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Control Credit Card Debt

It's a common sight to see people pulling out plastic to pay for everything from groceries to gasoline to movie rentals. All it takes is a quick swipe of the card through a little electronic box and a signature. However, the convenience of using credit cards can lead to a false feeling of financial security-at least until the bills arrive. Robert McKinley of Ram Research says for the first time ever, bank credit card purchases last year totaled more than a trillion dollars. Other statistics are equally staggering -- for instance, the average family has a credit card balance of $7,000, and pays out $1,000 a year on interest alone.

If you find yourself overwhelmed with credit card debt, don't despair. With discipline and a change in spending patterns, you can get out of debt and concentrate your efforts on saving and investing.

"Getting out of debt is easy, but it won't happen overnight," says Steve Rhode, President of Debt Counselors of America. "You can't borrow your way out of debt. It takes discipline and time, and requires making more than the minimum payment every month."

Here's an important rule to remember: resist the temptation to dig into a 401(k) or other investment fund to pay off your debt. "When people get into debt, they often liquidate investments to pay it off," says Rhode. "The problem is the cost of lost opportunity. They could be losing 15 to 20 percent return on that money. It's one of the costlier ways of paying off debt."