Many people think that reducing credit card debt is all it takes to be in a position of financial stability and it used to be that was pretty much the truth. If you had no debt, you could rely on your credit card for the emergency expenses that came along. But credit cards are not available the way they used to be. So, now it is important to reevaluate the way we prepare for financial emergencies. The past advice for dealing for unplanned expenses has changed.
Getting a new credit card right now is not like it used to be. Now you have to have a credit score that is worthy of credit. In the past, it was easy to get a credit card whether you had the credit score for it or not. And this has many people in debt that is not going to be easy to get out of. Right now, it is not easy to get a credit card or a loan and if your credit score is below 700, it may be next to impossible.
Having credit is not what it used to be. Both mortgage lenders and credit card companies have almost stopped lending to anyone that does not have an above average credit score. What is even worse is many consumer lenders have closed accounts, reduced credit limits and raised interest rates. With all this going on, there is no way of knowing for sure whether you will have an available balance or a credit card account and all when the time comes that you may need to used it.
If your credit card accounts are current, besides paying off your debt building an emergency fund should be your next action item for becoming financially stable. Making minimum payments will keep your credit card accounts satisfied until you get enough money saved in a liquid account to be able to pay for expenses that can derail you if you are not prepared. Having a certain amount of money in an account for emergencies will keep you from having to use your credit cards. After all, you are trying to pay them off and not charge on them.
Being financially secure requires you to do a number of things. At the top of the list should be paying off your credit card debt, but a very close second should be having an emergency fund that has at least $1,000 in it. This is not a lot of many, but there many unexpected expenses that can be covered by this amount of money. This will get you started. Once you have save $1,000, the next step will be to aggressively begin paying off your consumer debt. After this is complete, then it will be time to increase your emergency fund. Following this process will get you on your way to being financially stable.