Not a lot of people are familiar with the concept of staying debt-free with a credit card. Just because you have one, doesn’t mean that your balance should exceed your earnings. While the over-arching concept is “buy now, pay later”, it means that you should be spending only the amount of money you actually have and not more.
If you have a credit card, you’ve probably also heard of retail therapy. A product of modern capitalism and cheaper than actual therapy, we have all tried it at least once. Over 52% of people have confessed to spending money to relieve stress.
How therapeutic is it to spend money on purchasing things that make us feel better? The emotional rollercoaster of feeling joy, guilt and then regret can soon become quite addictive. You can find yourself in your very own Rebecca Bloomwood situation of maxing out all your credit cards and avoiding debt collectors!
Managing credit card debt can become infinitely easier if you learn how to control your spending habits. Here are some of the things the movie taught us about being smarter spenders.
Avoid impulse shopping
Swiping a credit card can become second nature to you and you might not even be aware of the purchases you make. Do you find buying a new outfit makes you feel better? Do you spend your time shopping online when you can’t sleep?
Wanting to spend money on things impulsively can be a way to take control of a situation but it’s almost never the solution. In fact, it can do more harm than good.
The next time you feel the urge to buy something, sleep on it! If you’ve forgotten about it in the morning, you probably never wanted it in the first place.
Record and evaluate your purchases
Every time you spend money, write it down. Even if it was a bagel on your way to work or a luxury item, jot it down. Then over the month evaluate your spending habits. Categorize the items according to needs and wants.
This will help you visualize where your money goes the most and what you need to cut down on. Based on this you can prepare a budget and then compel yourself to stick to it.
Use credit card for only certain purchases
Sometimes, you can actually benefit from using a credit card to make certain purchases. Here are some of the things you should definitely use a credit card for.
- Electronic appliances:Some credit cards come with extended warranties and protection of price and purchase. This can help you get free repairs or even the option to get money back. Read up on the terms and conditions before you make purchases. Major credit cards also have reward programs which can help you accumulate cash back on some bigger purchases.
- Online purchases: Using a credit card instead of a debit card when buying things online can help you stay protected from identity theft and fraudulent charges. Avoid making purchases via websites which are not encrypted.
- Renting a car: Most car rental services accept credit cards only and also offer additional insurance. You can check to see if there are any further benefits being offered by the rental company’s insurance or you could be paying for insurance you already have.
- Travel:There are plenty of travel services you can avail such as rewards, frequent flyer miles, travel insurance and more. You can save up rewards for a big trip coming soon that you’ve always been looking forward to.
Maintain a good credit score and negotiate a lower interest rate
One thing that can get you when you use a credit card too often is the interest. It’s possible for you to negotiate for a lower interest rate but chances of you actually getting it are higher if you have a good credit score. You can have a good score if you spend wisely. Catch 22?
Let us help you get out of it. Masters Credit Consultants offers you free credit consultation and credit help services in Greenville and Anderson, South Carolina. For more information about availing our services you can call us at 1-844-620-8796.