get out of debt change habits american households credit cards

I’m not here to tell you that debt is bad or evil, and I’m not even going to tell you not to use it! In fact, I think debt can be a good tool in many cases as it allows us to leverage our buying power to buy a home for instance. However, debt can get you in trouble very quickly if it is not used responsibly.

Last week I read a report from NerdWallet that the average household carries a credit card balance of $16,061. Yikes!! On top of that news, the Federal Reserve increased interest rates in December and predicted an additional few more rate increases this year. Increased interest rates simply mean that the rates on credit cards, or any other variable interest debt, is going to increase as well. Higher rates means that those balances are going to become more costly for you to carry. The only solution is to get rid of those balances! Here are the habits we need to adopt to make this a success.

Take Back Consumer Power

Having a credit card is a convenience. You can book flights, get rental cars, shop online, and do several other things with this little tool that provides all the advantages of cash back and consumer protections. But that is just it. It’s a tool for consumers and as a consumer, we are hit with roughly 4,000 marketing messages a day! It is our responsibly to create our own financial destiny because nobody else is going to do that for us.

Being in charge means that you decide what to do with your money and who to give it to. When you have 4,000 different companies bombarding you with photos, ads, and incentives it can be hard not to spend money but the trick is to change your thinking. Everyday you need to remind yourself that ALL of those companies are looking for ways to get into your pocket book and it is your choice. Are you going to buy what you need or are you going to buy that ‘insert thing here’ that made you feel a certain way when you saw the advertisement?

Understand That Sale Shopping Is Not A Sport

Do you know someone like this? “Look at all this STUFF I bought! It was on sale. Look at how much I SAVED!” I laugh at this because I have said this so many times! And while it does indeed feel like you’re saving money when you buy something on sale, you’re only actually saving money if you were already planning to buy that item.

Now, I never walk through the mall just for fun or browse the circulars because I know I will get wrangled in with all the marketing and so called deals they put on. Instead I only go to those places when I absolutely need something, put it on my list, and go in with intention to buy just the things I need. In addition to making your list, let’s just go ahead and unsubscribe from all of those retailer ads! We can always look those up when the need for something arises!

Delay Gratification

We live in such an instant world where even if our internet videos take a few seconds longer to load, we become annoyed. Money has become instant as well. We just swipe, tap, click and done! In the moment there is such an adrenaline high! “Yes, I’ve always wanted that super-blender and now I have it!!” You wait and it arrives in a box two days later from Amazon, you use it, and then suddenly you begin to regret your quick purchase.

I get it! Shopping is fun but if you set a time limit for yourself, you won’t have to worry about that regret so much later. I personally have set a two week time limit for myself. If I really want that item I found in the moment I wait two weeks to purchase it. I have found that I usually don’t go back to buy it. Bonus: Put that money in savings instead!

Focus On Your Financial Destiny

Going back to the part where only you can control your financial destiny, it’s time to focus on that! When you have your future-self on your mind and you are working on creating the best life for yourself, it’s not always about accumulating stuff. Well that may be the goal of some people but I’m in the mindset of not letting my stuff own me, and instead having the financial freedoms to do what I want, when I want! I literally get sick to my stomach when I go through our closets and get rid of all the things we no longer use or wear. All I can think of is all the money we spent on those things that we are now just giving away or selling at a substantial discount.

Practice the above habits, take advantage of your employer’s 401(k) match, set up saving challenges, stick to your budget, invest in a low-cost portfolio, and make a plan to get out of debt. Doing any of these things can help create your own successful financial destiny but it takes work and it takes time. Forming good habits today can free you from a lot of stress later and from incurring extra costs from those rising rates.





Disclaimer: I am a CERTIFIED FINANCIAL PLANNER TM (CFP®), but I am not your CFP® or financial advisor. The information in this article is for general informational and entertainment purposes only and does not constitute financial advice. This article does not create a financial planner-client relationship. The author is not liable for any losses or damages related to actions of failure to act related to the content in this article. If you need specific financial advice, consult with a licensed financial advisor or CFP® who can tailor advice regarding your specific circumstances. Additionally, sometimes I use affiliate links to support my website. This means I may earn a small commission, which is no additional cost to you, for referring and discussing products and services that I personally use, or have used, and trust. Thanks for your support!