by Scott Hannah
Q: My partner and I were going over our credit card bills the other day and realized that despite our best efforts, we won’t be able to make all of our payments. We aren’t even sure how the balances got so high because we don’t feel like we spent that much. In the past when we’ve noticed that our debts have become difficult to pay off we’ve just cut our spending back to pay our credit cards off faster. That however, won’t be possible this time because my partner is still on parental leave with our youngest so we’re working with reduced household income. What other tips can you suggest to help us pay off our credit cards? ~Jody
A: As you have noticed — and the same is true for most people — debt, especially credit card debt, doesn’t happen overnight with one big purchase. It’s a series of smaller purchases over a period of time, even several years, that add up to more debt than they can afford to repay.
There are countless tips and strategies that will help you to pay off your credit card debts, but one of the most important is often overlooked: Paying off debt has as much to do with your mindset as it does with how you manage your money.
With that in mind, here are three things to avoid if you’re serious about paying off your debts:
1. Avoid Spending Mindlessly
As important as having a realistic budget is, be mindful of what you spend. Really think about how much you earn; what your financial goals are; what it will take to pay off debt and achieve those goals; and actively distinguish between needs and wants every time you make a purchase.
Get your mind in sync with your money to make budgeting easier. Once you’ve set your mind to paying off your debts, it becomes much easier to follow through with plans to make that goal a reality. A plan to pay off what you owe requires a budget. Start with an outline and fill the rest in as you find out more about your spending habits. A spending tracker will help you keep track of where your money is actually going and identify habits that are detrimental to reaching your goal. Then a budget calculator spreadsheet or workbook will help you come up with the bigger picture. Managing your paycheques so that all the money you get is used in ways that help you reach your goals is vital.
To cut your debts down and pay them off will take time and diligence. That’s why thinking about every purchase you make is important — and yes, this is one time when you need to sweat the small stuff.
2. Don’t Store Payment Details in Online Accounts and Apps
A few quick clicks and your order is confirmed. Sound familiar? If you’re someone who stores credit card or payment details (e.g. PayPal) in your online accounts or apps, you might be your money’s worst enemy. For the sake of your credit cards and bank accounts, not to mention for security reasons as well as your budget, it’s better not to store payment details online. Any extra steps that make it just a bit less convenient to spend without a second thought will help to put distance between you and the checkout. It really boils down to keeping your money safe from yourself.
3. Avoid Subscribing to Emails that Tempt You to Spend
Email marketing is a lucrative business and many people get more offers and specials delivered to their inbox than they need or want. Instead of just deleting these emails, unsubscribe from them so that you are no longer tempted to buy what you can’t afford.
Cruises, vacation packages, offers to earn bonus loyalty points, Groupon-type promotions, or weekend deals at particular merchants, are all examples of emails that try to get you to spend beyond what your budget allows. If you’re not ready to eliminate what amounts to electronic flyers from your inbox, set up a separate email address to use for marketing emails. Only check that email account when you’ve got funds saved up to spend.
The Bottom Line On the Best Tips to Pay Off Credit Cards and Other Debt
Practicing self control with your spending is hard, but working at it every day is worthwhile. The detrimental effects of feeling overwhelmed by your debts can impact your own well-being along with the well-being of your partner and children. Work at it together; the process of getting back on track will help you learn money management skills that last a lifetime. It’s a legacy you can be proud to share with your kids!
- Tips to Teach Your Kids About Money
- How to Use a Credit Card but Not End Up in Debt
- 5 Things You Need to Do to Live on One Income Successfully