We all have secrets we’d rather not trumpet to our friends. For some, it’s age; for others, it’s weight. And for many Americans, it’s money mistakes.
A recent poll by the National Foundation for Credit Counseling revealed that we’re more embarrassed by our credit card debt than our pounds or years. If you can relate, there is good news: We have advice for moving past the shame so you can deal with your debt effectively.
How embarrassing is credit card debt?
For many Americans, carrying a balance on plastic is a way of life. In April 2014, the average household credit card debt stood at $15,191, according to a NerdWallet analysis. This means if you routinely charge more than you can afford to pay off in a month, you’re in good company.
Despite the prevalence of overspending, it’s a habit most of us are deeply ashamed of. More than 2,100 people answered the NFCC’s March 2014 poll, which asked:
I'd be most embarrassed to admit my ...
C. Credit card debt
D. Bank balance
E. Credit Score
F. None of the above
Thirty-seven percent of respondents ranked credit card debt as their No. 1 source of embarrassment. Credit score came in a close second with 30 percent of people claiming it as their biggest cause of shame. Weight came in a distant third place at 12 percent.
The data shows that many of us struggle under two related burdens – credit card debt and the humiliation that comes with it.
To tough-love advocates, it might seem like a good thing people are embarrassed by their debt. This negative emotion will serve as a source of motivation to pay it off, right?
Actually, wrong. Shame is counterproductive when you’re dealing with debt because it can lead to actions that interfere with the payoff process.
“When a person is embarrassed about his or her credit card debt, instead of using that emotion as the incentive to do something about their financial situation, just the reverse can happen,” NFCC spokeswoman Gail Cunningham wrote in an email. “Facing the financial facts can be painful. Thus, people often choose to bury their head in the financial sand and ignore the problem – often until it becomes unmanageable.”
The first step on the path to debt freedom is setting your shame aside. This will put you in a position to take control of the situation. If you’re struggling to let go of your embarrassment, remember this:
- As the average household credit card debt figure indicates, a lot of people are carrying debt. You are not alone.
- Being in credit card debt isn’t a reflection on your worth or moral character.
- There’s nothing you can do about the charges you racked up in the past. What matters is planning for a debt-free future.
Design a payoff plan
After you put your shame in its proper place, it’s time to set in motion a debt payoff plan. We recommend following these six steps:
1. Quit your cards. The first thing you should do is stop charging. Put your card aside, and switch to cash or debit now.
2. Get organized. Get your debts in order. Make a detailed list of all the cards you’re carrying debt on. Be sure to include each card’s balance, its APR and its payment due date.
3. Make a budget. Now that you know what you owe, it’s time to make a budget. This will help you keep your finances in order and plan to pay off a big chunk of debt every month. It’s also an opportunity to look for ways to trim expenses so that you can devote more money to cutting your debt.
4. Consider consolidating. Before deciding which card to pay off first, you should consider consolidating your debt onto a 0 percent balance transfer card. This can save you big bucks in interest, but it’s also tricky. There are a lot of factors to consider, including balance transfer fees.
5. Attack the card with the highest APR first. As an alternative to consolidating, you should make it a goal to pay off the card with the highest APR first. Devote all your extra funds to squelching this balance while still making minimum payments on your other cards. Doing so will save you the most money in interest in the long run.
6. Keep it rolling. Once you’ve paid off your highest APR card, attack the card with the second-highest APR next. Then tackle the others using APR as your guide to prioritizing. Keep it rolling until all your cards are paid off.
The bottom line: Credit card debt is no laughing matter, but feeling ashamed is no way to conquer it. Put your humiliation aside, and use the tips above to get debt-free fast.
Konsko is a
writer for NerdWallet,
where she covers credit, credit cards and other personal finance topics.