We Jamaicans love criss tings and we have the Visa and Mastercard bills
to prove it. Now while having a credit card can be a wonderful thing,
but having credit card debt is not so wonderful. Jamaicans owe a
whopping $14.4 billion on their credit card bills as at March 2008,
according to the Bank of Jamaica. That is a 56 per cent jump from the
$9.2 billion owed in March 2006 and a 31 per cent increase from the $11
billion owed in March 2007.

And while the national credit card bill has been growing steadily by
double digits, wages and the overall economic output has not. Single
digit pay increases are commonplace and the gross domestic product
(GDP), the measurement of the country's output of goods and services has
always hoovered under 3 per cent. Karen Fitz Ritson, financial analyst
and director of Fitz Ritson & Associates, says, "People need to look
behind the numbers and seriously ask themselves where is the productivy
that matches this level of consumption."


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Some would agrue with inflation raging at 17.9 per cent for the 12 month
period ending March 2008. Persons are using their credit cards to fund
their day-to-day expenses. Fitz Ritson states that, "People really need
to reevaluate their budget. Something has to give. We can't continue to
spend beyond our means." Of course, if you are living within your means
but are carrying old credit card debt, with interest rates at a low of
38 per cent charged on the orginal debt, not the balance you owe, old
debt is very, very expensive debt.

Get out of Debt
If you are serious about getting out of credit card debt, the very first
step is to spend less than you make. If you can't pay for it today, that
means you can't afford it. Financial advisor Barbara Bedway offers more
steps to get out of credit card debt.


1. Call a halt to new charges.
The smartest money-management move you can make is also the simplest: to
reduce old debt quickly, avoid incurring new debt. Once your credit card
debt is paid off, resolve to pay off all new credit card charges in full
when the bill comes.

2. Set a realistic goal.
Your main goal may be to get out of debt entirely, but depending on your
debt level, that may be too overwhelming to accomplish right away. To
keep up your incentive, try setting smaller, more immediate goals that
you can celebrate as you reach them. Paying off one credit card is a
good example. When you've reduced your debt to the goal you've set, you
can use the extra money you'll have each month to reach other goals.

3. Prune your plastic
Though it's rarely a good idea to carry more than two credit cards, most
people own a bundle. This increases the potential for fees and
penalties, makes it difficult to keep track of balances, and of course
adds even more impulse-buying firepower to your wallet. Caution: Don't
just stick your unwanted cards in a drawer and stop using them! The
account remains open until you tell the company to cancel.

4. Prioritize your debt payments.
Make up a spending plan that will include payments to cover the minimum
amounts on all your loans and credit cards. Develop a strategy for
reducing your debts as quickly as possible. You can do this in one of
two ways:

*Pay off the debts with the smallest balances first. Putting a little
extra money toward the smaller-balance bills gives you a psychological
boost, as those debts are more quickly eliminated.

*Pay off high-rate cards first. This method saves you the most in the
long run. That's because those high-interest cards eat up most of your
monthly payments in finance charges, instead of going toward paying off
your bills. Once you've paid off the most expensive bills, more money is
freed up to pay other bills--what's known as the the "debt snowball"
effect.


Sources:
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