Credit Card Joe: Don’t Spend Any More!

Here’s the number one problem I think most people have with credit: they’re not responsible (I’m guilty here). You have available to you a line of credit either via credit card or just a bank loan, and you have to keep in mind that money is not really yours. Again, here I’m guilty.

You have to make use of the credit for it’s original intent, and then immediately do something like cut up the card or put a spending limit on the credit line just barely past what you needed it for originally. You don’t want to borrow more than you need, and you don’t want to spend forever paying it off.

Another credit guffaw people are guilty of is paying off their credit card or loan, and then going “Hey! I’ve got credit available! I could go buy that X-box 360 I’ve been eying all this time!” and then go run the credit card up again.

Here’s my current debt-ending process I’m trying out. I read about it on Lifehacker.org – it’s called the “Snowball Effect” or some such nonsense. You pay the most on the smallest debts you have, and then pay minimums on everything else. Once you have the small debt paid off, you move on to the next smallest paying what you can afford to, and pay minimums on everything else. This only seems to work if you make enough to pay more than all minimums anyway, which I barely am. If you’re stretched too tightly or are over-stretched on paying minimums, you might consider going to your bank or an online site and getting a debt consolidation loan.

Some of the extra money I’ve started earning online is going to help me out – I might get my car paid off first and that should free up $250 every month to pay on other things, like my student loans or credit cards. The sooner I’m debt free, the sooner I’ll have one less thing to worry about!