Credit card debt is the enemy of financial success. Not all debt is created equal and there are no set standards as to what is considered too much debt. What is manageable for one may not be for another. If you want to succeed financially, you need to break the cycle of credit card debt.
To be fair, credit cards aren’t the problem. Nor am I suggesting that debt is bad. In fact, taking out a loan or using various types of financing is critical to starting or expanding a business. Even buying a home requires debt. What is critical is how we manage it.
Credit is inherently a good thing but racking up the credit card debt can get ugly quick. The first thing we need to do is change how we perceive credit cards. So from now on, instead of calling them credit cards (which sounds so harmless) we should call them ‘debt traps.’ This is similar to calling cigarettes ‘cancer sticks.’ Let’s call these things what they are.
Credit cards, I mean debt traps, should be used with caution. My suggestion is that you become the credit card company’s worst customer. Their worst customer uses the card and pays off the balance each month. Do you like 0% interest? Well that’s what you’ll pay when you pay off the card each month. Do you know who is the credit card company’s BEST customer? It’s the person who racks up the debt and pays the minimum payment each month. The credit card company also loves it when you’re late because they can charge a late fee AND jack up your rate.
If you’re serious about long term financial success, the first thing you need to do is develop a plan to tackle your credit card debt. Be honest with yourself. If you can’t pay off the cards within 12 months given your current income, you’ll need to make some serious changes to your budget. If doing it within 12 months isn’t possible and you feel you’re in too deep, you may need credit counseling which can be away to help you develop a more comprehensive plan in dealing with the debt.
When your credit card debt is in the rear view mirror you can focus on building up your savings and retirement funds. Getting out from under credit card debt will allow you to devote more funds toward these goals and most importantly will give you peace of mind. Instead of making the credit card companies rich, make yourself rich. Credit card debt is the enemy. Its defeat can bring financial success.
DON’T JUST SIT THERE, DO SOMETHING!
Last year, I did something way out of my comfort zone. Against my better judgment, I signed up for an endurance event called Tough Mudder. Designed by British Special Forces to test mental as well as physical strength, participants attempt 10-12 mile long military-style obstacle courses. The event I competed in was in Lake Tahoe at about 7,000 feet altitude which made the adventure that much more exciting.
Having just come off the holidays with a couple of extra pounds, I reluctantly agreed to join in the fun. The event was to occur in 7 months and had that amount of time to get into the best physical and mental shape of my life. I found myself researching online about the event and what training regimes would work best. I was amazed at how much information was out there not to mention the conflicting information about what to expect and how to prepare. It seemed like there were differing opinions on everything, even the type of clothes to wear. I became overwhelmed by the information and the next thing I knew a full month had gone by without starting any training whatsoever.
There were so many things to consider, and I didn’t know where to start. There are a couple of obstacles that involve live electrical wires that zap you and dumpsters filled with ice water where you fully emerge until you reach the other end. How do you prepare for that? This was all so foreign to me, and I felt like I needed to get a better handle on everything before I started training. Yet again, my brain told me, you’d better do a little more research on this. Then life happens and another full month had gone by without really doing a THING.
My good friend who convinced me to sign up asked me what I was doing to prepare for the event. I told him that I’ve been researching about the event and trying to figure out how to start training. It was then that I felt as though he was reaching through the phone to ring my neck. He said “don’t just stand there, do something!” It was just then that I realized I was getting in my own way. Competing in the event didn’t mean I needed to become an expert in the event. My knowledge about the event or different training methods would do me absolutely no good unless I actually did something. I needed to take action and that day put on the running shoes and hit the pavement.
A few months later, I competed in the event and am glad to say, successfully finished without any major injuries. It was a great experience and my success wasn’t due to my extensive research into the subject matter. Letting go of my irrational need to know everything there is to know, before taking action was the key.
Don’t just sit there, do something. Whether it’s getting fit or taking control of your finances, start your journey today.
David Waldrop is a Certified Financial Planner™ and owner of Bridgeview Capital Advisors, Inc. in El Dorado Hills, California. You can find more information at his personal financial blog www.theastuteadvisor.com.
David Waldrop is not affiliated with Social Security Intelligence or with LPL Financial.