5 Easy Steps to Crushing Your Holiday Credit Card

It’s no surprise that after the holiday excitement is over, we come into January feeling exhausted and in denial about how much we spent on our credit cards. It happens to everyone, so don’t beat yourself up about it.

Rather than staying in denial, here are a few simple ways that you can relieve some of the financial pressure:

1)??????? Always pay your minimum payments – this may sound like a no-brainer but the reality is that most people don’t understand the importance of paying your minimum payment by the due date. Sometimes we spend a little over budget and can’t afford to pay off the entire credit card balance in full, but being financially responsible is ensuring that you are paying your minimum payments on all of your debts by the due date. This will help you build your credit rating, ensure you aren’t paying unnecessary late fees (which could be used towards paying down the balance instead) and keep your accounts from potentially being frozen from future use.

2)??????? Stop using the cards – Sounds simple, but most people struggle with the addiction to using their credit cards for everything and “figuring out how to pay it off later”. The easiest way to pay off your card and get out of debt, is by simply stopping to use the cards, paying the minimum payments plus additional payments to pay down the principal and being diligent about living within your means. Whether you have to cut them up, put them in the freezer, or give them to your partner to hide for you, just get rid of them out of your wallet and off your Apple Pay.

3)??????? Create a budget & repayment plan – there are many free budget calculators out there on the internet (and I’ll be creating a downloadable one soon!) but in the meantime, it’s an easy calculation:

·????? Calculate all of your Net Income (after tax – what you receive in your account)

·????? Subtract all of your expenses (be realistic, check old bank statements to see what you’ve actually spent)

·????? Determine the difference – if the number is negative, meaning your expenses are higher than your income, you need to cut back on your spending ASAP. If the number is positive, you have a surplus and you can use this surplus to make additional debt repayments and help reduce your future interest charges.

4)?? Be realistic about your spending – this is a tough love point. The reason you are in this position is because you are not spending within your means. Treating a credit card like free money is a trap that the banks want us to fall into. The extend your limit as often as possible so you will spend more, often much more than you can afford on a monthly basis because they know that the average person lacks the self control to stop spending if they money is available to them. You can make simple adjustments to your weekly routine to make a big long-term impact on your financial position. Cut back on eating out, online shopping and all your damn subscriptions to services that you don’t use. Spend 5-10 mins going through your Apple Subscriptions, streaming apps, and memberships. What can be cancelled? What can be reduced? Sometimes when you go to cancel a subscription that you don’t use often, they’ll try and get you to stay for a super reduced rate, which can make sense if you want to keep it. This strategy is a easy win and can save you hundreds of dollars if you’re smart about it.

5)?? Reduce your credit card limit – this is a scary one for a lot of people. If you have a high limit (say, over $10,000) and you know you are bad with spending, as you pay it down, reduce your limit to reduce the temptation to rack it back up again. You may need to keep a limit of $5,000 or whatever you feel is right for you, for travel purposes or automatic payments but you don’t need an unlimited credit limit if you are trying to build better spending habits. What you can’t access, you won’t spend.

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There are many ways to get out of debt and remove the restrictive shackles from your ankles, but the first step is acknowledging that you need to make it a priority this year, and then start by taking small steps in the right direction. Don’t look at it as a huge, unattainable task, just focus on the small daily sacrifices and habits that will build the savings muscle to help you get out of debt a little bit faster. Eventually the actions will start to compound, thus reducing interest and before you know it, you’ll be debt free and able to truly plan your life with money that you own instead of money that you borrow.

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Thank you for reading this week’s Money Matters Newsletter and for more information on my coaching programs and courses, visit my website at www.sandrajoe.com and use promo code: 2024 for 50% off virtual courses for the entire year of 2024!

See you next week!

Sandra