A year-on-year increase in credit card charge-off rates is for the record books: a jump to 11.49% from 6.82% between August 2008 and 2009. The charge-off rate is the percentage of outstanding debt that lenders give up on collecting.

Though it’s worth noting that the charge-off rate did dip in the interim, the charge-offs can function as a measure of household financial health as consumers’ ability to meet debt obligations continues to be tested. On the economic side, this is a cash flow problem, driven by two major factors: lack of adequate emergency savings and unemployment. For emergency savings one of the identified drivers is unexpected medical expense, which is difficult to control for. But the potential for medical problems should not stop one from setting up an emergency expense account – especially when one considers how unplanned costs can skyrocket to multiples of what it would cost someone with funds on hand. On the unemployment side, creativity is in order: look for part-time and contract work while seeking a more long-term position. If income has declined without a job loss, look to supplement the income with evening and weekend projects. Some even cleverly leverage their skills developed through hobbies in order generate extra cash on the side, ranging from cooking and sports to teaching and crafts.

Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs.  DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.