? The Fastest Four Minutes in Finance: How to Counter Credit Card Debt ??

According to a Federal Reserve Bank of New York report released this week, the share of credit card debt that is 30 days or more past due, increased by 0.6 percentage points during the first three months of the year. In other words -?more Americans are not paying off their credit card debt ??

?? Inflation?is taking a bigger bite out of Americans’ income, and it could be that is causing them to pile up the credit card debt.?

I think the first thing you have to analyze is whether what you are putting on a credit card is a?necessity?or a?want. For instance, if you are having trouble buying gas or groceries from your paycheck, that’s one thing, if you are used to going out to eat three times a week, and are still trying to do that, but instead of paying for it with your debit card, you are putting it on a credit card, it’s time to rethink it.??

I was recently asked to join?Yahoo Finance Live?to talk about credit card debt. One of the things I shared was a two-pronged approach to credit cards, depending on where you are. First, we need to be educated about?how to use credit cards?wisely, but, if you haven’t used them wisely, you need a plan?to get the debt wiped out.?

Having a credit card is not a problem and is even of value to you?if you never carry a balance. To do that, you need to only?use a credit card within the parameters of a monthly budget.?If you know how much you can charge to the card each month based on how much you can afford to pay from your bank account, you will be able to take advantage of the points/cash back/loyalty programs that a credit card offers, without paying interest. That’s the best usage of a credit card. It is?not a piggy bank to tap. It is not a way to pay for a vacation or a new toy. You should have a cash savings account for purchases that don’t fit into your budget.?

This takes discipline, and planning. Cash may no longer be king, but?cash?flow?is King.?You can’t achieve financial independence if you are spending more than you make, or even if your margins between income and expenses are too thin.?

If you’ve gotten yourself into credit card debt, we need to wipe it out. At GenWealth, we collect information about all of a client’s debts, including balances, monthly payments, and terms, and utilize software to create a plan to wipe all debt out by a specified date in the future, oftentimes that’s at retirement.??

Often times we will find that clients have other fixed-rate debt like a?car loan?that paying the monthly payment may be all that’s needed because it is on a schedule. Making small payments on a credit card can take forever to pay off, as well as cost you so much more in interest.?Credit card debt should be the first thing to attack.?

We have found that a client needs a win early in that plan. Oftentimes, instead of the higher interest rate debt, we may attack the smallest credit card balance first. We concentrate all our effort on eliminating that debt while paying the minimum amount on the others. Once that debt is paid off, we snowball what we were paying on the small debt onto the next one.??

I would also?suggest only carrying one credit card.?It can be hard to resist the offers of getting discounts from specific stores just for opening an account, or for making a purchase with a separate card. But, the reality is the more cards you have, the more difficult it can be to track your spending.??

Just pick your favorite way to receive rewards and stack it all up in one place. For instance, if its ?? airline miles you find that will benefit you the most, use a card from an airline. It you like ?? cash back, find the card that offers the most cash back. You may miss a 5% discount somewhere else, but, at least you know there’s?only one place to look?to see what you’re spending.??

If you need help getting rid of credit card debt, or an overall plan to reach financial independence, a GenWealth advisor is available to you.??

Want more content like this (plus bonus content you won't get anywhere else) delivered straight to your inbox? ?? Visit?fastest4.com!

FINANCIALLY SMARTER | FOUR MINUTES AT A TIME

• financial insights and updates delivered to your inbox weekly

WHAT TO EXPECT:

• One four-minute video with relevant financial information.
• Three things you should know from the past week in finance.
• Two informative or inspirational quotes.
• One question to ask yourself to make sure you are staying on track with your personal finances.

WHAT NOT TO EXPECT:

• Overly "salesy" material
• More emails than you signed up for (we hate spam too)
• ?? Unicorns. You definitely can't expect that.

GenWealth Financial Advisors?|?getreadyforthefuture.com

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Advisor Alliance. Independent Advisor Alliance and GenWealth Financial Advisors are separate entities from LPL Financial.