 19% in interest, you are doling out $1,900 in interest per year to carry that balance. That works out to almost $160/month. Think about what $160 would pay for on monthly basis. You could take years off your mortgage, save for a healthier retirement or pay for an annual vacation.

If you have a different balance and/or interest rate take a few minutes to add up the total amount of interest you are paying across all your credit cards. It can be a sobering exercise – but well worth it as it may spur you on to take action to fix this problem. You shouldn’t be carrying any high-interest debt – plain and simple.

So what can you do? Well the good news is that there are many blogs out there that have great articles educating people on credit and debt management. Perhaps a good New Year’s resolution could be to find some good articles on debt management and start studying the subject. Just by constantly putting that kind of information in front of you can help to change your perception and behaviour – and hopefully speed your plans to finally rid yourself of high-interest debt.

I’m going to be writing some articles on debt-management over the course of 2008 – so you can stay tuned here too, but in the meantime… here are some sites to check out. Don’t just rely on a few articles though, do some more reading and searching on the web. Many writers have the same overall themes, but some have some subtly different methods:

Article from "Get Rich Slowly"
Article from "Free Money Finance

These two articles should get you started. Happy New Year everyone! 

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Preet Banerjee
Preet Banerjee
...is an independent consultant to the financial services industry and a personal finance commentator. You can learn more about Preet at his personal website and you can click here to follow him on Twitter.
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  • Monty Loree

    That seems to be a common theme with personal finance bloggers.
    Wouldn’t it be nice if people tore up their high interest credit cards and paid cash for things!