In our society, we have the mentality that you must always be moving up the social ladder or "keeping up with the Joneses." Whether this is through designer clothes, a larger house, or a fancy sports car, usually it means buying more stuff. While it's nice to aspire to greater things, the problem reveals itself when people start spending more money than they make in order to appear more affluent or to present a certain image.

The quest for status symbols has put many Americans into enormous credit card debt. In the buy now pay later world that we live in, we are constantly encouraged to borrow money to purchase items that are well beyond our means. Practically every store you go to has its own credit card. In fact, most stores make more money on their credit cards than they make on cash purchases (because of the huge interest rates), so employees urge you to sign up for their card. The companies influence you to apply for the card by offering percentages off your purchase, added incentives, or frequent coupons for card holders

In reality, these discounts and incentives are not worth it if you don't pay off your credit card balance every month. Whatever money you originally saved, you will probably pay every month in the form of interest that has accrued on your balance. Most of the time the added interest far outweighs the money saved. In fact, you may end up paying double or triple what the item originally cost. Many people who apply for store credit cards use them because they cannot afford their purchases in the first place, and when they use the credit card, they are living way beyond their means.

If you are ready to take action and reign in your credit card debt, here are five steps that can help you accomplish this feat:

1) The only way to get out of credit card debt is to live within your means. To do this, you need to stop spending with your credit cards. If you can't afford to pay for something in cash, you can't afford to own it. Put away all of your credit cards somewhere that is difficult for you to access, so that you will really have to work hard to use them. Consider freezing them in a block of ice or putting them in a safety deposit box on the opposite end of town.

2) Next, you should prioritize all of your expenses according to your current income. Allot a certain amount of money to each expense per month. The basic necessities of food and shelter should be budgeted first, and then clothes, transportation and communication. Your budget should only include expenses for the cost of your rent or mortgage, utilities, groceries, clothes (only what's necessary, no shopping sprees), your car that you use to get to work, and a telephone. Also, a small amount for miscellaneous expenses should be incorporated into your budget. Make sure that you are delegating a suitable amount each month for your expenses, which would preferably be the minimum amount needed. For example, your food expenses should not include eating at restaurants every day, and a telephone does not mean a cellular phone for every person in your family.

3) Determine the amount that will be left over each month to save or live pay off your credit card debt. Ideally, you would like to have enough money to pay more than the minimum payment for each card. Usually, when you are paying the minimum payment, you are barely covering the interest that has accrued on the account. This is why it seems like your balance is never decreasing. Also, always pay your credit cards on time because if you miss a payment, the companies can charge you excessive late fees. If you pay more than you are required to each month and avoid late fees, you will pay your credit card debt off much sooner.

4) When you find yourself with excess income, resist the temptation to spend it. Instead, put this money towards your credit card debt. The faster you pay your debt, the less money you will have spent in the long run. The more money you pay now, the more money you will have in the future. When you receive your tax return or any unexpected money, put it towards your debt. Instead of paying $100 for a $30 jacket you bought a year ago, you would rather have that extra $70 in the bank; wouldn't you?

5) Once you have determined your budget, track your expenses diligently. After getting into the habit of putting yourself in debt, it will be very hard to get into the habit of saving money. Every time you spend money, save the receipt and keep a log. This may be difficult on a busy schedule, so keep your receipts together during the day and when you have the time, calculate how much has been spent so far. You will find that small expenses add up and will learn how to sufficiently curb your spending habits. Persevere, and you will be glad that you made the decision to get yourself on the path of financial freedom.

U.S. Financial Management, Inc.
www.usfmgroup.com