Admit it, your credit card spending is out of control. I ran into this problem this past two weeks. My balance was over $2,500, and I was in shock. It is not like I didn’t look at my balance every day or swipe my card without thinking. To day I will talk about how to stop overspending on credit card.
There were big purchases that I had to make: BCPS exam ($300), animal hospital ($280), 4 new tires ($300) but there were also purchases that I could totally avoid: Amazon ( total of $400), sushi date dinner ($130).
Related: TIPS TO PAY OFF CREDIT CARDS FAST.
I am a little overwhelmed so here are a few tips that I used in the past that help me avoid overspending.
1) Don’t apply for more credit cards.
When I first started to be more serious about my finance, I came across Dave Ramsey and his podcast: DO NOT USE CREDIT CARD. It was a good listen, but I was skeptical because credits are needed to buy a car, purchase home and apply for loans. I thought it was harsh and unrealistic.
After I feel years of using the credit card, I realize there is some truth in his method: the more credit card you have, the more debt you will be in. Every credit card has a maximum limit. Once you reach that limit, people are tempted to get more cards to support their irresponsible spending, which eventually leads to more debts.
Related: 5 SIMPLE WAYS TO PAY OFF DEBTS
TIPS TO PAY OFF CREDIT CARDS FAST
2) Start budgeting
Budgeting requires disciplines. It will be difficult at first, but you will get used to this habit after more practicing. Starting by understanding your spending. Write down how much will be coming out of your account at the end of the month. I call it DEAD MONEY because it has to be spent no matter how much you make. This amount includes mortgage, bills (phone, gas, electricity, groceries, …). If you have kids, there is more spending to consider such as baby foods and diapers.
Everyone’s limit is different, and it depends on your lifestyle plus the current financial situation. The most important thing is you have to be honest with yourself if you want this to work. Anything after that is extra. So let’s put a cap on this additional amount. My cap is $500 every 2 weeks.
Related: HOW TO ORGANIZE YOUR FINANCE
3) Using Cash only
Get into the habit of using cash only. You still can have the credit card to pay your bill but make sure to pay it off biweekly or monthly.
Instead of using a credit card, go to the bank every paid period and withdraw your max cap spending. What I do is I withdraw $500 out of my bank every two weeks. I don’t carry the whole amount in my wallet at all time because of my irrational fear of being robbed or spend everything all at once. I usually keep $100 in my wallet and the rest in the secret stash at home. This method works for me because if spontaneous spending comes up and I don’t have enough money in my wallet, I will just hold it and not making that purchase.
Related: 5 SIMPLE WAYS TO PAY OFF DEBTS
TIPS TO PAY OFF CREDIT CARDS FAST
4) Write your spending ideas on a piece of paper
Here is a way to solve compulsive spending: treat it like an idea and write it on a piece of paper.
For example, you want to purchase a piece of furniture because all the sudden you think your current sofa doesn’t fit with the living room’s theme after watching HGTV. I want you to put that idea away and look at it again tomorrow or even next week. 90% of the time you will not need this sofa anymore. I have tried it a couple times, and it works.
Your turn
Do you think these ideas will stop you from overspending on credit card? If you have credit card debt, I highly recommend starting small and apply these steps. If anyone has different opinions, please feel free to share it in the comment below.
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