This is actually possible; imagine that feeling of your chest tightening when you open your credit card statement each month and the stress you feel about the amount of money you owe, and the amount of money you waste in interest each month. This feeling is shortening your life.
Aussies owe more than $34 billion on credit cards and overall our debt (per individual) is the highest it’s been in 25 years with it being on average 1.8 times our annual income. That’s scary, we are spending almost double what we make.
Below are some practical tips on reducing your debts from credit cards:
- Ideally cut it up, but I know many people who just wouldn’t be prepared to do that. Alternatively, you can freeze it (which means, you’d have to wait several hours to use it) so essentially gives you a ‘cooling off period’. At the very least don’t keep your credit cards in your wallet; leave them at home (someplace safe) or locked in the glove box of the car, to only use for planned purchases.
- Put a note (permanent market or sticker or label on the card “Do I need this?”. I did this myself for several months and honestly, it does work. Every time I went to use it, I asked myself that question, and yes, sometimes, I didn’t make the purchase. Yes, some of the shop assistants commented on the note, but always positive.
- Rather than trying to pay a large chunk off the card once a month, pay a smaller amount off each week, but equivalent to double what you would have paid monthly. The weekly amount is actionable, larger chunks become hard.
- People hate this word, so I call it “Profit Planning” and that works the same in personal or business. If you can’t make a budget work on paper, then you’ll never make it work in real life. Though, whatever you call it, it does require discipline. When you’re saving for something special, it’s amazing how few shoes you actually need to buy.
A business coach can help you.
- Look over your credit card bill and look at both the ongoing regular expenses as well as the one offs. For the regular items, can any of these be cut back? When was the last time you reviewed your phone account and shopped around for a better package? For the one off items, did you really need them? Even get an orange highlighter and highlight the items you didn’t need to buy (ie your 28th pair of shoes). Each month your objective is to reduce the orange highlights. This only works if you are truly honest with yourself.
Credit cards are fine if you are able to pay the entire amount back every month. Image you are paying $300 a month in interest (quite common) … compounded that’s over $4K a year in interest. That money instead would buy a nice holiday OR a parcel of blue chip shares. Make the choice today!
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