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The 2008 financial crisis was a disaster of epic proportions from which the global economy has still not fully recovered: growth is anaemic, wages have stagnated and good paying jobs are more scarce than ever before. But even with all those things as givens the fact is that the 2008 financial crisis did produce at least one positive result: people stopped borrowing and began paying down their debt.

This welcome trend continued more or less unabated until 2014 when personal unsecured debt levels began to rise once again. Today it seems any lessons learned from 2008 have been forgotten as consumers have bellied back up to the credit trough to gorge themselves on funny money. Personal debt in the UK has now risen to more than £1.5 trillion and the upward trend shows no signs of abating.
What’s it all About?

When one sifts through the recent statistics on personal debt in the UK perhaps the most troubling fact to emerge is that UK consumers now carry a staggering £67 billion in credit card debt. That’s more than the total GDP of Bulgaria or Panama. So why is it that so many who seemed humbled by the events of 2008 have now decided to once again embrace borrowing as a way of life? There’s no easy answer to that question but there are a couple of likely suspects we can point to.

● Record low interest rates – With interest rates at historic lows many people have simply found themselves unable to resist temptation. Most who venture into the land of 0% interest are convinced they’ll be able to muster the discipline to steer a responsible course but the fact is many lose control and wind up with balances that will take them years to pay down.

● The non-recovery, recovery – While huge financial institutions and the 1% have recovered in spectacular fashion from the Great Recession the picture for the rest has been decidedly less rosy. As mentioned above wages have stagnated or even tumbled, overall growth has been anaemic making it difficult for new businesses to find their legs and good paying jobs have continued to evaporate. Many have simply tired of waiting for things to turn around and decided to follow government’s example and borrow their way to a better future.

Whatever the reasons behind the current credit bubble however the fact is that, having dug such a formidable hole for themselves, people with massive credit card debt now need to find a way out before they drown in a sea of red ink.
6 Steps to Retire your Credit Card Debt

When you’re facing a mountain of credit card debt things can seem very dark indeed. But the situation doesn’t have to get the better of you if you’re willing to following these steps:

1. Put the cards away – Or better yet, cut them up. The first rule of problem solving is to stop doing things that make the problem worse. In the case of credit card debt that means either putting the cards away where you don’t have easy access to them or simply cutting them up and being done with it. The latter is the preferable method as it will eliminate all possibilities that you’ll give in to temptation and go on a counterproductive spending spree.

2. Take stock of your situation – Once you’ve removed temptation by stashing your cards somewhere inaccessible or cutting them up it’s time to take stock of where you stand. Gather all your credit card bills together and add up exactly how much you owe. Take note of the interest you’re paying on the various cards and which ones have the most odious rates. These will be the ones you’ll want to tackle first.

3. Reduce your expenses – In order to make real progress in paying down your debt you’ll need to free up as much money as possible to put toward repayment. Cut back on non-essentials, try to find a cheaper energy supplier, consolidate all your digital contracts into one money-saving package and eliminate those double mochaccino lattes.

4. Pay as much as you can afford – If you just make minimum payments it could take you decades to clear your credit card debt. You need to resolve to pay as much as you can afford in order to make real headway. You should also make a concerted effort to pay off the highest interest rate cards first as interest is the real killer when it comes to credit card debt. Once you have those cleared you’ll feel a noticeable sense of relief.

5. Consider a debt consolidation loan – In some cases a debt consolidation loan may be the best way forward. You’ll quickly satisfy all your credit card debt and be left with only a single monthly payment that’s typically smaller than the combined payments you were making before. The danger with the debt consolidation loan is that once your credit card balance reads “0” you may be tempted to start using it again, in which case you’ll have undermined the entire reason for taking the debt consolidation loan in the first place.

6. Stay resolute – It’s not uncommon for people to tackle the worst of their debt problem and then lose focus. They believe the dark days are behind them and go back to their hard charging ways. In short order they find themselves back where they started wondering what went wrong and convinced they’ll never be free of debt problems. This won’t happen if you see the repayment plan through to its conclusion and then work with credit counselling agencies to modify your behaviour going forward.

Credit card debt can be a vexing problem that undermines nearly every aspect of your life. But it’s not a genie that can’t be returned to the bottle. To rectify the situation you’ll need personal resolve and a logical, realistic plan of action. If you find that credit card debt has gotten the better of you take the above steps to put yourself back on the road to financial solvency.