TAKE CARE OF YOUR FINANCIAL HEALTH is a remedy for increasing your physical health as well as your mental health. How much do you have in credit card debt? How much savings do you have? If the first question’s answer is higher than the second question, you are suffering from financial woe syndrome. I am not a financial wizard but together with my husband’s cooperation, we figured out some ways to overcome the symptoms of over spending, impulsive spending, and living above our means. As a diabetic that gets excited when my numbers normalize because of smart choices, it feels the same excitement to first see the debt go down and then be eliminated.
I am posting this blog not to brag as it is a difficult and challenging task but I can personally tell you the joy of watching balances go down and then disappear is worth every sacrifice. I would like to share our story, not the personal details but the “How” we worked toward this goal. Maybe you can clear out the financial overload cabinet and feel the freedom from shelling out money for high interest and find ways to invest that same money instead of needless payments.
Did it happen overnight? No, absolutely not. I see the advertisements of how people got out of credit card debt in a short time and I think they couldn’t have owed what we did. It took me over 4 years to make it happen but it did. Looking back over the time it took, maybe you might ask, “That’s a long time. Would you do it again?” I would answer, “What I would do differently is I wouldn’t allow us to get sick in credit card debt.” That may be too late for several of you and you may be in the same ward of debt as we were. Here is how I worked at getting healthier in our financial world.
Tips on how to treat your credit card sickness:
- Decide you are fighting an illness. Buying things when you have to depend on credit should only be used when the purchase is an emergency need and not a whim purchase.
- As any illness, make up your mind to fight it and do what is necessary the same way you begin to exercise more, eat healthier, avoid the pitfalls of binge eating. In other words, begin to exercise purchase restraint, buy healthier purchases, and avoid the binge or compulsive spending.
- List out all balances on all cards or other loan payments other than your mortgage (that debt can be paid off quicker after you have taken care of those high interest cards or store accounts.
- Prioritize the highest interest accounts as these are the cards you place in a drawer and NEVER use them again. You heard me right! That was the first thing we did was to stop using those cards and eliminate those balances first.
- Forget minimum payments! Stop reading this blog if that is what you do and if you want to continue this practice, I can tell you that you will remain in debt forever.
- Make a budget on your have to pay bills like utility bills, cell phone, internet, mortgage or rent, regular medications, estimate on food costs, etc. That goes on the left side of the page with a total at the bottom. On the right side, count all net income (do not use your gross as that is not applicable to this plan).
- Once you have the totals, find the difference in accessible revenue. This is your IV for improving your health. Once you have usable money, you can distribute this money by payments to those ugly, nasty credit cards paying more to the highest interest cards and lesser to the others.
- In other words, don’t try to pay all of the cards off at one time. It is my way of saying Chip Away at the biggest weight holding you down. An example would be if you have $200 to pay the cards and you have three cards pay $100 to the highest interest and either $50 to each of the others or even $75 to the next highest one and $25 to the lower interest card. When you see the next step this will become clearer.
- If you are not hurting by the payments, you are not getting anywhere. I bled while I made those payments and there were times when it seemed very difficult but we were determined to accomplish a credit card freedom.
- Once you pay the highest card off, and this is the secret and the key to making it work……take that same amount that you paid to the first card, and choose the second highest interest card and pay that “extra” to that card. Remember the example, you paid $100 to the highest card and $75 to the second one…..now pay $175 to the second one and continue paying $25 to the next in line. Guess what, that second card will get paid a lot sooner and then what happens, you begin to pay $200 on that last one and it happens sooner.
- As balances go down and no purchases unless emergency needs, you will find it tempting to stop paying the extra to those other cards…..DO NOT BE TEMPTED! This plan only works if you are determined. We know from dieting, if we are not determined, we fall off the diet wagon easily.
- Here is the most important tip I can give you. When the credit card debt is gone, and it will happen if you follow this plan and not purchase needlessly, do not go back in the trap of credit card debt. You will begin the next phase…Saving Money for rainy day purchases.
- Our goal has been initiated that since we have been paying that amount out to credit cards, why not put that same amount into savings? Let’s go back to the example and for a lot of us, I am minimizing the amount but it is an example: The $200 you paid out for credit card debts can go into a savings account. This part of your savings will become your emergency purchase account. No, you can’t start spending more, LOL. Using this method, in 5 months, there would be $1000 for an emergency. If you can save $400 a month, you then have $2000 emergency purchase funds. Can you see what begins to happen? In 5 short months, you would not have to go to a card. You take care of the emergency and begin to rebuild that emergency fund without paying that awful interest.
- When you have accomplished this part of the plan, a reward is wonderful, but I made a hitch in the reward. We have to build up whatever amount we are going to use for our reward and it can’t go on a card. I found ways to put money aside for us to have a reward trip (not an expensive cruise, or flight) but a nice long weekend getaway.
- Once you get in the mood of financial health, you go on a maintenance plan using the logic I have laid out. Look at other spending and cut out unnecessary spending. It will amaze you as it did me at the wasteful spending we all do on a regular basis. This spending elimination will give you more money for your rewards and/or the savings element.
The above list are my ideas and not anyone else’s financial plan and are based on our personal goals and achievements. This year on my husband’s birthday and for Mother’s Day our gift to each other were printouts of zero balances. Best celebration we can remember.
I am not a financial expert or advisor. I found a way to take stress out of our “financial bliss” and we both feel a splurge of freedom from worry. I can’t guarantee you this will work for everyone and it is the concept not details that may be helpful. LIVE LIFE, LOVE LIFE, AND LIVE LIFE TO THE FULLEST by adjusting your priorities to make it happier!
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