Even a small amount owing on a credit card can rapidly balloon into a sizeable debt. As the outstanding balance grows so does the monthly interest charge and the situation can get out of control very easily. As long as definite action is taken you can regain control of your credit card debt. If you push a little bit further you can improve your life and finances by ditching debt altogether.
A credit card should not be used as a method of paying for things that you could not otherwise afford. If this is what you are doing then either your personal spending is too high or your lifestyle doesn’t fit within your means. It could even be a combination.
Stop wasting money.
A good and relatively painless way to get ahead with your finances is to cut out wasteful spending. Wasting money is a damaging habit and it’s nothing more than a habit. Boredom, loneliness or even something positive like personal satisfaction can all be triggers which prompt you to buy something.
Every time you are about to make a purchase ask yourself why you want to open your wallet. If the answer is that you are responding to an emotional state then you’re about to waste money. Put your cash away and think of a better way to react to your emotions. This can improve both life and finances in one.
Set a budget for unnecessary spending.
There are a lot of things in life which, whilst enjoyable, are not essential. In order to keep your life in balance it is important to make sure that you are enjoying a few of the things you really want rather than breaking yourself to buy everything that enters your head. If you go too far with unnecessary spending you only end up at the other extreme end of the scale where you can’t afford anything and have to make do without.
Set yourself a budget for non essential purchases such as coffees, nights out, clothes and entertainment. If you want to do something expensive then cut back on other purchases to save up. Compare how much you want different purchases so that what you keep in budget is more important to you than what you cut out.
Lifestyle vs. means.
If your lifestyle is at a level that frequently stretches you financially then it needs cutting down to the size of your available funds.
Examine all the regular expenses in your life such as rent, bills, grocery shopping and transport costs. Getting a smaller living space will reduce both rent and utility bills, selling a car and choosing to walk or use public transport will save money.
Improving your lifestyle needn’t be off the cards. It’s a common goal for many people. However this improvement has to be in line with what you can afford or you only damage your long term wealth potential. The more you save and avoid debt the sooner you can improve your lifestyle.
Get financially organised.
Create a budget for the money you have coming in and decide what it’s going to be used for each month. How much is going to debt repayment and how much will go to savings or into your pocket for spending?
Make sure that spending money is the result of a decision making process and not just arbitrary. If you have a lot of debt on a credit card then consider taking out a loan at a lower rate than you pay on the card and transferring your debt over. Be calm and clear headed and examine all your options rather than giving in to panic or stress. Actions and decisions got you into debt and it is actions and decisions which will get you out of it again.
If you have debt there is an imbalance in your earning to spending ratio. Readjust the balance and then work to pay the money back. Regularly re examine the balance of your life and catch any burgeoning problems before they become crises.