Keeping credit card debt in check gives you more financial strength, which you can put towards buying your first home.
The practical jokers in your life might tie your shoelaces together when you're not looking, or slip a rubber spider in your drink. If you're the good-natured type, you don't mind letting friends get the best of you now and again. Just make sure that you're more guarded when it comes to your credit accounts. Casual, unchecked credit card use can sabotage you at the worst times.
Perhaps you received that first credit account when you landed your first job, or when you were in college. You weren't making much money then, but still had expenses to cover. You figured that eventually you'd make more money and catch up with your debt.
Fast-forward a few years. You're making more now...but you're spending more, too. You still have that debt balance, and maybe it's gotten larger. Making more money doesn't get you out of debt unless you also increase the difference between how much you earn, and how much you spend. If you're still planning to catch up once you get another pay raise, here's some advice: The time to take action is now.
Becoming another number
In 2006, the Consumer Credit Counseling Service of Santa Clara and Ventura County, California (CCCS) helped more than 7,000 households create budgets and debt pay-off plans. Part of the agency's role is to help households identify the causes for their financial troubles; 25 percent of the time, the root cause was overspending.
Preparing for home ownership
Homeownership is a key stage in the lifelong journey towards financial maturity and independence. An early and crucial step is deciding how much home you can afford. To do that, you need a solid grasp of your income and expenses. Credit card debt is problematic in this regard, because those revolving accounts can blur true spending habits. As long as you have available credit, you can charge more than you pay down each month. This means that your outgoing cash flow doesn't reflect your actual spending. Sadly, as these credit balances grow, the amount of mortgage debt you can afford shrinks.
How do you keep the credit balances under control, so that you can buy that house when you're ready? One word: Budget. Write down your income, and then set aside amounts for bills, necessities, debt pay-down, savings, and discretionary spending, in that order. Then, stick to your numbers and avoid further charging. If you have trouble with compulsive spending, remove all the cards from your wallet and carry only budgeted cash with you.
When your shoelaces are tied together, there's a good chance that you'll fall down. When your credit card debt is unchecked for too long, there's a good chance that you could cripple your credit record and put off that home purchase indefinitely. Start tying up the loose ends of your debt now, and you'll be able to walk strongly and carry a big mortgage later.