Budgeting / Credit Cards and Debt / Personal Finance

Fix Your Finances in 30 Days

Day 25: Evaluating Your Expenses – Credit Cards

Today is the final day of expense evaluation before we begin to tie things up (the month is nearing an end, after all), so today we’ll tackle what is perhaps the biggest financial rough patch in the United States: credit cards. As anyone who has ever faced a big pile of credit card debt can tell you, credit cards are nefarious little devils that can sneak up on you and destroy all of your financial planning if you’re not careful. Thus, here are some tips for managing that month-to-month credit card debt; spend some time today implementing them to reduce your monthly credit card spending.

Look into moving your balance to another card. If your credit is strong, you can easily obtain a 0% APR on balance transfers for as long as 18 months. Doing this can transform high interest debt into no interest debt, meaning that each payment will go straight towards eliminating the balance. Be sure, though, that you have eliminated a lot of the balance during this period, because it will be painful when the interest payments come back.

Ask for a rate reduction. Another potential avenue for reducing the monthly interest on a card is to call the number on the back of the card, get to a live operator, and ask to speak to a supervisor. At that point, tell them you’re tempted to take a balance transfer offer in order to consolidate your debt and request that they reduce your interest rate. Quite often, they’ll be happy to oblige because earning less interest on a credit card is better than earning nothing at all.

Stop using credit cards for day to day expenses until you can eliminate the debt. Until I got my credit cards under control, I moved to using checks and cash wherever possible, supplemented by a debit card. I treated the credit card bills as a loan that needed to be paid off, not as a tool to buy more stuff I couldn’t afford. I didn’t cut them up, though; I just put them in a place that was hard to access. Why? Canceling a bunch of credit cards all at once can be severely detrimental to your credit health.

Pay Off Your Credit Card Debt

If you take nothing else away from this 30 Days to Fix Your Finances tutorial, please take away an urgent desire to pay off your credit card debt. Credit card debt will continue to weigh you down and prevent you from reaching your dreams and goals. Credit cards are one of the biggest financial traps you could fall into (and we have a lot of personal experience here!) and you need to get out of debt and stay out of debt to succeed.

Tomorrow, we’ll begin to finish out the month by re-evaluating where we’ve been and looking at ways to keep the momentum going.

Ready? Let’s continue on to the next day.