Controlling Credit Cards and Spending

When we were in college, we applied for credit cards and thought we hit the jackpot when we got approved. They started off as small approval amounts, $300 here or $500 there. We would make small purchases here and there, pay our minimum payment on our bill on time, and slowly the amount we owed grew. What eventually happened after making so many on time credit card payments, the credit card companies would increase our credit limit and the cycle would start again. We would celebrate with spending more. We were facing one of the biggest issues that most Americans face and that is credit card debt. As of mid-2019, Americans have 1.08 trillion in credit card debt. Visa, Mastercard, American Express, and Discover are the most popular cards to have. We used to be proud of the credit cards we had. Now the goal is to pay off our credit cards and to have a healthy savings account. 

I’ve talked about the snow ball-effect, which Ramsey is known for. You know, arranging your credit cards by the highest owed to the lowest owed. Then paying the minimum on all of the cards except the smallest amount due. Then paying a larger sum on the smallest card in an attempt to pay it off early. 




Chris Hogan is a black man who works with Dave Ramsey. He wrote a book about millionaires and he explained that you would be surprised at how everyday millionaires live. They build wealth slowly. The steps are simple. They live on less than they make, avoid debt, and invest. Their goal was not to have a premiere credit card, but to have wealth in other forms. 

There are unstable methods people try to get from under debt quickly. They are the get out of debt quick methods like debt consolidation. This is where you consolidate your debt and pay one single payment towards it. This is dangerous though. A lot of the companies that offer this program are not legitimate companies. You’ll find that you are paying for your debt longer and the initial interest rate you were offered increases over time. Worse yet you may revert back to using your old cards and remain in the same position you were in before. 

Debt settlement is the other method that you should avoid. These companies charge a fee and promise to negotiate with your creditors to lower the amount you owe. They typically do not do this, but make off with your money. 
 
You have to commit to stop using credit cards. Make a budget. Cut up your credit cards. Debt snowball and save, save, save. I know this is asking a lot and it requires a lot of self-discipline. These are methods that work for any budget. Remember the goal is not to be approved for a specific credit card but to have $1,000 saved for emergencies at a minimum or 6-months-worth of income saved as a maximum. 

By Natricia Edwards

Comments

  1. UnknownJune 21, 2021 at 3:09 PM

    We have begun to use the debt snowball and I have cut up all of my credit cards. I've paid off two credit cards and will hopefully have the third one paid off in the next three to four months. I'm excited about this journey that we're on.

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