This bit of advice is probably something I should have started this site off with. In fact it is the number one suggestion most financial planners will tell you when asked how to eliminate credit card debt. The suggestion?
Quit spending. Tear up your credit cards (well, cut them up). Don't buy anything else on your credit cards until you get them paid off and you have elminated your debt. This is really good advice, but it does miss the point of how most people get into credit card debt to begin with. That's partly why I didn't put this one up first.
Our situation when we first started out was that we had a very meager income which was enough to cover the phone, lights, rent and car payments. (One of our cars died when we were first married and it needed lot's of money to repair it.) Notice that I haven't mentioned food. If I recall, after our essentials were covered we had maybe 50-100 for the MONTH for groceries. I was spending 50-100 each week at the grocery store. We weren't going out to speak of (MAYBE once a month.) We also had unexpected other expenses (and some that should be expected like 6 months car insurance payments.) So, if we had quit using the credit cards we would have not eaten, not been able to get car repairs (or pay insurance which as I recall had to go on a credit card.) Could we have borrowed from friends and family? I guess that's a possibility although we were a good distance from them.
Over the years I've looked back to those 2 stretches of our lives where our debt has gone up and I've tried to think if there was any way I could have avoided us going into debt during those stretches. Could we have just quit using the credit cards? I look around and ask if we've spent money on luxuries. We really haven't. We have at most eaten out once a week and always at some of the cheaper places (or if it costs a bit more we save it to reheat for another meal.) We don't drive luxury cars, they're both simple and we bought them used (currently they're both paid for too!) We have 1 television. No, it isn't an hdtv or even digital tv. Do we have things that we could get along without? Yes, probably. There's certainly a bit of fat that could be trimmed and these last two years we've tried to really trim that fat every way we possibly could.
I guess my point here is this, in our situation we would have gone without essentials if we hadn't used our credit cards. In fact, we probably would have cut things that would have prevented us being able to get to work reliably. Those times that we've gone into debt our income just didn't meet our rent+utilities+groceries+health bills+car bills total. The credit cards acted as extra liquidity and unfortunately we are still paying for that.
So, the bottom line is if you are out shopping for the latest cds and dvds, new clothes and you sit down and see huge amounts of credit card debt. Take a look at your budget. Take a look at how much the things you HAVE to have cost and how much you make. As for your living expenses, can you downsize? What about utilities, is it possible to save there? I know from our experience that many times you just don't have too many options to downsize living expenses. We lived in a one bedroom apartment for quite a while that really wasn't cheap, but it was the cheapest around. What about your income? Is it possible to find ways to make more money?
We've learned so much about budgeting over the last 12 or 13 years, but the bottom line is you can't always cut the cards up cold turkey and quit spending. If you're in a position to do that, great. It's one way to guarantee that you won't be adding to your credit card balances. Also if you are able to do that, your pathway to eliminating your credit card debt should be much easier.
0 comments:
Post a Comment