How to Avoid Credit Card Debt
Get a debit card instead of a credit card., Think carefully before making a purchase with your credit card., Create a rainy-day fund.Set aside some of your monthly income for financial emergencies., Identify signs you might be a spendthrift., Find...
Step-by-Step Guide
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Step 1: Get a debit card instead of a credit card.
If you are tired of the inconvenience of paying cash, but don’t want to rack up credit card debt, using a debit card is the perfect third way.
A debit card works just like a credit card: with an easy swipe of the card, you can make purchases almost anywhere.
However, while a credit card basically operates as a loan-making tool, a debit card lets you tap directly into your bank account.
This way, you won’t end up having to pay the credit card company back when making a purchase.
Be careful.
Practice responsible buying with your debit card just as you would with your credit cards. -
Step 2: Think carefully before making a purchase with your credit card.
Before buying anything, always ask yourself: “Do I need this?” If you think the purchase is worthy, follow up with the question “Can I pay cash? Or do I need to charge this to my credit card?” If you do choose to purchase luxury items with your credit card, give yourself a waiting period before deciding to do so.
When you see something in a store or online that you want to purchase, freeze your credit card in a plastic pitcher of water.
Place the pitcher in the fridge after it is completely frozen.
If you still believe that making the purchase would be a wise investment after the card has been unfrozen, and you’ve consulted your partner about it, make the purchase.
Do not use your credit card on things like cars and clothes.
Luxury items like home gym equipment and new TVs, similarly, should be purchased with cash.
Finally, avoid getting disposable goods like groceries and toiletries on credit.If you carry a balance, you’ll be paying interest on things which potentially don’t even exist anymore.
This is not wise use of your money.
Good investments with a credit card include educational or business expenses.
Emergencies, especially medical emergencies, might also require use of credit cards.
Try living without your credit card for thirty days.
When you use only cash, you are much more likely to notice where your money is going and how often you’re running out.Perhaps you withdraw $200 thinking you’re covered for the week, but end up needing $300.
Thinking about the difference between the expectations you have of your spending and the actual way you spend your money can shock you into being more thoughtful with your finances, and ultimately change the way you spend when you go back to using credit cards at the end of thirty days. , If you lose your job or need to invest in something expensive like surgery, you’ll be glad you have that money.
Another equally important use you might be able to put the money to is credit card debt.
If you sense your debt is beginning to spiral out of control (accruing a lot of fees and high interest), dip into this fund to pay down your debt. , If you are a spendthrift, you will purchase things you do not really need on a regular basis.
Your spending habits will be so rash and reckless that it may seem as if your money is evaporating into thin air.Other signs you’re a spendthrift include feeling a rush of excitement while shopping and making the purchase, but feeling guilty after getting home or being confronted by your spouse or partner about what you’ve purchased.
You might also have many items in your home with their price tags still attached.
If you find yourself lying to your spouse or partner about how much you’ve spent, or it seems you two are constantly fighting about your spending habits, you may be a spendthrift. , Being a spendthrift is not a permanent state.
The first step toward changing is admitting that you have a spending habit and want to stop.
Ask your spouse, partner, or friends to reign you in if they see you consider making large, unnecessary purchases.
Talk to a therapist about your behavior to see if you can identify the root cause(s) which drive you to spend money so recklessly.Alternately, talk to a financial advisor about how to budget your money and find areas where you can cut expenses. -
Step 3: Create a rainy-day fund.Set aside some of your monthly income for financial emergencies.
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Step 4: Identify signs you might be a spendthrift.
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Step 5: Find help for your spending habit.
Detailed Guide
If you are tired of the inconvenience of paying cash, but don’t want to rack up credit card debt, using a debit card is the perfect third way.
A debit card works just like a credit card: with an easy swipe of the card, you can make purchases almost anywhere.
However, while a credit card basically operates as a loan-making tool, a debit card lets you tap directly into your bank account.
This way, you won’t end up having to pay the credit card company back when making a purchase.
Be careful.
Practice responsible buying with your debit card just as you would with your credit cards.
Before buying anything, always ask yourself: “Do I need this?” If you think the purchase is worthy, follow up with the question “Can I pay cash? Or do I need to charge this to my credit card?” If you do choose to purchase luxury items with your credit card, give yourself a waiting period before deciding to do so.
When you see something in a store or online that you want to purchase, freeze your credit card in a plastic pitcher of water.
Place the pitcher in the fridge after it is completely frozen.
If you still believe that making the purchase would be a wise investment after the card has been unfrozen, and you’ve consulted your partner about it, make the purchase.
Do not use your credit card on things like cars and clothes.
Luxury items like home gym equipment and new TVs, similarly, should be purchased with cash.
Finally, avoid getting disposable goods like groceries and toiletries on credit.If you carry a balance, you’ll be paying interest on things which potentially don’t even exist anymore.
This is not wise use of your money.
Good investments with a credit card include educational or business expenses.
Emergencies, especially medical emergencies, might also require use of credit cards.
Try living without your credit card for thirty days.
When you use only cash, you are much more likely to notice where your money is going and how often you’re running out.Perhaps you withdraw $200 thinking you’re covered for the week, but end up needing $300.
Thinking about the difference between the expectations you have of your spending and the actual way you spend your money can shock you into being more thoughtful with your finances, and ultimately change the way you spend when you go back to using credit cards at the end of thirty days. , If you lose your job or need to invest in something expensive like surgery, you’ll be glad you have that money.
Another equally important use you might be able to put the money to is credit card debt.
If you sense your debt is beginning to spiral out of control (accruing a lot of fees and high interest), dip into this fund to pay down your debt. , If you are a spendthrift, you will purchase things you do not really need on a regular basis.
Your spending habits will be so rash and reckless that it may seem as if your money is evaporating into thin air.Other signs you’re a spendthrift include feeling a rush of excitement while shopping and making the purchase, but feeling guilty after getting home or being confronted by your spouse or partner about what you’ve purchased.
You might also have many items in your home with their price tags still attached.
If you find yourself lying to your spouse or partner about how much you’ve spent, or it seems you two are constantly fighting about your spending habits, you may be a spendthrift. , Being a spendthrift is not a permanent state.
The first step toward changing is admitting that you have a spending habit and want to stop.
Ask your spouse, partner, or friends to reign you in if they see you consider making large, unnecessary purchases.
Talk to a therapist about your behavior to see if you can identify the root cause(s) which drive you to spend money so recklessly.Alternately, talk to a financial advisor about how to budget your money and find areas where you can cut expenses.
About the Author
Ann Anderson
Dedicated to helping readers learn new skills in organization and beyond.
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