Dig Out of Debt

Managing credit card debt is a touchy subject that can be overwhelming and stressful -- even painful. But as Duke University Federal Credit Union financial counselor Scottie Dowdy explained, it's nothing a little first aid can't fix.

Dowdy presented the seminar, "Plastic Surgery-Getting Out of Credit Card Debt," this fall as part of a financial series sponsored by the Duke Credit Union. Equipped with mini first aid kits for participants, she offered critical advice on how to manage credit.

An obvious warning sign of credit trouble is when spending outweighs income, Dowdy said. A budget has two elements: income and expenses. Keep it simple, she said, and don't get overwhelmed.

"Ask yourself, ‘Do I really need this new credit card? Am I the type of person to pay my balance off every month?' " Dowdy told participants. "You don't want to get caught in the trap of obtaining more credit. Your goal is to try to save money."

With the holiday season over, some consumers may be finding themselves in a financial crunch. "People may be in a situation where they're paying on credit from holidays past," Dowdy said.

Dowdy said the first step in digging out of credit card debt is to request a free credit report for credit history and credit score. After reviewing the report, Dowdy suggested creating a spreadsheet of creditors, monthly payments, balances and interest rates for a clear picture of what is owed.

"Cut up your credit cards, close out those accounts," Dowdy said.

To pay off debts, she said, homeowners may consider consolidating debts with a home equity loan or second mortgage for a tax advantage. If consolidation is not an option, consider participating in the Balance program through the Duke Credit Union. Balance, a financial education and counseling service separate from the Duke Credit Union, provides an array of assistance, including debt management plans.

Mary Forehand, a professional in her late 20s whose father is a Duke employee, attended the seminar with one main goal in mind: buying a home. As a former employee for a major department store, she has insight into credit as a consumer and retailer.

"Don't open up a new credit card; just have one main card," Forehand said. "If you don't have the money, don't charge it."