Credit cards have become a common part of our daily lives. While they offer convenience, they can also lead to significant debt. Credit card debt can accumulate quickly, and if not managed effectively, it can have a negative impact on your financial health. In this episode, we will discuss how to manage credit card debt effectively.

If you're looking for a trusted source to help you stay on top of the ever-changing financial world of investing, retirement and estate planning, and asset protection, whether it's for you and your family or your small business, you're in the right place. This is the 1715 Treasure Coast Financial Wellness Podcast, where we'll keep you up to speed with the latest market news and conditions every week. Now here's your host, Thomas Davies. Well, hello and welcome to another edition of the 1715 Treasure Coast Financial Wellness Podcast.

My name is Thomas Davies, I'm a wealth advisor here in Stewart, Florida, and welcome to the show. Well, what a week it's been, what a couple of weeks it's been. We've had interest rate raises, we've had Donald Trump indicted, that's exciting. If you live in New York, in the Manhattan area, what a mess that's been, and before you know it, tax deadline filing is here for April 18th, and so we're going to talk about a few things today on the show, and I've got a list of things that I think we're going to talk about here over the next couple of weeks.

These are going to be issues that are probably related to those of you that are between 35 and 55, and these are some of the most common things that we're going to talk about over the next couple of weeks. First of all, it's going to be about paying down debt, and that's what today's show is going to be about, specifically credit card debt. That seems to be the number one topic out there, and so we're going to talk about how to pay down debt, how to get those credit cards paid off, and if you're struggling with them, there's some options there for you too. Then we're going to talk about falling for financial scams.

That's going to be next week's show. We're going to talk about how not to fall for them. Boy, there's a ton of them out there, and there's a lot of people out there that are looking to get into your pockets that are bad people. The next, we're going to talk about managing an unexpected health issue, and how do you do that?

Believe it or not, it is the number one thing that bankrupts most people in their lifetime, is an unexpected health issue, not preparing for that, not having any type of long-term care life insurance, long-term care and life insurance, to separate those two. We're going to talk about that in the coming weeks. We're also going to talk about investments, which is my specialty and my expertise. A lot of people, they don't understand them, so we're going to try to go from about a 10,000 foot view on investments, and try to just get a general understanding of investments, how they work, why you should invest, maybe what you should invest in, what you shouldn't invest in, based on your risk tolerances, your age, and income.

Those are a few things that we're going to talk about. Lastly, keeping up with your payments. That's another issue that kind of goes along with budgeting. We're going to have an episode on budgeting and how to manage your money, your cash flow, and your incomes.

It's really important to have those income streams coming in, and are you in a surplus or a deficit? Keeping up with your bills and everything that's going on, that seems to be a common issue, along with covering housing costs. I just heard the other day, I'm here in South Florida, and down in Broward County, the median home price is about $560,000. I can tell you that that is out of the range for most young people starting out.

That's a heck of a mortgage payment, and to have a median home at that price, you're probably looking at renting, which isn't always ideal, but sometimes that is what it comes down to. If you're paying out $1,500, $2,500 a month in rent, how are you going to save for that house one day to purchase a house? We'll talk about those things also in the coming weeks. With that, we're going to get started.

I mentioned taxes are coming. The tax deadline is approaching. If you haven't filed your taxes, I'm here to share three things that you should do to set yourself up for a win. One is to make an IRA contribution for 2022 by April 18th.

You can contribute up to $6,000 into a Roth or traditional IRA. If you are 50 years or older, you can put away an additional $1,000. If you are handling your taxes yourself, then you may want to put that into your program that you're using. If you have a CPA or accountant, just run that by them and say, hey, does it make sense to open an IRA, or if you have an IRA ready, to make that additional distribution into it?

Two, submit your first quarter 2023 estimated tax payment if you are required to, but don't lump it together with your 2022 taxes. You owe on your 2022 1040. The IRS may not post it correctly, and you'll spend time straightening out later. Make sure that you do them separately.

