The simple but effective way to smash credit card debt

The simple but effective way to smash credit card debt

Consistently spending more than you earn?

BY Melissa Browne, 7 min READ

My name is Melissa Browne and I am a chocolate addict.

Honestly, I have no idea how people keep entire bars in their cupboards or desk drawers and occasionally, every few days, snack on another piece. To me, that’s entirely unnatural.  If I purchase a block of chocolate or a bag of chocolate (notice there was no talk of a small bar there), it’s with the understanding that it’s probably not going to make it past the next few hours, never mind the rest of the day. To me, the idea of drip feeding chocolate so it lasts an entire week is both ludicrous and fanciful. It’s never, ever going to happen.

The difference between me and the rest of the world is that I know and embrace my chocolate addiction. I don’t try to fight it and I don’t try to test my willpower by bringing chocolate into the house in large quantities. Instead, I work mindfully with my chocolate consumption. I eat a small amount daily and it’s always Lindt or Haighs so it’s great quality and rich enough that I can’t gorge on more than one bag at a time.

And I eat craploads of chocolate happily and guilt-free as a result.

What does my chocolate habit have to do with money other than creating the desire for you to go spend some dollars and grab a quick snack?

Quite simply, I believe many of us need to apply the same mindfulness to our finances.

That’s because most people are entitled to have a credit card but not everyone should. The truth is, not everyone can handle credit. If you know your card (or cards) will always be at their limit, then perhaps you should rethink whether you should have credit cards at all.

There’s no shame in admitting you can’t control how you deal with credit, it’s simply acknowledging you have no willpower when it comes to the extra funds and controlling the affect this has on your finances and your long-term goals. Or perhaps you can have a card but it has a very small limit and it doesn’t live in your wallet so you can’t be tempted to overspend.

Or if you know you’ll dip into your savings if a bright shiny thing comes along then protect your savings so you can’t.

There’s no shame in admitting you struggle to save.

It’s simply acknowledging that you often end up dipping into the honey pot because you have no willpower when it comes to bright shiny things. And setting up your accounts and investments accordingly. This might mean detaching your savings from your cards and removing the redraw access as you pay down debt. Or you might take more extreme action and lock up your savings in a longer-term investment or in an account that you can’t access within 24 hours.

It’s akin to my acknowledging that if I’m going to have chocolate in the house, I’m going to eat it in one sitting. So, I don’t have it in my pantry to tempt me. That way I’m not in the cycle of eating it and then beating up on myself. Instead, I’m being kind to myself and living within what I know I can handle.

I believe more consumers should stop beating up on themselves about not being able to control their credit card consumption or lack of savings and instead, work with how they are naturally inclined to behave. Which may mean having a debit card instead of a credit card or having a limit of only $1,000 and taking the card out of your wallet and using it for emergencies only. Or keeping your savings in an online account that you can’t access with any cards.

“It’s all about being kinder to ourselves and being mindful about how we choose to interact with our finances.”

Sure, we can berate ourselves and tell ourselves we should be able to handle credit and we should be able to save. Which really isn’t helpful when the next credit card bill arrives and we’re scared to open it because we know the card will be at the limit again. Or it’s the end of another month and we’ve been ‘forced’ to dip in to our savings.

Instead, my suggestion is that we choose to understand and embrace how we are likely to behave and work within those constraints.  It’s all about being kinder to ourselves and being mindful about how we choose to interact with our finances.

After all, when it comes to our finances (and all our lives) most of us claim that we want choice. I believe it’s time to make great choices around set up our finances so they suit our personalities rather than fight against them.

My recommendation? Look outside your finances and see how you behave. Then create a plan for how you can protect your finances from you.

Melissa Browne is a Powerplayer, and CEO of accounting firm A&TA and financial planning firm The Money Barre and author of Unf*ck Your Finances.


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