I am close to the end of my battle with credit card debt. I’ve been close before, but this time, I can see victory in the wings. So for some inspiration for the final hurdle, I turned to Globe and Mail’s Smart Cookies to find out what 5 mistakes I need to avoid as I finish paying off my debt.
Working Without A Plan
The numbers might seem overwhelming. Or you might be throwing everything you have at your debt in a mad attempt to run it into the ground. While that works if you’ve got loads of spare cash, generally speaking, to tackle debt you need more than money, you need a plan. Do you order your debts from highest interest to lowest, and tackle them in that order. Or do you order the debts from smallest to largest, and tackle them that way? Either has positives. The first saves you money on interest, the second allows you to have a win and keep motivated about your debts. Set yourself a timeline, don’t despair if you have to miss a week because of other circumstances and reevaluate your progress every week or month to keep yourself focused and positive.
Paying Too Much
My generation, at least, has an implicit belief in bills. My parents will check through every bill they get, making sure there aren’t any extra charges. I just direct debit all my bills and don’t even look at them, usually because the pain is too great. But that’s a fast way to lose money. Check for false charges, or subscriptions you didn’t know you still had. If you get charged a late fee, make sure that it was deserved- sometimes dates are moved around by credit card companies in an attempt to make money off a lack of consumer concentration.
Overlooking Hidden Money
I’m not talking about money-in-jeans hidden money, but the kind that sneaks out of your wallet without you even noticing, Tracking your spending will illuminate where your money is going, and where you could make cuts to improve your debt repayments. You’ll realise you spend a lot of money on things you don’t actually really care for- you won’t notice them when you cut them out, and you’ll free up some money to contribute towards your debt.
Paying For Free Perks
Recent events have caused me to change my tune somewhat on the total annihilation of credit from my life. I need to rent cars for work, and the only way I can afford to guarantee the excess for insurance is through a credit card, Sure, I could deliver a wad of notes every time I wanted to rent a car but it just isn’t realistic. Sometimes, a credit card is very helpful. Once mine is paid off, I plan to keep it (with its delightful balance of nil) sitting peacefully in my wallet, accruing nothing but dust.
Doing It Alone
Debt is a huge strain, and trying to pay it off without a support system is tough. You’re getting your life back on track, so set up some people to talk about it with while you go through the process. At some point, the debt repayments could get a bit tough so make sure you have people who can help you through that point. Then, when their turn comes, you’ll have their backs.