3 Ways to Eliminate Credit Card Debt
It is unversally known that next to mortgages, credit cards are the next biggest debt that Australians face everyday. When I first heard this, I was shocked as I'm not one to not pay off my statement in full. However, after watching "Confessions of a Shopaholic" and reading about the spending patterns of most Aussie women around the country, I've come to realise Heymaybe we are victims to our credit cards because we just cannot pass on that bargain or those Jimmy Choos are real investments and I really need to have them NOW! In reality, those bargains are not really bargains when we add them all up. It is true that I experience a kind of giddiness and happiness when I pick up a bargain but when these bargains add up and stare at me on a statement at the end of the month, I just feel like crying! And then I get depressed and feel the need to spend again! This is a vicious cycle that is really really bad.
Additionally, my partner is one who understands the need for 30 pairs of shoes and still counting. He never understands why I need to buy something (just anything) when I'm at the shops. So, he was really happy when our accountant sat us down and gave us both a reality check. The first thing on the list was (yes you guessed it) to curb my spending. See, my Mr. Accountant happens to be male and when I told him that I require about $300 a month on clothing, he just glared at me and gave me a "WTF look". The conversation went like this when we had the meeting at a Vietnamese restaurant
Mr. Accountant: "Jess, you are spending too much on clothing and entertainment. It is unnecessary"
Me : "I don't understand what you mean. $300 is barely enough money to spend a month on toiletries and an outfit let alone all the other entertainment like poker".
Mr. Accountant: "Well you need to learn to cut back or you will have no savings for a rainy day"
Me: "You sound like my mother!" (By this time, I was resigned to the fact that I was losing the battle and I made a promise to Mr Accountant to cut back on my expenditure).
Hence, I've embarked on a 3 way strategy to break this vicious cycle.
1. Surrender your credit cards to your skinflint partner.
This is the cold turkey treatment and I was VERY EXTREMELY reluctant to do so. Tears welled up and I knew that by handing over those pretty plastics, I was doomed to a life devoid of shoes and fancy clothing. However, under the pressure from both my partner and Mr. Accountant, I had to relinquish my American Express, VISA and a deparment store card. These cards are safely kept from me and I'm only allowed to spend on NECESSARY business expenditure (still unsure whether pretty stationery can be classified under this category). The only way I can spend is to use whatever money I have in my bank account.I have to say that the first two weeks we're tough when I went into the shops. However, as you get used to the idea that you have to "future money" to spend, you eventually stop thinking about it and start avoiding the shops.
2. Cut up your Credit Cards into Halves
For those who do not have a skinflint partner or someone whom you can entrust your beloved plastic friends with, do not fret. I reckon the most effective way to eliminate credit card debt is to cut up your cards into halves. This means cutting up your daily credit card, the card that is stashed away in your emergency compartment and the one that you hide in your shoe box. YES! EVERY SINGLE ONE OF THEM will have to experience the guillotine. In reality, no card equals no spending equals more savings.
3. Cash only for all transactions
For those who are disciplined enough (now I'm starting to speak like an alien from out of this world), you are encouraged to use this method. After taking into account all the neccesities that you need to pay for (please note that neccessities include rent, utilities, mortage, bills and not shoes, accessories and movies), work out how much disposable income or spending money you would like to have alongside your savings. Extract three quarters of the spending money out in cash and spend only that amount til your next pay day. This means that if you are paid on a fortnightly basis or monthly basis, this stash of cash will need to last for that duration. All transactions will be paid in cash and your debit card should be left at home. This strategy makes you think that you do not have enough money and you are forced to decide what is the best way to spend those money. Often, this could mean a choice between that hot WISH dress or Stila cosmetics for the month. In the event that you run out of money, staying at home watching TV or reading a book is always FREE.
Personally, I've tried all three methods and method one works the best for me. It is up to you to decide which method you are most comfortable with and which one will bring you success. Imagine being able to pay off your credit card debt or being able to save for a nice holiday without having to borrow money to pay it off. The first few weeks are always the toughest but once you cross the crest of the hill, the view is beautiful and you will never look back.
Posted in Newspaper Post Date 05/17/2017