Third, review your 2021 tax return. This can help refresh your memory on the forms you'll need and the tax deductions or credits you may have. Those are three simple things that you want to look at in your tax returns. Once again, contact your CPA or accountant regarding your IRAs.

If you can make those deductions against your income, it's just an easy win right there. Then also, two, look what you did in 2021. Just review it. Maybe you changed CPAs and accountants, and make sure that they review your 2021 taxes going forward.

With that, we're going to get started, and we're going to talk about understanding credit card debt, things that you can do to minimize it, how to get it paid off, and just really understanding what that is. Credit card debt is unsecured debt. What does that mean? Unsecured, it means that there is no financial backing behind it.

It means that you have taken out a loan with no security backing, like maybe your house or your car is collateral. It is unsecured, so that is owed to a credit card company, and when you use that credit card to make a purchase, you are essentially borrowing money from the credit card company. If you do not pay your balance in the full each month, you will accrue interest on that outstanding balance, and this interest can add up quickly and lead to a significant amount of debt over time. If you have credit card debt right now, those interest rates are through the roof, anywhere from 25% to 30%, and really, you've just got to get them paid off, and we're going to talk about how you can do that.

The first thing you need to do is create a budget. That is first and foremost, and find out, do you have more money coming in than what's going out? Do you have a surplus or a deficit? You have to understand your finances in order to get out of this credit card debt, and hopefully, you have a surplus, and you have more money coming in that's going out, and you're going to be able to pay off that credit card.

That is crucial to understanding and managing your credit card debt. A budget helps you understand your income and expenses, allowing you to allocate your money effectively when creating a budget. Be sure to include your credit card payments. Don't forget that you have to pay those credit card payments, and make sure that is inside your budget.

You're going to want to pay more than the minimum payment, because that is just the bare minimum, and you'll end up paying it forever, and it can lead to significant amount of debt, because you're getting charged interest on that every single month. You want to make sure that you pay more than that minimum payment. If you are at minimum payments, and that is all you can pay, then my suggestion is look to see if you can get some type of promotional rate to transfer those higher interest credit cards onto a lower interest rate credit card. Yes, it will hit your credit score, but this is for a good reason to get rid of some of those higher interest rates.

A lot of people can't do that, and they say, well, I maxed out on my credit cards, what do I do? The first thing you got to do is try to consolidate from the highest interest rate credit cards you have, and try to transfer those balances onto those lower interest rates credit cards that you may have. By doing that, you're going to lower your interest rate. There is a small fee usually generally with that, so you have to want to check on the credit cards to see if there's a fee to doing that, but you want to try to consolidate everything down to one payment if you can.

If you have three credit cards, four credit cards, try to get them consolidated down to one or two credit cards. This way, when you're making payments on those credit cards, if you're only paying $50 on this one and $100 on this one, well now, you're going to be paying $150 on one card, and that will significantly make a difference over time versus only paying those smaller amounts. You want to consolidate those credit cards. Take advantage of the promotions.

If your credit's still good and you're making all those payments, but you just rack up those credit cards, take the promotion. Get that 0% or low interest rate. It makes sense to do that. The one thing that I'll mention, and you want to check with a bankruptcy attorney on this if you're in that bad of debt, but one of the things I never recommend is taking a home equity line of credit or a home equity loan to pay credit card debt because now what you've done is you have taken that debt that was unsecured and now made it a secured debt, which is your home.

If God forbid something was to happen, you couldn't work, just whatever the myriad of circumstances may be, now you're in forfeiture of losing your home over unsecured debt. So keep unsecured debt unsecured. Don't make it a secured debt. Once again, this is my personal recommendation for most people is just don't use your home equity to pay off your credit cards.

A lot of times, and especially right now with home values that have gone through the roof, people will want to do that. Check with your advisor, whomever you speak with or work with. But if you're coming to me, more than likely I'm going to tell you not to do that. So now for those of you that are in real serious trouble, I would certainly consult a bankruptcy attorney.

