Credit card debt is a leading cause of personal and financial stress. That little plastic card is the cause of countless cases of divorce, depression and even suicides. It is ruining the fiduciary lives of millions of Americans who just can’t say no. It’s difficult after all. Imagine having a way to buy practically whatever you want without having a single dollar in your pocket.
It’s all fun and games until the bill comes in the following month. Actually, the fun stops when your credit score dips and your debt is in collections. Or perhaps the fun stops when you’re taken to court and your wages are garnished. Nevertheless, there are ways to avoid the inevitable victory of the credit card companies over you.
Here are three ways you can get ahead of the game.
Give up one small luxury
Each of us has those little pleasantries that help us through our day and make us feel better. Maybe it is buying coffee to go at Starbucks for 5 dollars a pop. Perhaps it’s getting take out for the family every week from a nice restaurant. Or maybe it’s a relaxing monthly massage at the spa. Giving up just one of these unnecessary luxuries can equal hundreds of dollars in payments to your credit cards.
Let’s say you get Starbucks 5 days a week on your way to work, a restaurant once per week and a massage every month. That’s $230 per month you’re spending on just those three luxuries. Now imagine if you were to save that money and put it away for your credit card payment, that would be at $2,760 in one year. That would be enough to erase or at least put a major dent in your credit card debt.
Double the minimum payment
Paying the minimum payment each month is merely a stop gap. Credit cards love it when you do this because you have really paid nothing on the principal and they can continue to charge interest at your expense. Since most of the minimum payment is interest, double it so that a good chunk pays down the card.
If you only pay the minimums on your credit cards you may never be done paying off the debt. So if you get any extra money via a bonus or a raise, put every last dime into paying down your debt. Pay your credit card off as soon as you get money, rather than waiting for the bill. Interest accrues every single day, after all.
Ignore Cash Back Incentives
Credit card companies have full time staff who calculate the odds that customers will actually get ahead with these bonuses. Namely, that the banks will pay you money that you do not already owe. The odds are not in your favor.
Think about it, why would the credit card companies offer you something that makes them lose money? These cash back offers are an insidious ruse to get people to use their card more than they can afford.