Never Get in Trouble with Credit Card Debt Again
Once you pay down this costly debt, you need to focus on keeping it in check. These three tips can help.
Debt is an ugly four-letter word. It comes in all shapes and sizes, and generally includes mortgages, auto and student loans, credits cards and more. In fact, as of December 2015, an average American household was estimated to have $130,922 in debt, with $15,762 belonging to credit cards. Even more staggering is the total $733 billion of credit card debt owned by U.S. consumers coming into this year.
As credit card debt is considered to be a costly threat to your financial success (and one of the worst kinds of debt), it's often reviewed first when putting together a financial plan. One overlooked question, however, is what comes next. What if you stuck to your plan and got those pesky credit card balances down to zero? What steps can you take to ensure you don't rack up those bills again?
Below are my top three recommendations for keeping those credit card balances in check now that you've greatly reduced or eliminated your debt.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Cut Up Those Credit Cards
As cliché as that image has become, this is an essential first step. There are a lot of psychological factors that go into acquiring debt, and if you were prone to racking up debt in the past, chances are you are prone to do it again. Don't take the risk. Cut up your credit cards and rely on a bank debit card. This will ensure you only spend the money you actually have—not the funds your credit card company so generously lets you borrow.
Check Yourself and Remain Accountable
Accountability is key when it comes to keeping credit card balances in check. At a minimum, schedule an annual financial check-up to build in that accountability. This can be done in a variety of ways—be it with a family member, a spouse, financial planner or even YOURSELF. Knowing that this event is on the calendar will hopefully provide you with the needed motivation to stay on track.
Utilize Tech Tools
With the advent of technology, mobility and online resources, it's now possible to find solutions to virtually anything using tech tools. Why not leverage technology to get a comprehensive view of your financial well-being? You can do this with the help of a financial professional or even complimentary sites, such as mint.com. Use these tools to track your spending or set budgets, and make it a habit to log in once per week to ensure consistency and results.
While there are plenty of reasons people fall into debt, more often than not, debt begins to spiral out of control because people neglect their finances. They are afraid to look, and by the time they get the courage—it's too late. Be proactive, take control and use the necessary tools to stay on track of your debt. The less you owe, the more you own, and the better chances of a successful financial life.
Taylor Schulte, CFP® is founder and CEO of Define Financial, a San Diego-based fee-only firm. He is passionate about helping clients accumulate wealth and plan for retirement.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Taylor Schulte, CFP®, is founder and CEO of Define Financial, a fee-only wealth management firm in San Diego. In addition, Schulte hosts The Stay Wealthy Retirement Podcast, teaching people how to reduce taxes, invest smarter, and make work optional. He has been recognized as a top 40 Under 40 adviser by InvestmentNews and one of the top 100 most influential advisers by Investopedia.
-
How to Help Your Kids Without Ruining Your Retirement
Here are some general considerations to ensure the gift of assets to your kids will not negatively affect your financial future.
By Mario Hernandez Published
-
AI to Power the Next Generation of Robots
The Kiplinger Letter There's increasing buzz that the tech behind ChatGPT will make future industrial and humanoid robots far more capable.
By John Miley Published
-
How to Get Your Kids to Step Off the Gravy Train
A surprising number of young adults live with their parents. Setting some financial ground rules could get the kids out on their own faster.
By Neale Godfrey, Financial Literacy Expert Published
-
Spring Is a Good Time to Clean Up Your Finances, Too
While you’re decluttering your home for spring, consider taking a crack at cleaning up your finances and old paperwork, too.
By Tony Drake, CFP®, Investment Advisor Representative Published
-
Is Your Retirement Solution Hiding in Plain Sight?
Here’s how to use your home equity in combination with an annuity contract to produce late-in-life income.
By Jerry Golden, Investment Adviser Representative Published
-
Three Steps for Women to Take Control of Their Finances
These strategies are especially for women who are new to managing their money because of divorce or the death of a spouse.
By Emily Glassman Published
-
Navigating the Finances of Fertility Choices and Adoption
Before embarking on the journey to parenthood, knowing what to expect financially for the different options is a good starting point.
By Julia Pham, CFP®, AIF®, CDFA® Published
-
Four Tips to Make Your Sales Presentation a Winner
Being prepared and not being boring can go a long way toward persuading a potential customer to buy into what you’re offering.
By H. Dennis Beaver, Esq. Published
-
What’s the Difference Between a CPA and a Tax Planner?
CPAs do the important number crunching for tax preparation and filing, but tax planners look at the big picture and come up with tax-saving strategies.
By Joe F. Schmitz Jr., CFP®, ChFC® Published
-
Charitable Remainder Trust: The Stretch IRA Alternative
The SECURE Act killed the stretch IRA, but a properly constructed charitable remainder trust can deliver similar benefits, with some caveats.
By Brandon Mather, CFP®, CEPA, ChFEBC® Published