Insanity is defined as making the same mistakes and expecting different results. It’s easy to recognize after the fact, but very difficult to detect when you’re going through it. Accumulating credit card debt falls into this category. Do high credit card balances surprise you at the end of the month? You may be making some very basic mistakes.
Simply paying off the debt doesn’t solve the problem. Before you start looking for the best way to consolidate credit card debt, let’s look at the behaviors that landed you in this position in the first place. Some of them are correctable. Changing those will alter the way that you use your credit cards, so you can stay out of credit card debt for good.
1. Failing to Follow a Budget
Spending money without using a budget is like driving a car without a gas gauge. You never know when you’re going to run out of fuel. Sadly, many Americans never create a budget, trusting themselves to handle their finances on gut instinct. That’s why 54% of consumers, roughly 125 million adults, live paycheck to paycheck.
The end of the month, when your credit card bills come in, is a great time to create a budget. Go back through your statements and make a list of all your expenses, including the non-essential ones like restaurant bills and recreational shopping. Figure out how much you’re spending and then look for areas where you can cut back.
2. Not Checking Your Balances Regularly
Checking your credit card balances regularly throughout the month will prevent that “big surprise” when the bill comes in. Credit cards with high spending limits are a trap. It’s easy to disregard the price tag on certain items when you know that you have all that purchasing power. Start watching your balances daily and you’ll change that behavior.
3. Impulse Buying Because It’s Easy
The Amazon “One Click Buy” option is an impulsive shopper’s worst nightmare. It’s presented as a convenience, but it’s just a mechanism to tap into your addictive tendency. How many times have you purchased items because “one click” made it too hard to resist? We justify it because the price is right, but many of those purchases are unnecessary impulse buys that add up over time.
4. Too Many Automated Subscription
Many of the applications on your phone use a subscription model for generating revenue. Streaming services, online games, and publishing platforms are good examples of this. They’re all cheap, many under $10 a month, but they can add up quickly if you’re not careful. Check your credit card statement every month to see if you can eliminate any of these.
Change Your Credit Card Behaviors
If you keep landing in credit card debt, you’ll be right back in the same position if you don’t change your behaviors. The solution is simple. Create a budget, check your balances regularly, and avoid impulse buying and automated subscriptions. You’ll find that your balances will steadily go down every month, not up.