These are for people that generally have more than $25,000, $30,000 in credit card debt. We used to work with a bankruptcy attorney, and he said if you had more than $25,000 to $30,000 in credit card debt that you would never pay that off. So that may be the case with a 30% interest rate, which is just unbelievable high rates. They're not 5%, 6%, 7%.

So if you have those real high debt credit cards, you may want to consult with a bankruptcy attorney just to find out how to navigate those waters. Maybe you can call the credit card company yourself and try to negotiate a better rate. Maybe you're in good standing and that doesn't apply to you, but you carry a balance. You say, hey look, I pay my credit card on time every month.

My rates have gone up here. Look, you want to keep me as a customer? You need to lower my interest rate. You don't know unless you ask.

There's an old saying that the dumbest question is one that's never asked. So try to negotiate payments with the creditors yourself. Just give them a call. Say, hey, I'd like to talk to someone that will be able to help my credit card rates.

Or in this case, it may be loss prevention, lost account prevention, because you'll threaten to move your account. Say, well, why don't I just move it to XYZ Bank and you're going to lose my business. So once again, you can call the creditors. Maybe they're willing to work with you.

Maybe they're not. But that's a way that you can transfer some of those balances. Work with creditors. For those of you that are really struggling, most bankruptcy attorneys will give you a free consultation to see.

There are some credit counseling companies out there. I will tell you, be very hesitant and ask a lot of questions. Because a lot of these credit card consolidation companies, all they do is not pay your bills for you. You can do that on your own.

And then what happens is generally the credit card companies, sometimes they have agreements with these other companies and once you're basically 90 days past due, they're going to say, well, would you pay 40% of the balances? Yeah, that's how it works. If you become 90 days, 3 months, 6 months, the credit cards still want their money and they'll take something better than nothing. So they will start negotiating with you, but you have to be past due.

Once again, I'm not speaking as an attorney, but these are some of the things that I've talked about in past episodes with credit card debt. But once again, it's very important to understand where you are legally once you stop paying those bills. So that's why I reference, talk to a bankruptcy attorney and an option for you may just to be not pay those bills and let your credit score sink for that short amount of period of time. It may be a couple of years versus filing a bankruptcy that stays on your record forever.

So those are some things that you want to look at. And once again, these are for people who are struggling, not being able to pay their bills or just barely making those minimum payments. Once again, it's unsecured debt and it's important to understand what that is versus a secured debt. So for those of you that are just wondering how to get out of it, the best thing once again is to create a budget, find out where you are, make the most payments that you can on those credit cards.

If you find yourself in the credit cards piling up, my suggestion to you is cut the cards, stop spending on them, you know, ask yourself, is it a need or is it a want? This is a willpower decision. So you know, you need to do a little, have some willpower in there. You know, we all watch things on TV and we say, well, I want that, boy, will they have that?

And I have to have that. Maybe you don't have to have it. Is it a need or is it a want? And those are just some things that you need to look at.

It's a difficult decision, you know, things that you can cut out of your life. So as you're going along in your budget and you're budgeting those items, is it a need or is it a want? Maybe you belong to a car wash club and you get your car washed on a monthly basis. Well, guess what?

It's a lot cheaper to do it yourself and you can save yourself a few bucks. Now this doesn't mean you have to do it forever, you know, but you may want to get a bucket of soap and water and go out and wash your own car versus paying someone to do it. Another thing you might be able to look at is your cable bill, your cell phone bill. Those are kind of some easy things.

And also your car payment. You know, maybe you drive a car that, you know, you probably shouldn't be driving. If it's, you know, $700 or $1,000 car payment, well, you may need to use it to drive a used car for a while. And you know, you can reduce some expense there.

