Credit card debt

Replies to This Discussion

Permalink Reply by Tina on May 31, 2008 at 6:54

I can't help you, but I'll certainly be watching for any advice. I need it myself!

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Permalink Reply by Warren on May 31, 2008 at 16:43

First step - cut up your credit cards.

Second step - consolidate them into a loan.

Third step - pay off the loan.

Credit cards are only going to get you to buy things you don't need.

Warren

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Permalink Reply by Natalie Bochenski on May 31, 2008 at 23:32

Hi Miffy!

One of my articles for Fat Cat is on this exact topic. You can click through to the main page and you should see it there. It has some tips on how you can start getting a handle on your debt.

I like to think that I can talk a bit about this issue as I currently juggle a credit card debt myself! However it's a "manageable" one, caused mostly by things like rates, body corp charges and other big bills that I use my credit card to pay for. As I say in the article (or rather as I quote), much of the debt we accumulate is due to life happening around us. That's why we have credit cards, as a "safety net". You just have to do your best not to get too tangled in the net!

Warren suggests you should cut up all of your credit cards and consolidate into a loan. That's an option; I would perhaps suggest finding a no-frills credit card (try BankWest - most of the big banks also have their own version) and rolling everything onto that. Then close the rest of your credit card accounts. If you only have one card with debt, it may help you stay focused on repaying it. Most cards give you a low or no-interest rate transferral benefit for six or twelve months. Take advantage of it - try to pay off as much as you can.

The rest really comes down to discipline. If you have indeed splurged on things you don't really need, like Warren suggests, now's the time to tighten the straps. Set up internet banking, and make sure you have funds directly transferred onto your credit card as soon as your pay comes in. That way you won't have a chance to spend it! Take another look at your budget and see if there's any little cutbacks you can make - can you reduce your eating out, or cut back on sweets (that's my particular poison!), or avoid clothes/games/DVD shopping for a couple of weeks? All these little things can add up.

I think with a credit card you have to embrace and own your debt, and get motivated to get rid of it. Don't get disheartened if you have to use your card again to pay for something and it rises - just be committed. It's a "long game", as Doctor Who might say (sorry, my inner geek coming out there!). You probably will take some months to pay it off; but if you accept that, you'll be more focussed in sticking to your repayment plan.

I only wish I could use the same rules in order to stop eating chocolate and exercise more!

I hope this helps somewhat. Hopefully other members will have their own ideas.

Cheers, Natalie.

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Permalink Reply by Warren on June 1, 2008 at 5:03

Hi Natalie,

That's a great article you wrote: Drowning in credit card debt - 5 tips to get out of the rip

This really gets down to the core elements of getting out of debt - budgeting, limiting your access to credit and consolidating debt.

Keep up the good work.

Warren

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Permalink Reply by Tina on June 2, 2008 at 12:37

Hi Natalie,

Thank you!! This is a great help - now I just need to apply this... I know, I'm going to use your theory in reverse...I'm going to apply the rules I use to exercise and eat well to my finances. I will let you know how I go.

Tina

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Permalink Reply by Natalie Bochenski on June 2, 2008 at 12:52

Hey Tina - I'm glad it's helpful.

Feel free to send any diet/exercise tips my way, particularly if you know how to cure a sweet tooth! ;)

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Permalink Reply by jacquesk on June 2, 2008 at 13:48

Hi Miffy
As Natalie alluded in her reply a look at your own situation is required. I do not have any briliiant tips to give on how to manage credit card debt apart from that if you do not understand how you got into this situation and/or how you are staying there then it will be very hard to resolve. I think looking at spending habits is a great start. A budget is fine if you have the discipline to stick to it for long periods of time. But underlying all of this I believe you need to understand why you do what you do. Understanding ones own psychology and situation is essential for long term resolution. My observation is that few of us (definitely including myself here) understand why we do the things we do and hence go on doing them. Same observation for eating and exercising.

ps Sadly there is no cure for 'sweet tooth'. :-)

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Permalink Reply by Matthew Reader on June 2, 2008 at 13:57

:)) - that's true, for those with a "sweet tooth", there's little you can do, short of removing said teeth so you can't chew any more "sweets". Although there's always the liquid form, so there goes that idea...

