Why is it so hard to manage credit? That answer is easy!

I admit it. I, small business owner/writer/computer programmer, have been through bankruptcy. I survived, though! I did not take the approach of ditching the debt and the problems because that is also ditching any responsibility. I paid approximately $1500 per month for quite a few years until it was finally discharged.

Although it is still on my credit report for another year or more, I am now able to have a credit card. That credit card has just under a $1,000 balance and a minimum payment of $27. The question asked in the title of this post, I am sure, is a quite common question. As stated, the answer is really easy to decipher – be sure to pay only the minimum balance.

Even without interest or using it again, it would take over 30 payments to pay that balance off at $27 per month. Notice that I said that would be “without interest.” We know that has to be a factor, also, unless the balance is paid in full. You may be thinking that “I can’t pay all of my cards in full every month.” I am sure that is an accurate statement, and I would agree totally. Just keep in mind that the more that you pay on it, the less you will pay in interest, and it will be paid off much sooner.

As we answer the credit management question, we have to analyze the statement itself. Does it contain only stuff that you needed over the past month? Did you purchase a large item or two that were not absolutely necessary? Large items, or wants, are fine as long as they are not a regular occurrence. Buy a large item and make large monthly payments until the balance is back to zero. Now you are cleared to bay another large item that may be considered solely a “want.” Even better, if it is truly not a necessity, plan for the large purchase so that you can pay the entire balance when it is due.

How can you allocate more money to your credit card payments? Curb your wants and lessen your needs. Do you really need that big screen television right now? You may need a washing machine now, but do your needs require a top-of-the-line, most expensive model? You may drink champagne often, but it doesn’t have to be the top-shelf stuff. reallocating funds and living on a tighter budget becomes much easier once you have done it for a while. As a matter of fact, after about 90 days (only three monthly payments), you should be very much into the habit of living on your new budget. Just as it was for my bankruptcy, you start out saying “I think I can” which turns into “I thought I could” and then finally, as you are nearing the goal, you begin seeing the reality with the thought “I will do this!”

2018 Update: When the bankruptcy was discharged, I saw an immediate increase of almost 40 in the TransUnion and Equifax credit scores. Yes, there is light at the end of the bankruptcy tunnel. The brightness of that light depends on how committed you are to managing the bankruptcy payments and effect.