How to Divorce Your Credit Card
Scrutinize your credit card bill to determine what you're spending money on each month., Identify how much money you are sending to your credit card company each month.
Step-by-Step Guide
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Step 1: Scrutinize your credit card bill to determine what you're spending money on each month.
Sometimes you may not even realize how much you're charging until you see it in black and white.
Plus, because credit card fraud has become commonplace you may be paying for items you haven’t even purchased. (You have been checking monthly, haven't you? If not, goodness knows whose boots, restaurant meals and movie tickets you've been funding!) Look for a consistent pattern each month.
Compare and contrast three months worth of credit card bills to look for trends.
For example, are you purchasing a $5.50 latte and $3.00 scone every morning? How often do you shop or dine out and then use your credit card? Add up your monthly credit card expenses, along with other financial obligations such as mortgage payments, utilities and groceries.
Identify every bill that must be paid each month in addition to your credit card bill.
Don’t forget about childcare, school tuition and gas (if you don’t pay for gas using your credit card).
Compare your monthly expenses to your total household income.
Are you spending more money than you bring home each month and if so, where is the bulk of it going? Typically, the largest amount should go toward the mortgage or rent, so concentrate what is being spent on luxury items such as clothing, entertainment and dining out.
Find luxury items you can do without.
Tally up the consistent expense and reduce it from the total.
Compare your new total to your household income and determine if you are living within your means.
If you still are not, go back through your list and cut other expenses.
While most people consider cable television to be in the “need” instead of “want” pile, you should consider transferring it to the “want” pile until you can get your credit cards under control. -
Step 2: Identify how much money you are sending to your credit card company each month.
If it’s the minimum balance, there’s a good chance you’ll end up paying double for your purchases in the long run.
Credit card interest rates can exceed 30%, so figure out how much of your money your credit card company is making off of you for only paying that small portion each month.
Detailed Guide
Sometimes you may not even realize how much you're charging until you see it in black and white.
Plus, because credit card fraud has become commonplace you may be paying for items you haven’t even purchased. (You have been checking monthly, haven't you? If not, goodness knows whose boots, restaurant meals and movie tickets you've been funding!) Look for a consistent pattern each month.
Compare and contrast three months worth of credit card bills to look for trends.
For example, are you purchasing a $5.50 latte and $3.00 scone every morning? How often do you shop or dine out and then use your credit card? Add up your monthly credit card expenses, along with other financial obligations such as mortgage payments, utilities and groceries.
Identify every bill that must be paid each month in addition to your credit card bill.
Don’t forget about childcare, school tuition and gas (if you don’t pay for gas using your credit card).
Compare your monthly expenses to your total household income.
Are you spending more money than you bring home each month and if so, where is the bulk of it going? Typically, the largest amount should go toward the mortgage or rent, so concentrate what is being spent on luxury items such as clothing, entertainment and dining out.
Find luxury items you can do without.
Tally up the consistent expense and reduce it from the total.
Compare your new total to your household income and determine if you are living within your means.
If you still are not, go back through your list and cut other expenses.
While most people consider cable television to be in the “need” instead of “want” pile, you should consider transferring it to the “want” pile until you can get your credit cards under control.
If it’s the minimum balance, there’s a good chance you’ll end up paying double for your purchases in the long run.
Credit card interest rates can exceed 30%, so figure out how much of your money your credit card company is making off of you for only paying that small portion each month.
About the Author
Logan Cox
With a background in education and learning, Logan Cox brings 10 years of hands-on experience to every article. Logan believes in making complex topics accessible to everyone.
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