What is the best way for Shelby and Mark to become more aware of the effect of c

Question

What is the best way for Shelby and Mark to become more aware of the effect of credit card debt on their current and long-term financial situation?

Life Situation
Single
Age 21
No dependents
Graduate and engaged

Financial Data
Monthly Income $1,750
Living Expenses $1,210
Personal property $7,300
Savings $5,000
Student loan $4,200
Credit card debt $4,600

Shelby has been out of college for about a year and has continued to work at the pet store full time. She recently got engaged to
Mark Lawrence. After the last year of saving, she now has an adequate emergency fund. However, in the last year, she and Mark
have used credit cards to make many of their purchases. They used cards (they each have several) when they ran out of money near
the end of each month. They also used credit to fund a vacation to the beach. Shelby justified the trip and many of her purchases
because both of the cards she uses have rewards programs. Both Shelby and Mark almost always make their payments on time but
have been unable to pay off more than the minimum balance every month, leaving them with credit card debt.
Shelby and Mark would like to get married soon and possibly even buy a condo, but are not sure how to finance these things
while also starting Shelby’s pet salon.

What is the best way for Shelby and Mark to become more aware of the effect of credit card debt on their current and long-term financial situation?

Explanation / Answer

Obviously, using of credit card bring more disadvantage than advantage toShelby. Her credit card debt has increase to $4600 already. So she needs tomake a plan to reduce the debt. There are a few steps to reduce credit card debt.

First step Shelby needs to know where she stands now. In another words, she should clearly know what exactly amount owed to bank.

Second step, she can negotiate with bank directly for a lower interest rate. And this is the quickest way to save big on her credit card bills.

Third steps, Shelby should calculate the debt payments to income ration. The maximum spend on credit card should not bemore than 20 percent of her net income.

Fourth step, she should track her monthly cost and create budget.

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