So, you applied for a credit card and you were approved. You’ve been granted a maximum limit of $2,000 – Perfect! There’s a pair of shoes you’ve had your sights set on for months. After all, isn’t that why you need a credit card? You swipe your shiny new card and are beyond ecstatic with your killer new shoes. Virtually overnight, you’ve maxed out your credit card. You’re completely baffled. How did this happen? You’re now responsible for paying off borrowed funds and available funds in your checking account won’t be enough to cover the balance.
Like many people, you decide to apply for another credit card, so you can pay your bills and keep your head above water. This is certainly no way to live.
What do you do? This feeling can be overwhelming and believe me, there are tons of people who have encountered the same problem. You will need to repair your credit score and get your credit cards bills down, but when you have obligations every month that conflict with your minimum payments, it may seem harder than you realized to accomplish these goals. Facing this challenge will require you to start planning.
I’m sure that plenty of people throughout your adulthood have offered advice surrounding the importance of budgeting your income. And like most people, you immediately assumed that these individuals had no clue what your situation entailed. Everything is easier said than done, right? While creating a budget and sticking to it is undoubtedly difficult, getting into a healthy financial routine will help you successfully manage your credit card spend.
First, it’s important to acknowledge and firmly understand what you can and cannot afford. Take some time to examine your monthly income against your expenses and purchases to determine if you are spending more than what you’re bringing in. By doing this, you’re just setting yourself up for disaster. And it’s certainly not good if you are only paying the minimum on your credit cards or even less, only because you cannot afford the monthly payments. This means you need to start adequately planning for your monthly expenses so you can settle your debt and erase bad spending habits moving forward.
It’s important to prioritize. Of course, enjoying a meal at your favorite restaurant with friends or treating yourself to some new clothes is fun, but if your monthly income can’t accommodate for these additional expenses than you need to focus on covering the necessities. Don’t let yourself dive into a black hole of lousy credit just for a few nights of cocktails. Once you come up with a budgeting plan and eradicate your debt, you’ll be able to set aside funds as needed for these special occasions.
Staying organized is a crucial factor in tackling what you owe on credit cards and how you should be managing your monthly income. A great way to do so is to create a spreadsheet. While this may seem like a tedious task at first, you will find that when you clean up the clutter, you will be able to become more successful at managing your bills.
A spreadsheet will help you put everything into perspective, essentially laying out all the numbers in one place. If you have three credit cards, a student loan, utility bills, and monthly rent payments, that’s a lot of moving parts to be responsible for. And you could find yourself panicking over attempting to shuffle it all together in your mind. By putting it all in front of you, you will have gained a more realistic perception of your financial situation, and you will finally be able to break away from shouldering the weight of your debt.
Another tip with credit cards is being sure to get a credit card that has benefits. There are plenty of credit cards in the marketplace that you can choose from, and you should select one that best fits your needs. Many credit companies provide cash back incentive or sign-on bonuses that you should undoubtedly research and take advantage of. You can either use the money that you earn back to help pay off your credit card or use it to pay off other bills.
If you have a credit card that comes with a high interest rate or an annual fee, there is often the option to transfer your balance over to a credit card with a lower interest rate and no annual fee. The problem with interest rates is that a lot of times if you are paying the minimum per month then you could be mostly spending your hard-earned pay on interest and be forced to prolong your payments when you could have been finished paying off a credit card at an earlier time.
Also, make sure you set alarms for yourself. When I say this, I am talking about when to pay your bills every month. We are all human with busy schedules, and sometimes we forget deadlines. The problem with that is that you could run the risk of a bill stacking up and penalties caking on. Also, not paying your credit card bills on time could negatively impact your credit score, which will only make things harder for you moving forward.
It can certainly be a little overwhelming when you think about trying to tackle a battle such as getting your credit card spending in check. You may feel that it is impossible, but understand it is a journey that will take time. By being dedicated and disciplined to staying organized and being financially responsible, you’ll find yourself having a much easier time covering your expenses. Once you get to that comfortable playing field, it will no longer feel like budgeting and instead, feel natural.