There’s talk that consumer credit card debt may set a record and potentially exceed $1 trillion this year. We already set another record, with the largest net increase in consumer debt since 2007 ($80 billion). Wow!
But should we see accumulating more credit card debt this year as inevitable? I, for one, don’t think so. Consider this advice for proving the prediction wrong – even if only on a personal level.
Face the music (or rather, the numbers).
Forcing yourself to look at what you owe on your credit cards and use interest payback calculators to reveal how much more you’ll spend before they’re paid off can be just the rude awakening you need. If you’re overwhelmed by the data, ask a friend who enjoys number-crunching to help you sort it out. It won’t be fun, but you’ll be more motivated to stop creating more debt and deal with what you have.
Realize that a debt problem is usually a spending problem.
Paying off existing debt is important, but you’ll continue to get into debt and go through the entire cycle again and again unless you get to the bottom of how you accumulated it in the first place. Be willing to admit you might have a spending problem and do something to change it – whether it’s closing credit card accounts, avoiding the mall, unsubscribing from sales emails, abstaining from late-night infomercials, or seeking professional financial counseling.
Learn to distinguish between wants and needs.
Take just a moment before each purchase, no matter how small, to ask yourself “is this something I need or just want?” This simple step can help you see patterns of wasteful spending and evaluate your attitudes and priorities. It’s fine to buy things you want if your budget, not your credit card limit, can afford it of course. Just make sure you acknowledge that’s what you’re doing.
Don’t make major purchases in one day.
“One day only” sales are tempting, but they also pressure us to spend money we may not have just to save it – that’s counterproductive. No matter how good a limited-time sale looks, take some time to think about the purchase and shop around. While you give yourself time to think, you may find the item priced more affordably elsewhere or just decide you don’t need or want it bad enough to create more debt.
Only open a new credit card if the goal is consolidation
If your goal is to stop accumulating more debt, it’s unwise to open a new credit card account, pre-approved or not. The one exception is when you’re transferring your current debt to a card that offers 0% interest on balance transfers for a limited time. Still be sure to shop around and read the fine print, since one-time fees can range from 3 to 5%. Remember that many of these cards have exorbitant interest rates once the grace period is over, so plan to have it paid off before then.
Just because financial projections indicate consumer credit card debt will continue to rise in 2017 doesn’t mean you’re forced to be a part of that statistic. Defy these predictions and use this advice to prove you have control over your spending and, going forward, the ability to tackle your debt once and for all.