And once again, it's not going to be permanent, but this will help you get out of this debt that you've accumulated over time. Student debt is a whole other subject for a whole other show. And we will be talking about student debt and student loans. This is really more about credit card debt, how to get out of it, and things that you can do.

And I'll say it again, do a budget, write it down. You know, you have to really understand your finances to get out of this credit card debt and how to make it go away. And I've said in the past, it is the absolute worst debt to have. Once you get those things paid off, another recommendation is get rid of those credit cards.

Once they're paid off, close the accounts. That way there's no temptation to use them. You know, you have to keep a credit card. Just keep one and that's it, you know, for whatever it is.

There's an old saying that if you don't have the cash to buy it right now, you probably shouldn't be buying it. So you know, hopefully these are a couple things that will help you. There's some great cash management systems out there. I will talk about Dave Ramsey.

Dave Ramsey has probably got one of the best cash management systems out there with the envelopes. Debt generally don't like recommending competition, but I will tell you that Dave Ramsey's budgeting is probably one of the best out there. If you're not familiar with it, I would suggest Googling it. It's Dave Ramsey and like I said, his budgeting is probably the best in the business.

So with that, I'll kind of wrap this up a little bit. Credit card debt can be a significant burden, but it is not insurmountable, meaning you can get out of it by creating a budget, paying more than those minimum payments, maybe negotiating with the creditors. Either you can do it or have someone do it on your behalf. Consider those balance transfers, getting things from four to maybe one card or two cards, seeking professional help if you're really in the jam and you're really jammed up with all those credit cards.

And just remember, managing your debt requires a proactive approach. You just can't put your head in the sand and say, well, it's all going to go away. And it's stressful and it's not fun. But once again, it's not insurmountable and you can get through it.

So take action today. Get out there and do your budgeting to ensure your financial health in the future. So hopefully you found this information useful. If you have questions, give me a call.

I am not a debt consolidation person. I work in the investment world, but I do know that there are people out there listening to this that are not in an investment ready right now. Financial planning 101 is create a budget. I've been saying it, it's probably about the 10th time I've said it, is create a budget if you have a surplus or a deficit.

And if you're past that, the next part of that is have an emergency fund. This is a little financial planning 101. So you make sure you get most of your debt paid off. You can have some debt and not all debt's bad.

Credit card debt is bad. That's the one you want to get rid of. But maybe you have a mortgage. That's not necessarily always a bad debt.

So you have a surplus built up. And then you want to make sure that you have all your insurances, whether that be life insurance, long-term care, you know, just have all your insurances and your bases covered. And then once you have those three primary things taken care of, then you can start looking at investments with your surplus. And then you say, okay, well, how much risk can I take in those investments?

Because remember, you have a nice emergency fund set up somewhere at a bank or, you know, in an account somewhere just for emergencies. And that's what it is. And I'm going to tell you, most people say three months. I like six months built up.

So if you take your paycheck on a monthly basis, just multiply that by six and put that money away. Keep it in cash. Put or put it today in a money market account that's going to pay you four and a half percent. So have that money ready and on hand.

And once you do that, then we can start talking about investments and how to get your money invested. And if you're in that point in your life, give me a call. You know, my phone number is in the podcast here at 772-210-4031 or you can go to my website www.tdwealth.net. Don't forget to like and subscribe, shoot me some comments, new ideas, things that maybe you want to hear about.

Once again, I hope this has been helpful to you. Thank you for listening to the 1715 Treasure Coast Financial Wellness Podcast. My name is Thomas Davies. I am located here in Stewart, Florida.

Thank you very much and I hope you guys have a great, great holiday weekend and I am out. Thank you for listening to the 1715 Treasure Coast Financial Wellness Podcast. If you enjoyed this episode, share it with a friend who might like it. And please rate, comment, and subscribe.

If you'd like to contact us, find more information, or if you'd like to keep up with us on Facebook, Instagram, Twitter, or LinkedIn, check out our website at www.tdwealth.net. Have a great day and we'll talk to you next week.