2008 was a rocky financial year for most everyone in this country. The decline of the real estate market and the credit crisis left many wondering what to do next. As consumers look to 2009, many are trying to regroup and figure out a plan for their financial futures. Some are shaken, but will weather the economic storm okay. Others have racked up debt on their credit cards and are seeking ways to reduce or erase that debt. It is estimated that the average number of credit cards per consumer in this country is four. Credit cards are a common way of making purchases. If utilized appropriately, they are a handy resource. On the other hand, credit cards offer an enticing path to spend beyond your means. Once debt is accumulated, it takes a disciplined routine to climb out of it. The first step to reducing and eliminating debt on your credit cards is to stop making purchases on the cards. It may be common sense, but erasing debt while you are accruing more is not easy. Also, resist the urge to apply for new credit cards. Simply change your habits. Write checks, use cash or a bank card that automatically takes the amount from your account. Next, examine your budget to determine where you might be able to cut expenses. The most logical area of your budget in which to do this is discretionary items. Start taking your lunch to work, making your own coffee and get rid of unnecessary entertainment expenses. Take the money you save on those discretionary items and put it toward the balances on your credit cards. You may need to temporarily take on additional income opportunities, if you find that you have no discretionary expenses to reduce. After you have a handle on your budget, develop a routine of slowly paying down the debt on your credit cards. Make more than the minimum payments on the monthly statements. When you make only the minimum payment, you are paying a significant amount of interest. If you pay more than the minimum, you will pay down more of the balance. Work on the card with the least amount of debt first, if you have debt on several credit cards. The emotional benefit of seeing some debt paid off will offer a reward and let you see the light at the end of the tunnel. Whenever you have extra money, make an extra payment on your credit cards. After you begin to eliminate the debt on your credit cards, cancel the most recent cards and keep the one you have had the longest. Having long established credit card accounts that are in good standing reflects positively on your credit score and credit report. Maintain your commitment to paying off your debt until the balances on all your credit cards have been paid. Always remind yourself of the dedication it took to pay down accrued debt, especially if and when you decide to use a card regularly again. Stay on top of your balances and use your card wisely. Remember that you will have to pay for everything you put on your credit cards.
But should you?
Since money issues are a prime cause of divorce, the first thing to do is get into agreement about how your credit cards - and the rest of your financial picture - will be handled. Of course, this issue should have been settled long before the wedding, but if it's still a question, now is the time to face it.
If your spending habits are similar - good - especially if you're both conservative spenders. But if one of you is a free spender and the other is conservative, you probably shouldn't blend your cards.
As far as the credit bureaus are concerned, each of you is an individual entity - with an individual credit history. So if you've taken good care of your credit and your spouse spends freely - you probably want to keep your own cards separate. And since joint accounts - such as utility bills - may be reported under both your names, you probably want to oversee payment of those accounts.
Because each of you will be treated as an individual for credit reporting, it is a good idea for you to either have separate accounts or a joint account - with both of you being responsible for payment. A joint account will be reported to the credit bureaus under both of your names, and your credit will be improved or harmed by the way you handle that account.
Many widows have found out too late that merely being an authorized user on their husband's accounts did not give them a credit history. So when they were widowed needed credit, they had none - even if they had been the person responsible for bill-paying during their marriage.
Every person needs a good credit history, and thus should either have a credit card that is solely in their own name, or be a joint holder on an account - not just an authorized user.
So if your spouse is irresponsible with spending and should not have a credit card - share the account, but shred his/her card!
When the time comes for you to purchase a house - probably together - both of your credit scores will be considered. So it pays for both of you to keep your FICO scores as high as possible.
In cases where one spouse has maintained good credit and the other has not, lenders can write the mortgage in just the name of the "good credit spouse" - but in that case can only use the income from that party. This could be a blessing in disguise if using your combined income would cause you to buy a house with payments that put a strain on your budget.
If you don't have a credit card in your own name, look over the possibilities and make an application. If you have no credit yet, you may need to choose a high interest card, but if you use it sparingly and pay the balance in full each month, you'll build your credit and soon will be eligible for a lower rate card.
Both Barry Waters & James Exum are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Barry Waters has sinced written about articles on various topics from Credit Cards, Credit Card Interest Rates and Credit Cards. Read more on , visit www.getsmart.com/credit-cards.. Barry Waters's top article generates over 165000 views. to your Favourites.
James Exum has sinced written about articles on various topics from Credit Cards, Gas Prices and Credit Cards. BestRateForCreditCards.com is your on-line resource for comparsions. James Exum's top article generates over 8100 views. to your Favourites.