Getting in over your head with your credit card spending isn’t hard to do and the cost of poorly managed cards can impact your family’s future financial security and well-being. It limits your options and ability to build wealth and, depending how far you’re in the red, can come at a huge emotional cost.
Credit card spending is a slippery slope
Credit card spending is one sneaky monkey. It creeps up….an extra $50 here, an $100 there…. then WHAM one day your statement *suddenly* shows you’re in thousands or tens of thousands of dollars of debt.
Credit cards give a false sense of financial security. That ‘security’ is eventually wiped away by the bill that finally tips you over the edge.
Here’s the thing, if it took you years to dig yourself a big ol’ credit card debt hole, it’s not gonna disappear overnight – even if your wakeup call gets you hyper-focused on paying it off.
To manage a credit card wisely, you have to be on top of it, keep track of each payment you charge and pay it off in full each month. Non-negotiable.
PRO-TIP: Better still, get yourself a debit card you can use as a credit card so you’re only ever spending your own money.
It borrows from your future paycheck
When you’re in credit card debt, big chunks of your future paychecks are already spoken for – before you’ve even earned them.
Think about it. If you owe $7,000 on your card and you get paid $35 an hour, you’ll need to work for 200 hours to pay it off – with nothing else to look forward to. You’ve already had the fun / bought the stuff.
It’s way less exciting (i.e. – not exciting at all) spending 200 hours working just to pay the bank back than working 200 hours anticipating the awesome overseas family trip you’re saving for.
Paying off your credit card is paying for past you – not setting the future you up for wealth building or good family times!
The only winner in the credit card business are the banks. They want you to stay in debt, it’s what fuels their massive profits. Why do you think they offer you limit increases on a regular basis, it’s not for your best interests that for sure.
Let’s beat the banks and start working for you and your wealth.
Credit card spending is holding you back when it comes to investing
Investing is THE best way you can create a secure financial future for your family and debt seriously puts the brakes on your capacity to A) invest at all or B) invest to your maximum potential.
Take that 200 hours/ $7,000 equation we looked at above and instead of paying it back to the bank, imagine investing it. Now that’s a future worth working for!
In my upcoming FREE Money Made Simple workshop, I take students through the process of paying off debt the smart way, that is faster and more efficient, to free up their cash for investing. With the bank no longer demanding a big slice of every paycheck, you’re free to channel more funds towards your investing efforts. Don’t let your risky credit card spending hold you back from creating the future you want for your family.
To be notified of the details of the FREE Money Made Simple Workshop, click here to get on the waitlist. Hurry it starts this THURSDAY!
It causes stress and tension in family relationships
Debt doesn’t just wreak havoc on your wealth-building potential, it can seriously impact your family relationships. It can trigger arguments about who is responsible for the debt and how will it ever get paid off?
If you’re under the strain of debt there other negative effects too; your self-esteem and ability to be attentive are thrown way out. It’s hard to think about anything else if you’re drowning under a mountain of credit card debt – especially if you’re hiding the extent of the problem from your family. Worrying endlessly about debt triggers stress, which can even spiral into more serious mental health issues.
A study by the University of Nottingham considered the correlation between carrying debt and mental health issues and found those who were struggling to pay off debt were more than twice as likely to experience depression and anxiety.
If you have kids and they’re exposed to the stress of their parent/s being overwhelmed by money problems it can affect their future relationship with money too.
Financially stressed-out parents do not make great money mentors and even if you try to protect your kids, they can sense when things aren’t going well on the home front, financially or otherwise.
Credit card interest is a killer
You know all about the awesome power of compound interest for wealth creation, right? If not – read this.
Well, compound interest works the opposite way too – and credit card interest left unchecked will bury you faster than you can say “19% per annum.”
Everything ends up costing more when you charge it to the card but don’t pay it off at the end of the month in full – only making the minimum payment is not a winning financial strategy.
If you have a large amount of credit card debt and are only making the minimum payments each month, you’re not going to pay it off any time soon. Depending on how much debt you have, it could literally take you decades. DECADES.
You need to decide what side of compound interest you want to be living on…and I don’t think it’s much of a decision.
Eliminating your credit card debt takes an overhaul of your spending habits, clarity, and commitment to stay the course and see it through until the balance shows a big fat zero!