Credit Card Common Sense

Everyone knows that loading up on credit card debt is a bad financial move, right?!   Yeah, sure you get lots of stuff, but then you have to eventually pay down the debt that you accumulated while buying that stuff.   And many times by the time you pay the debt off, the stuff you bought is old and needs to be replaced.   The excessive use of your credit cards is one of those financial mistakes that you want to avoid because if you accumulate to much debt you may never, ever get out of debt.

How To Avoid Excessive Credit Card Debt

Tip #1 – Avoid Covering Basic Needs With Credit Cards

Using your credit cards to pay for your housing, food and clothing is a perfect example of excessive credit card use.   Your housing, food and clothing are basic needs and you should be able to pay for those needs with the income from your paychecks not your credit cards.

If you are covering your basic needs with credit cards, you need to seriously look at your spending habits. Are you over spending because you are buying things you want vs just the things you need.

Tip #2 – Review Your Spending Habits

Some financial planners  will suggest that if you use your credit cards for anything other than emergency purposes you are over spending and need to review your spending habits.

Do you have poor spending habits?  You don’t think you do, but how would you know.

If you are not spending within the framework of a budget, you could be over spending.   If you buy items that you just like but don’t need, you are over spending.   If you are always picking up the lunch tab when you eat out with your friends or picking up the bar bill, you could be over spending.

These financial habits may all seem perfectly normal to you because that is just how you operate your personal finances.   But these normal financial habits of yours could be the reason you are drowning in debt.   Take the time to review your spending habits, you may be surprised at what you find if you take the time to dig deep enough.

Tip #3 – Watch Your Income Compared To Your Spending

Credit card debt, income and expensesThis is an easy tip to talk about, but a hard one for some people to follow… live within your means.

If your living expenses are more than your income the tendency is to rely on your credit cards; which leads to that debt which you will never pay down.

Credit card companies love people who live beyond their means, they make lots of money from fees and interest on that type of consumer.    Your financial life is in ruins, but the credit card companies are profitable.

Credit cards allow us to buy things we can’t afford.  That is exactly what you are doing when you spend beyond your means; don’t do it, cut back on your living expenses.