Sticking To Your New Year’s Resolution: Blowing or Growing Your Finances by Handling Credit Card Debt

Jan 09, 09 Sticking To Your New Year’s Resolution: Blowing or Growing Your Finances by Handling Credit Card Debt
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It’s that time again. Time to make that New Year’s Resolution about your finances and totally forget about it by mid February. Seriously, there’s no better time to actually STICK to your financial resolution for the new year than this year – 2009. Here are a few major things that you should put into effect before making any money-related resolutions for 2009.

What should you do about your credit cards this year?

Simply put, make it a no excuse priority in 2009 to pay them off, or bring the balance(s) down as much as you can afford to.  Please, only use credit cards for emergencies.  This is a mistake most college students make, in addition to adults that are aware of the repercussions, but somehow get sucked back into the same habit, even after paying them off.

I’m sure you’ve heard this before, and I’m sure you’ve ignored it. How many times have you attempted to only use your credit card for emergencies and failed yourself?  Think twice about using a credit card to make any unnecessary purchases.  Just because your credit limit says you can afford to, you’re actually not making as wise a decision as you think you are.  Your LIMIT may say you can afford it, but the amount you can spare each month probably says otherwise.

This can and will end up being a great downfall for anyone with any amount of credit card debt in ’09.  The sooner you pay off any debt, the closer you are to using your money to invest into your dream business, or putting it towards something that will benefit you financially in the long run.

It’s logical to pay off cards with the highest interest rates first, because those are the ones that put the hugest dent in your finances over time.  The sooner you pay off cards with higher interest rates, the easier it will be to avoid the perplexing feeling that your balance seems to always stay the same.

If you think it’s far-fetched to just pay off all of your creditors outright, try increasing your payments.  If it’s just an extra 5 or 10 dollar increase a month, be sure you’re paying more than the minimum amount.  The longer you continue to simply pay the minimum, the closer you get to making friends with creditors  and perpetuating your credit card debt indefinitely. Definitely a no no to your financial freedom in 2009.

Where do you get the extra money to pay off your credit card debt?

This is a question most people ask themselves when attempting to pay off credits.  Either they ask this question, or they know the answer and fail to admit to themselves that they need to immediately do what it takes in order to pay off their credit card debt.  Things that can force you into this delusional state of mind are:

  • Eating or ordering out too often
  • Frivolous purchases of clothes/accessories
  • Hot new entertainment/electronics, etc.
  • Eating or ordering out ENTIRELY TOO often

Cooking for a month, which ultimately results in saving on the costs of your favorite restaurants, won’t hurt you.  It’s actually extremely beneficial.  I love Chinese food like it’s a favorite cousin.  I monitored how much I spent on ordering from my favorite combination fried rice establishment for a month…a whopping 250 dollars.

I thought a few 20 dollar charges to my card about 3 times a week from my favorite neighborhood Chinese delivery spot wouldn’t be so bad.  I could have made Chinese food for a few small armies for a week by buying the necessities and cooking at home.

It’s easy to buy new DVD releases when they have a big sale sticker on them, although you’re still spending close to 20 bucks for a new release.  Plus, there’s a new visually appealing problem now, 30 – 40 dollar new Blu-Ray releases…great.

Taking time out to re-watch a couple of DVDs that you already own, passing on new DVD releases, and postponing dates to the newest blockbusters for a month won’t hurt you (financially) either.  I re-watched all the seasons of Lost and The Wire for a month and was turned on to some details I didn’t catch the first time around.  I know, lame, but fun to me, and I had more money in my pocket that month as well…I win.  Not to mention, I got the most out of some past purchases.

I don’t think I need to say anything about spending too much on clothes/accessories.  You can only wear one watch at a time.  Try a new sweater vest, button up combo that you didn’t realize worked before to step up your fashion diversity.  Monitor how much you spend on clothes for a month, and then think about how much lower your credit card balance would be if you put that amount towards paying off some of the credit card debt.  Very depressing, but eye-opening experience.

Those are just three examples of where the money you need to pay off your small or outstanding credit card debt magically appears from.  I’m sure you can find and eliminate more examples related to your personal spending habits, thus increasing your “minimum” monthly credit card payment to ultimately reach financial freedom sooner than you think.

The sooner you do so, the sooner you will be able to use that already hard earned money to make wise investment decisions and get back into your vortex of frivolous spending 🙂 – this time with cash you actually possess as opposed to money a credit card company “limits” you to.

This year, make it a point to do the things you don’t really feel like doing financially, but know that you absolutely need to. Be proactive and take the necessary steps toward getting closer to your financial freedom in 2009.  Another great recession survival tip for your financial success.

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