Your Credit Cards Are Paid Off, Now How Do You Stay Out of Debt?
One of the fun parts of having a blog is being able to see the search terms that people use to find whatever it is they are looking for. Some of them are quite comical. My two recent favorites have been Wow, I paid off my cat and Do snakes smell like burnt rubber. Why on earth those landed here, I’ll never know, but I do know that by and large my biggest search term is related to paying off credit card debt. My most popular post is my story of paying off over $30,000 in credit card debt. Obviously, there are lots of folks out there who are struggling to pay off their credit cards. I think there are tons of resources to help you with that plan, but how do you stay out of debt once you have paid it off?
I have another secret confession. The amount of debt we paid off over the past two years is not cumulative. There were two other times in years past when we paid off our credit cards. Once, we paid off $8,000, and another time, it was $12,000. Early on, we knew credit card debt was not a great habit, but after we paid off our balances on those occasions, we ran them up again. Why can’t people stay out of credit card debt?
I’ve Got All Kinds of Money!
I think when we reach a major goal like paying off credit card debt, it is usually through some struggle and sacrifice. You’ve cut out all unnecessary spending to focus on a goal. After the payment is gone, you suddenly find yourself with more money in your pocket. Advertisers and society try to rope you into spending it. People may tell you to reward yourself, or you only live once. Almost every business offers financing. How many people do you know who struggle with finances and then go out and buy a new car?
How Do I Stay Out of Debt?
Spending is like any other vice. Maybe there isn’t a surgeon general’s warning at the cash register, but if you think worrying over paying bills doesn’t affect your health, then I’ve got some beach front property in Colorado I want to sell you. If you aren’t ready to change your thinking and habits, you’ll never get out of debt. It’s just like losing weight or quitting smoking, you have to have good reasons and be ready to change. If you do it because someone told you to or because you think it’s temporary, you’ll never succeed.
Make Sure You’re on the Same Page as Your Partner- If you’re in a relationship, you don’t have to agree on everything, but you need to have the same basic goals about money. Glen at Monster Piggy Bank mentioned a couple who each spend money as fast as they can so the other one can’t get to it. It reminds me of the circus act where the guy has multiple plates spinning, and it gets harder and harder to keep them all in motion. This lifestyle might work when the money is rolling in, but if it stops, all the spinning plates come tumbling down. If you and your significant other are never going to be on the same page, it might be best to cut your losses.
Surround Yourself with Like Minded People- Sadly, your friends and family might not understand or support your quest to be debt free. They might even be jealous if they have debt problems themselves. It’s much easier to knock someone off their pedestal than climb up to join them. Trying to quit drinking while hanging out at the bar makes it that much harder to stay sober. Likewise, if you continue to hang out with your friends who continue to spend money, you will be tempted to pull out the credit card. If you can’t find people who share your ideas, look online. I’ve been thankful to find a great community of financially savvy people who are striving for similar goals.
Follow the Golden Financial Rules- Really, they work for any income and any amount of debt. Some people might need longer than others, but if you follow a few simple rules, it is possible to stay debt free.
- Set up a budget by tracking your spending,
- Spend less than you earn.
- Evaluate every purchase as a want versus a need, and don’t buy wants unless they add value to your life. If you lack will power, stay away from the stores or don’t look online.
- Start saving for emergencies so you won’t have to use credit if something goes wrong.
While these rules are simple, they do involve some major life changes for lifelong spenders. If you are used to having a new car every three years, you might have to learn to love an older vehicle. If you pay too much in rent, you might have to move. You might have to tell your children that they don’t need the latest gadget. You might not be popular. What you will be is debt free, and that gives you all the choices that making credit card payments never will.
Tell the truth, have you ever paid off your credit cards only to find yourself back in debt? What is the biggest reason people can’t stay out of debt?
Being on the same page as your partner is so important. I’m lucky enough to run The Outlier Model with my partner, CF, so we rarely disagree on money. When we’re out of debt completely, we won’t go back into debt for sure.
Luckily J and I are generally on the same page when it comes to finances. Believe it or not, I’ve only had my credit card at zero for ONE DAY before I started racking it up again and for over a decade, it’s never been paid off. I cringe thinking about all the interest I am still paying. Once I pay off my credit card debt end of 2013, I vow to stay away from it. For some reason, I’m certain I can do it 🙂
It sounds like you have hit your credit card rock bottom. I think once you do that, you won’t go back. It’s just a feeling you have and know you’ll never pay another penny in interest.
I’m actually just about to pay off my credit cards, got around $400 left til they are at $0 balance. My plan for not running them back up is taking that line in the budget and putting that amount in my 401k each month. It’ll be done automatically for me so I wont have a chance to spend it. That way i’ll be saving for my future and there won’t be this burning hole in my pocket.
I paid off over 15k worth of credit card debt many years ago and did the unthinkable thing of charging those darn things right back up. I have made the decision that I no longer want to live in debt and am willing to do what it takes to pay them off.
Great post Kim! I believe people don’t stay out of debt because they don’t fully believe in it as a permanent lifestyle. For me, staying out of debt evolved from a conviction deep down in my spirit. It’s a really strong conviction that I choose to follow with all my heart. You could say it’s a passion. And when you believe in staying out of debt that strongly, then the follow through becomes easy.
I think a lot of people tend to forget unpleasant feelings, and don’t remember how painful or stressful it might have been to be in debt. Plus, if they got out of debt once before, they might feel like they could do it again. Remembering how tough it was – and how great it felt to get out of debt – can be very helpful.
Great post, Kim.. Luckily for me, Michelle and I are absolutely on the same page. We both want to indulge a little bit, because we really buckled down for the entire period we were eliminating debt. But we are spending responsibly and doing it with patience, something we never could have done without going through the massive debt reduction exercise and re-education.
It is very tempting to use credit cards when there isn’t a lot of extra money in your budget and you want something (not need it, but want) Spending is a vice. People have to be very aware of how they spend their money or they will fall back into the debt trap.
Needs vs wants can certainly seem like a find line, especially if you don’t step back and think about it.
College was like that; rack up credit card debt, pay it off. Rinse and repeat. Thankfully those days are long gone!
Oddly enough, I was scared to death of credit card when I was in college. Too bad I lost my fear.
Being honest about our shortcoming and weaknesses in spending habits is key.
Denial certainly can run deep when you don’t want to change your behavior.