March 2018

FINANCE
How
to
Get Out of
by Larry Schwingel
With a growing economy, Americans
are bullish on spending. But being
bullish may lead to being foolish if too
much debt is accumulated. Added
debt will consume assets, bring on
mental stress, and hurt relationships.
So, how does one get out of debt?
Money management, financial
planning, common sense, and
budgeting are the foundation. From
mortgages, car payments, and credit
cards, to food, health care, utilities,
and clothes — making ends meet is
a constant challenge. There is no way
not to spend, but how you spend
is crucial. One of the downfalls in
accumulating debt is the use of credit
cards.
Credit card debt is one of
the most consistent and
worrisome debts families
face. The average household
credit card debt in 2017 was
between $12,000 and $15,000
— so making smart spending
choices is important (want
versus need).
Last year, two-thirds of holiday
shoppers used credit cards to finance
purchases, so they began 2018 with
at least $1,000 in extra credit card
debt. Credit cards, home equity, and
personal lines of credit all fall into the
category of “revolving debt.” This refers
to open-ended accounts, usually with
variable interest rates, predetermined
credit limits, and payments calculated
as a percentage of the unpaid balance.
Consumers carry balances forward to
keep the loan going or “revolving,” but
unlike a standard loan that ends when
the balance is paid off, revolving credit
automatically renews as long as the
minimum payments are made and the
credit limit is not exceeded. The total
revolving debt in the U.S. has topped
$1 trillion, a height not seen since the
financial crisis in mid-decade.
Advice from an expert
According to Alyssa C. Baer, Esq.,
consumer bankruptcy and family law
attorney for Brodzki, Jacobs, and
Brook, borrowing money for unrealistic
purchases, and taking too long to
repay the debt, is an invitation for
financial trouble. “Credit cards have
to be managed properly,” she said.
“The amount of debt accumulated is
something many families juggle with,
so you have to be a smart budgeter.”
For those that incur too much debt (for
a variety of reasons) filing for Chapter 7
or Chapter 13 bankruptcy protection is
an option. “This is one of the best ways
to resolve financial problems and get
people on the road to recovery,” Baer
said.
According to USCourts.gov, fewer
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MARCH 2018