Credit Card Debt: How are Americans to deal with $1 trillion of credit card debt?

Credit card debt is responsible for $1 trillion worth of American debt today as revealed by the Federal Reserve recently, so please do not think that you are the only person drowning in credit card debt out there, there is a small ocean of you unfortunately and this ocean just seems to be getting bigger all the time.

But what do we do about it? Burying your head in the sand is not really a viable choice but it is a course of non-action that millions choose to follow, just because you cannot see the problem it doesn't mean it doesn't exist! These people are being foolish and are just waiting for their own little financial time bomb to explode, the wise ones out there are hitting this problem head on.

We all know that we should pay off our debts, it is only ethical that we pay back that which we have borrowed, as constantly gesticulated by financial professionals who are constantly advocating to people to do just that, but they all concentrate their rhetoric in particular on high-interest credit card debts. Some credit card interest rates are phenomenally high and it probably seems like borrowers would be paying them off for an eternity; and in all fairness, that is exactly what these credit card companies want you to be doing; they don't want you to pay the full amount owing on your card and would be quite happy for you to pay off a ridiculously low interest only payment each and every month, therefore, never reducing your debt and probably increasing it, but giving the credit card company a perpetual income. Needless to say that clearing this credit card debt is one of the first things tackled when looking to reduce or clear debt.

Facing up to and dealing with debt is never easy but if you always remind yourself that taking action to relieve yourself of debt now will provide you with more financial freedom in the future. Firstly, study your income and expenses and analyze where you could cut back on spending and take steps to do so, if you are in a position where cutbacks are not an option then you have to take action to increase your income by taking a second job. Sure, you may have to make sacrifices in order to clear this debt but it will be worth it to be in control once again.

Now, having read that last paragraph, you probably thought how the heck am I going to get a second job? Yes, you are quite right, jobs are being axed right across America at the moment, and the rest of the world for that matter, as the global recession hits hard, and unemployment is increasing rapidly, but never give up before you even try, if everyone listened to the doom and gloom we hear constantly on the media none of us would ever leave the protection of our homes ever again, would we? So, make an effort, you may be surprised by the outcome.

When it comes to paying off debt there is a specific order you should look to do things in:

1. Secured or unsecured debt:
Your first priority is to always ensure that you maintain and keep up to date your secured debt repayments, such as your mortgage. Secured debt will always be your priority as it is generally levied against your home.

2. High Interest borrowing:
Once you have ensured that the money for your secured debt is in place each month you should look to reduce or remove the high interest loans that you have by increasing repayments or negotiating reducing your card interest rates with the card supplier.

3. All other borrowing:
And finally look at all other debt to see what can be cut back or removed quickly.

Getting to zero debt, as soon as possible, should be your goal and it is achievable with some dedicated application.