A recent article on Bloomberg is sounding the alarm for consumers burdened with debt. Over the last several years Americans have racked up a lot of consumer debt. During the economic crisis, Americans “deleveraged” quite a bit, but household debt has crept up ever since. Take a look at this chart below from the Federal Reserve.
You read that correctly, we are now at over 1 Trillion in credit card debt. Fortunately, the economy is doing much better than it was and employment has improved dramatically. This helps people with credit card debt keep their head above water.
But that could change if interest rates continue to go up. Rising interest rates mean you are paying off less debt each month for the same payment. It can also mean that the hole you’re digging keeps getting bigger and bigger.
If the economy falters or if you have a personal crisis in your family, with your job, etc., then things can get very serious very quickly. As they say on Game of Thrones, “winter is coming.” We know there will be a day of reckoning coming with all this credit card debt. So here are some things you can do to prepare if you are dealing with credit card debt.
Take stock of your situation. Sit down and crunch the numbers.
- How much do you owe?
- What rate are you paying it down at?
- Is it still growing?
- How much extra money do you have left over each month after paying credit card payments?
- What is your plan for getting out of debt?
- How long will it take you?
If you don’t feel comfortable with the answers to every one of these questions, you should probably meet with an Arizona debt attorney to evaluate your situation and determine your options. It’s better to deal with these things head on and in advance than wait until it’s too late.