In this plastic run economy, credit cards literally run our finances; hence debt management has come of age. Using credit cards must be restricted to necessities and luxury purchases must be curtailed, after all we have to pay for it later with interest. A balance of expenses and income is the key.
On an average every American consumer incurs a credit debt of 12 % the average credit debt of $ 10,300 per consumer and grown up to $ 11,000 minus mortgages, and the household debt is between $ 18,000 and $21,000. The credit debt needs to be controlled; doing so makes a considerable difference. Some wise thinking and a good judgment helps in bringing down debts. The children need to be educated on paying bills and importance of savings; life without debts is a better way of living. The average credit debt reduction is a possibility, if we take responsibility for our own spending habits.
Here are some guidelines to keep a tab on household debts:-
• Pay about 50% of what you make on your debt, as you make more increase by 10%-15%.
• Expenses like food, transportation costs, utilities and expenses needs to be preplanned.
Higher the outstanding debt, lower the credit score, the outstanding debt makes up 30% of this score, payment history makes up another 35%. An unbalanced percentage leads to bankruptcies and foreclosures. In the last 10 years as the average credit debt per American household rose, the amount of bankruptcies doubled.
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