The satisfaction and feeling of relief achieved by clearing down credit card debt can be immense, yet many people find it difficult to break the financial habits that caused their debt to accrue in the first place. The debt may have been caused by spendthrift habits, easy use of credit or a change in financial circumstances. However, once the debt is cleared it is important to retain the motivation to remain to debt free.
The first step to breaking the cycle of credit card debt is use the funds applied to paying down the debt on a monthly basis, to establish a savings pattern. It may have been a financial struggle to clear the debt. This should serve as a reminder of the importance of having an emergency saving fund to prevent a reliance on credit cards for future spending.
An excellent tip is to calculate how much money was used to service the interest payments on the recently paid off debt, including any charges the debt attracted. This will demonstrate the savings that can be made by switching to cash payments rather than wasting money paying unnecessary interest.
Having used disposable income to pay down the debt it is wise to now transfer this regular amount into a separate savings account. An ever accumulating savings balance gives security, rather than the sleepless night’s debt brings.
Having once incurred credit card debt is an indication that financial control can be easily lost. The best way to ensure credit card debt remains in the past is to stop using cards. Although credit cards can offer certain advantages to consumers, they should only be used by those who know they are certain of never carrying a monthly balance. If the temptation of easy spending was a contributory factor to the debt accumulating in the first place, then credit card usage should cease. To prevent giving in to impulse spending, limit the amount of cash one carries.
It is not advisable to immediately cut up all the credit cards as closing them can have a detrimental affect on ones credit score. Close them on a gradual basis, but ensure the card which has been held longest is retained, as at it represents the length of credit history.
Many people fall into the holiday debt trap, running up large credit card bills to finance holiday spending. Establishing a regular savings pattern enables funds to be put aside on a monthly basis in advance. Savings can be divided between holiday spending, vacations, emergencies and expensive items, giving the satisfaction of knowing the money is in place without the need of going into debt again.
It is possible to break the cycle of credit card debt by introducing financial discipline and adhering to a budget. Without the necessity of servicing debt payments ultimately one will be better off financially, and enjoy the additional benefit of the freedom from financial worries. That is indeed a goal to which to aspire.