The economic slowdown has forced many Americans into uncomfortable conversations with their credit card issuers about delinquent accounts. According to recent reports from TMZ, RadarOnline, and the New York Daily News, Lindsey Lohan has become one of them. One source told media outlets that the hard-partying actress has racked up over $600,000 in credit card debt, causing at least one credit card company to decline further transactions.
Although most consumers don't face credit card bills as daunting as Lohan's, personal finance advisors recommend a few basic steps to get out of debt:
- Write down every expense. Credit cards make impulse spending easy, especially for movie stars used to Cristal and caviar. Cardholders who keep spending journals find it harder to justify splurges.
- Match income to spending. Lohan's personal appearance fee dropped from $10,000 to $5,000 as her movies started going "straight to DVD." Maintaining an A-List lifestyle can lead to overwhelming debt for any consumer.
- Review refinancing options. Though many lenders have cut credit limits, most issuers are still open to negotiating interest rates on repayment plans.
Tabloids and gossip columnists may love to poke fun at Hollywood's fallen stars, but credit card delinquency rates show that financial hardship has become reality for one out of ten Americans. Consumers who build strong plans can survive a loss of income or a sudden surge in finance charges, according to financial advisors.
About the Author
Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.