You're right about budgets too Jacquesk - without discipline over extended periods, you'll just end up feeling guilty and miserable along the way, without getting the results you're after. Much like dieting and exercise. As with dieting and exercise, the rewards of being disciplined are well worth it, and it's amazing how discipline in one area of your life can flow into others.

MR

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Permalink Reply by jacquesk on June 2, 2008 at 15:26

Hi Matthew
Eat enough sweets and the removal of the sweet tooth kind of takes care of itself (along with all of those other teeth). :-)

I do not have a budget that I rigidly stick to but I do have a pretty good sense of what my expenses are. Same with my eating. The similarities between calorie control and monetary control are very similar and maintaining both requires a very similar mindset. Both issues can be solved by going to the very root of the issue. If you do not understand why you do what you do you will have no hope of controlling your consumption habits.

Here are some general tips that work for me. They may not relate to Miffy's or anyone elses situation:

- Make your own lunch & Dinner (saves $5+ each meal and a heap of calories and unless you are a bad cook its probably healthier)

- Don't buy shop coffee, make your own at work or at least don't go to places like Starbucks etc and pay $7 for a coffee)

- When faced with a situation where you are tempted to consume ask yourself "Is this a short term desire or a long term desire?". Does purchasing (consuming) X fit in with my long term desire/aims or is it a short term desire? Knowing what you are doing is fine, understanding why is crucial.

- If you have to justifiy it (to others or especially to yourself) then you probably don't need it.

- If it has no immediate use in your life it is an object not an asset.

- Just because it is on sale doesn't make it a saving.

- Be a hunter, not a gatherer. If you are going to go to spend treat it like a mission with clear aims, objectives and limits. Browsing is fun but expensive.

- An ounce of prevention is worth a ton of cure. Plan ahead. You *can* leave your credit card(s) at home. I do it a lot.

- If you have to then make the best 'bad' decision not the worst.

- Realise that there are many ways to love and reward yourself and hardly of them involve buying "presents" for oneself.

- What would you rather be known for? Your discipline or your excesses?

ps For Natalie! Exercise is a discipline same as money. I have preset times to exercise and i stick to them like glue. An exercise buddy is also a great investment. Mine keeps me honest and vice versa.

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Permalink Reply by Tina on June 2, 2008 at 15:41

Hi Jacquesk, your comments are spot on; you're obviously a very disciplined person and I can see how taking this approach can be very successful. I've taken a similar approach with work and exercise in the past with great success.

But it begs the question - as effective as it may be, does thinking an behaving in this manner take all the fun and spontaneity out of life? Does life need to be like this?
TNT

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Permalink Reply by jacquesk on June 2, 2008 at 16:00

Hi Tina
I choose to be spontaneous now! :-)

You can have a disciplined approach to life and fun too. Speaking for me I have a hoot of a life and a lot of it comes down to having discipline enough to choose.

For example I am off to Canberra for one day next weekend to visit friends and go to the Monet exhibition. Booked the fares early so I got a good deal. Went direct to the airlines web page rather than pay the extra $40+ using Webjet (another good tip). Made sure i had enough in the bank account so that none of this is funded from my credit card. If I do overspend then I will compensate for it by temporary belt tightening when I get back.

For mine I actually enjoy the 'disciplined' approach and treat it like a game (which it is).

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Permalink Reply by Tony Aloisi on June 2, 2008 at 16:06

Hi Jacq - looks like I was writing at the same time as you. :)

It's funny, I was only talking to my wife about Webjet today - how ridiculous it is that they can make such a huge profit ($24 million! see the article here) when it is just as easy, and much cheaper, to book directly.

I agree wholeheartedly that you can combine spontaneity and fiscal discipline - in fact, spontaneity alone tends to be short-lived...

TA

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