Credit Counseling: Staying Out of Debt

Jeanne McTaggartChristian Credit Counselors

christian credit counseling

There’s plenty of information available about getting out of debt.  You know that one of the best methods for paying down debts is the snowball method–paying down the smallest debt first, then proceeding on to the next debt and committing the funds from the first payment to that one until it’s paid off, and so on and so forth.  You know how to restrict yourself while you’re paying down those debts so that you don’t continue making the problem worse.  But what about when you finally have those debts paid off? Credit counseling is about more than just paying off debts. It’s about learning how to avoid going back into debt once you’re free of that weight.

Be proactive about Saving

It is recommended that at least ten percent of your net income go into a savings account each month.  By committing that money to savings, when something catastrophic happens–an unexpected home repair; a car accident that totals the vehicle; a medical issue that requires expensive tests or treatments–you have the money there to fall back on.  It’s easy to say, “Well, I’ve got plenty in savings for now,” and ignore the possibility of something happening in the future that will cause a need for that money.  It’s harder to remember in the moment all the things that could cause you to need that cushion in the future.

Round up Your Spending

Have trouble keeping track of your spending?  Occasionally forget to write down small purchases, leading to overdraft charges in your account?  Get in the habit of rounding every purchase up to the next dollar.  This will help ensure that you always have a little bit of extra in your account to help absorb those “small” purchases.  Also, rounding up makes the math easier, so you’ll be more likely to write down and balance even the small purchases.

Decide on a minimum amount to keep at the “bottom” of your account–$100, $500, or whatever amount works for you.  This is an amount that you don’t acknowledge, but that is there to catch “accidents”–those moments when an automatic payment comes out too early, or you mistakenly overspend.  When that happens, you have to pay yourself back out of your next paycheck; but you’re not left paying costly overdraft fees.  Once a quarter, check your account balance.  Be sure to account for any purchases that haven’t come out yet.  Then, move the extra money in your account over to savings.  You’ll be surprised how fast it adds up!

Allot spending money to yourself and your spouse

The quickest way to overspend is to constantly feel like you’re being deprived.  If you always have to walk past that splurge item that you really want, you’re going to start to feel like you’re never allowed to have anything–and you’ll start justifying purchases to yourself as a result.  Later, when you look back over your spending, all of those small purchases will add up to a much bigger number–and may make it difficult for you to stay on top of your other bills.  Instead, when you construct your budget, give yourself some spending money with each paycheck.  Make sure that your spouse has the same benefit!  The rule is, you can’t complain about what your spouse spends their spending money on.  If she wants to spend it on a pricey manicure, that’s her choice.  If he likes to grab a burger for lunch every day instead of packing a lunch, fine!  That money just comes out of spending money instead of out of other budgeted areas.

Plan ahead for major purchases

Do you know that you’re going to want to replace your car in two years?  Put money aside for that each month until it’s paid for.  It’s just like making a car payment, only you’re paying for it beforehand.  Know that you have an appliance that is nearing the end of its life?  Save for it before going out and buying a new one to avoid having to pull that money out of your primary savings account.  Try to maintain a long view of the things that you’re going to need so that you’ll be less likely to be caught off guard.

Maintain an attitude of gratitude

It’s easy to look around and see all the things that you don’t have, to wonder why you don’t deserve the same things your neighbors or friends take for granted, or to justify “deserving” things that you can’t afford.  To help offset those thoughts, try being grateful for what you do have.  Sure, your car isn’t the newest model on the market; but it is reliable.  Your dishwasher doesn’t get things as clean as you’d like anymore, but it’s still taking care of what you really need it to do.  Your kids are healthy.  You have a roof over your heads.  Those are the important things–and being grateful for them will help you to appreciate them more.

Getting into debt is easy.  Staying out of debt and living within your means is hard, but it’s well worth the effort.  The first time you’re able to pay for a major purchase without reaching for your credit card, you’ll discover just how proud you are of what you’ve managed to accomplish–and just how worth it learning to live within your means can be.  Need help getting started?  Contact us to see how we can help you get out of debt and stay there.

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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