I have been around long enough to know that in order to get out of debt you need to
a) pay off existing debt and
b) prevent any new debt from occuring
I seem to be struggling with B. It seems as though as I try to throw everything I have to my debt I wind up not being able to afford things that come up during the month. Then I have to get out the old credit card again.
How do I prevent this from happening?! I am eager to pay off my debt and not incur new debt.
Does anyone have any ideas to prevent new debt that worked well for them? I have cut up all but 1 card that I use for emergencies but that doesn't even do it for me. I know if I go into a store like Old Navy or Gap they can pull my account up just like that so I don't even need the card.
I think I am my own worst nightmare.
Basic Finance Principle-opinions wanted
August 26th, 2008 at 05:49 pm
August 26th, 2008 at 06:09 pm
As tempting as it may be to throw every penny towards debt, if you don't have any cash on hand, when unexpected events occur -- what happens? You add more debt. If you have cash on hand though, you'll be better able to handle the small emergencies or unexpected fluctuations without resorting back to your credit.
As for Old Navy, etc.? You may have to call and physically have those accounts canceled. Or, you could just not go into those stores.
August 26th, 2008 at 06:28 pm
i find it hard too. the only debt i have is a car loan, although i do have two credit cards. one i dont use, and one i use for every expenses, and pay it off at the end of each cycle. sometimes i think i underestimate how much i spend, and get a shock at how much i have spent, so i have been trying to transfer the money over each time i spend on it to make it easier.
whatever works for you is best, but an emergency fund is a good idea
August 26th, 2008 at 06:53 pm
I never knew you could charge to your account without physically having your card. That's disturbing. Definitely close those accounts and destroy the cards, even if it knocks down your credit score a bit.
August 26th, 2008 at 09:25 pm
Of COURSE there are emergencies that can be taken care of ONLY at Gap and Old Navy. Just kidding. But sometimes there are sudden needs... a kid suddenly needs a white blouse and black skirt for a concert, etc.
Really, though, I do agree that the cards need to go. Try NOT using ANY cards just for a month. You can always go back and get it in a month, but give it a try and see if you still want it.
If I want something, I write it down in a notebook (like clothes and toys and that kind of non-essential) and wait for two weeks. If I have lost sleep thinking about the item and can truly fit it in the budget, I'll go back and get it (more often than not, it's still available). Frequently, I do not want to go back. Works for me.
Try challenging yourself for a month, though...
August 26th, 2008 at 09:32 pm
Another thing you can do, that I am in the process of doing as well, is to look for ways to reduce your current expenses. I shopped my auto insurance around and ended up saving over $400 per year and I just blogged earlier today that I saved $42 per month on cable & internet.
I do have my momoents and when they happen I ask myself if I really need or want the item I am contemplating buying. More often than not, it is a want and so I put it back. You have to induldge yourself once in a while and buy something that is inexpensive or else you might binge and spend too much.
Good luck!
August 26th, 2008 at 09:34 pm
Another thing you can do, that I am in the process of doing as well, is to look for ways to reduce your current expenses. I shopped my auto insurance around and ended up saving over $400 per year and I just blogged earlier today that I saved $42 per month on cable & internet.
I do have my momoents and when they happen I ask myself if I really need or want the item I am contemplating buying. More often than not, it is a want and so I put it back. You do have to induldge yourself once in a while though and buy something that is inexpensive or else you might binge and spend too much. Think of it as dieting. If you deny yourself any sweets, eventually you will go over the edge and eat too much. But if you allow yourself a treat once in a while, your chances of success are much greater.
Good luck!
August 26th, 2008 at 09:35 pm
August 26th, 2008 at 09:56 pm
2. Buying a good or a service at the mall shouldn't be the first solution. If an emergency comes up, take a deep breath and think what are all my choices? Do I have this already? Can I make do without it? If I need to get it can I rent it, buy it at a thrift store, borrow it?
What sorts of emergencies are you running up against?
August 27th, 2008 at 07:20 am
August 27th, 2008 at 07:58 am
It's really all about budgeting or money planning.
August 27th, 2008 at 09:21 am
November 25th, 2008 at 05:28 pm
You should find a way to pay 20% of gross salary to debts. This allows you to aggressively pay down the debts/ Once you are debt free the savings plan most people advise is 15-20% of gross, so you will be used to this plan already.