Billionaire Warren Buffett recently stated on CNBC that the U.S. economy has ‘fallen off a cliff.” These are scary words coming from someone who has generally been an optimistic man when it comes to investing and economics. As he states that he has never seen people more afraid about the future, Warren Buffet still holds on to the notion that change can and will happen. Just as he say holds true his feeling that sound investing requires patients, so does the healing of the U.S. and world economy.

What can we learn from Warren Buffet? Millions of Americans are finding themselves drowning in debt. This is not news. The vast majority of people we know do not have the bank account of Warren Buffet to fall back on when jobs are lost and times get tough. What we do have, however, is the opportunity to live smarter and spend smarter.

When it comes to debt, one of the most frustrating debt cycles is the credit card. As interest rates on the credit cards go up, the minimum payments due each month increase. For someone watching their pennies, making only the minimum monthly payment on a credit card may seem like a good idea, but unfortunately it barely makes a dent in the growing credit card debt. In fact, in any minimum monthly payment most of that money is actually going to pay the interest on the credit card! This is one time scenario where patience is not necessarily the best thing. What you do want to do is reduce your debt quickly.

If you have more than one credit card, consider getting a consolidation loan. This is where you approach a bank for a single loan that will cover all of your outstanding debts. The debts are tallied up and paid off, and you then only repay the one loan to your bank, often at a lower interest rate than ever possible with any credit card. This can easily save you thousands of dollars and save your credit rating. Visit your local bank office to discuss terms and conditions of debt consolidation and see what they can do for you.

As Warren Buffett once said “I donâ€t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.” Donâ€t fight to climb the growing mountain of debt in your wallet. Simplify your debt into a manageable mole hill and step over it.

Written by Kate Leighton
kmleighton at shaw.ca