Reducing your credit card use can be difficult if you are in the habit of pulling out the card for every transaction or have no savings account and are living pay cheque to pay cheque. To reduce your credit card use and eventually your debt, the first step you need to take is to cut your expenses.
Track all your expenses over a period of time by categorising your spending into categories – car expenses, groceries, clothing, lunches, etc.
Ask yourself how your expenses compare with your income. Your household will sink deeper into debt each pay cycle if your expenses exceed your income. So the best way to reduce your credit card use, is to determine which expenses can be cut to get your spending under control. Then use the money you’ve saved to pay down the credit card.
If you are in the position to stop using your credit cards until they are paid off, you may be able to get things under control. However, this can require a major commitment on your behalf to live a frugal lifestyle during this time. Sometimes it takes a while to step back and realise that the situation is due to financial habits that are possible to change.
Steps to stop the credit spiral and work towards a financially free future:
- Stop the leak: Stop using credit immediately. Look for interest free option to transfer your balance too. Then commit to paying it off in the grace period.
- Look at discretionary spending: track your spending and cut any expenses.
- Start your debt reduction plan: if you haven’t read about snowballing, check out our debt reduction blog and get some tips and get reducing!
- Start saving: this is the next most important step you can take along the path to debt freedom. If an emergency pops up then you won’t have to turn to credit to cover them. You’ll have a contingency savings plan in place and will be able to manage those time better.
Our best bogs to get you out of the credit card emergency room.
- Make a budget
- Automate your bills
- Save for your irregular expenses
- Start thinking about your goals and plans
If you’re facing financial hardship we are here to talk about a solution. Call us on 1300 887 211 or Book a Free No Obligation Phone Consultation with our friendly team and we can discuss debt management options specially focused on your personal situation.