Mindy Neira, a financial planner in Westwood, New Jersey, suggests that if you’re having trouble managing credit card debt, take a look at your spending. “The first step is to look at where your money is going without judgment,” she said. Things like housing, food, entertainment, travel, and mortgage payments.
Next, set goals for each category. (Naila said she prefers setting goals rather than a strict budget to account for monthly fluctuations.) Ask: Can I spend an extra $25 a month to pay off my debt?” Recognize that if it took you years to build up your card balance, it will also take time to pay it off, and be realistic. Please set expectations.
Rob Williams, managing director of financial planning at Charles Schwab, says carrying balances on multiple cards is a sign that you’re spending more than you can afford. He advised paying off the cards with the highest interest rates first by making more than the minimum payment. (This is sometimes called the “avalanche” method. Make the minimum payment on your other cards while you pay off that card. After you pay off the first card, make the minimum payment on the next higher interest card.) Start paying more than the amount above.)
Las Vegas financial planner Luis Rosa says to include a waiting period when shopping online to avoid re-incurring debt after paying it off. Place the item in your digital shopping cart, but refrain from paying for 24 hours, he said. “Maybe you decide you don’t need that product,” he says.
Another suggestion, says Alvin Carlos, a financial planner in Washington, D.C., is to use two separate checking accounts, with one checking account for fixed necessities like rent, mortgage, and loan payments. The idea is to use a savings account. Next, decide how much money you can spend on fun things like eating out or shopping, and transfer that amount to a second account each month. That way, Carlos says, you won’t have to stop and think every time you make a purchase. Check your balance every week, and when your balance gets close to zero, you can complete your spending for the next month. (Ask your bank to make sure there are no additional fees for a second payment account.)