Help! My credit card is maxed. How did this happen?
Your best friends in this case are your credit card statements. You need to get to know these over a period of a couple of months.
Firstly you should be doing this to make sure that there is no fraud associated with your card – did you really buy every one of those items? Is someone else using your card?
The value-add of this activity is that you find yourself asking “just what could that transaction be? Did I really spend money on that purchase?
It often emerges that some of your transactions were ‘silly spends’! Items that you should never have bought – you didn’t need them and you haven’t used them. Why did I buy them? You come to realise that some of your shopping is wasteful and you need to be aware of this and question, question, question yourself every time you take the card out. Do I really need that item?
After the initial shock has passed you need to continue analysing your spending habits on the more regular items. There is more to be learnt!
If you have used your card to buy large items reflect on the big items that you really need – and prioritise them! What are the most important large items that you need? Now set some goals. Is it a holiday, a household item or some furniture? Decide on something that is really important and start researching and shopping around for this item – looking for the cheapest price you can find.
Meanwhile, every time you are tempted to spend big on your credit card STOP and think about this item that you REALLY DO NEED! This should help steel you in your determination, and you will find yourself putting the CREDIT CARD BACK in the wallet.
Next, examine the smaller items. Where can you make savings? Can I buy some items less frequently eg magazines, brunches? Do I buy less of some items eg at the beautician could I set myself a limit and resist the temptation to buy the latest, you-can’t-live-without product that the beautician tries to cross sell?
If you occasionally spend time like this on analysing your credit card statements, you will find that you are more informed about your spending habits and can bring this new knowledge to bear the next time you reach for the card.
Remember, when you use a credit card you are using someone else’s money – the bank’s! And they will want their money back – with interest!
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