Debt, it’s not you, it’s me.

Not all breakups are bad.  Some relationships wear out their welcome, require way too much of our attention and bring our anxiety levels to new heights.  Sound familiar?

That’s exactly our relationship with credit card debt.

It starts out magical in the beginning.  This little piece of plastic gives us this freedom to buy things, we probably don’t need, whenever we want.  It’s like a freebie, but not. Because before you know it, BAM, there’s a bill in your mailbox and reality sets in. You start to see this relationship for what it is: smoke and mirrors.

The euphoria is gone, and we need an exit strategy.

Make no mistake, we are a slave to the debt we create.  The servicing of all this debt keeps us from the dreams we visualize when we look toward the Empire we are building.

I am not immune to this just because I am in finance. I had a hell of a load of debt that I carried around for a long time.  It was emotionally and mentally draining because it was a constant reminder of how much I spent in lieu of saving. 

I turned it around in 2012 and so can you!!

 

Here are a few things you can do:  

FACE IT:

Let’s get it all on the table —  Put together a list of each and every debt that looks like this: 

Creditor, Balance Owed, Interest Rate, Minimum Due

GOOD RULE OF THUMB: If your total debt payments are no more than 35% of your gross annual salary, your debt load is manageable.

 

2. CHECK IT:
Check & monitor your credit score. Your credit score is not a measurement of your soul; it’s an algorithm that tracks your credit worthiness over time. There are FREE services out there like Credit Karma & Credit Sesame.

 

3. ADJUST IT:

Make new habits:

  • Cut up or freeze any credit cards that are not ESSENTIAL to your monthly household. Keep in mind that cancelling credit cards can have a negative impact on your credit score.
  • Pay down the debt with the HIGHEST interest rate FIRST. Unless of course the interest is the same across all accounts and then you can pay the lowest balance first. Pay more than the minimums!! The higher interest rates will have a substantial impact on your finances – especially if the balances are high and it would take years to pay off with only the minimum.
  • Use bonuses and tax returns to pay down that debt faster.
  • Automate your bill paying and automate your savings! Make sure you are putting a minimum amount toward a savings account each month as if you were paying a credit card.  PAY YOURSELF FIRST – just because we are paying down debt, doesn’t mean we don’t save. 

 

At Divine, we are on a mission to help every woman (and some brave men!) become more fully engaged in their financial affairs helping to prepare them for the inevitable challenges on this journey.

I’ve said it before, our financial walk is unique, but that doesn’t mean it has to be lonely. Become part of our network and get more tips for debt management, budgeting, investing and more.

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