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Money
My Credit Cards Are MAXED Out. I’m Officially Drowning In Debt.
3 ways you can avoid racking up credit card debt.
It’s a common story:
“I’ve maxed out my credit cards. I can’t apply for more credit, and I don’t know how I’m going to pay off all this credit card debt.”
Oversight: Monitor Your Accounts – Vigilantly.
How does a person arrive at this point in the first place? They don’t monitor their spending, and they don’t utilize a budget.
One of my friends avoided looking at their account balance to know how much money was available. Do you know what happens when you don’t look at your checking account? You overspend, get overdraft fees, and blindly walk yourself into more debt. Unless, of course, you’re loaded with cash flow and never spend more than you earn.
Another person told me they were oblivious to a large payment exiting their account four months straight; now, they can’t use their credit card anymore because it’s maxed out.
We’ve arrived at the point we check our social media accounts more than our bank accounts.
If you suck at money, do yourself a favor and do the minimum: check your accounts frequently. The more you monitor your spending, the more aware you will be of how much money you have, which means you are more likely to spend less money.
Convert Your Purchases Into Hours Worked
Recently, I wrote the article: “Are You An Addicted Consumer?” In the article, I suggest thinking of spending in terms of time lost. Ben the Trader, put it eloquently: convert your purchases into the hours it will take to pay for them.
The average hourly wage is $11.19. If you buy a new iPhone at an estimated price tag of $1,000, you’ll need to work 89.37 hours to pay for that phone.
Which takes me to my next point, how many hours do you figure you’ll need to work to pay for your debt?
How Much Time Will Your Debt Take To Pay?
Maybe you’re the average household and bring in 60k-80k a year, which amounts to earning $28.85-$38.46 per hour. If you have the average household debt ($93,000–$145,000 based on debt.org and CNBC numbers), you’ll need to work 5,026 hours to pay off that debt on a $60,000 salary.
Realistically, people pay ~$1,233 each month on debt (according to LendingTree), which equates to spending 10 years of your life paying for $145,000 worth of debt (all of this money could be compounding in your investments instead – a much wiser choice). You might even have more debt if you fake own a house (pay a mortgage).
You might consider spending less than you earn by thinking about how many hours you need to work to cover how much money you spend.
Quick Recap: How To Avoid Racking Up Credit Card Debt
Maintain high oversight for all of your accounts. Check your accounts daily. It won’t hurt you, I promise.
Utilize a budget religiously. If you follow a budget, you will never overspend, which means you will never be in debt.
Think of the number of hours you’d need to work to pay for the purchases whenever you spend money.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.