Ready to break up with your credit card? You know you need to do it, but actually making it happen is overwhelming and it feels impossible! Today I will break down some tips for you.
I know it’s scary to break up with your credit card.
What if you can’t put food on the table because your bank account is at $0 and payday is still a few days away?
What if an emergency comes up and you don’t have enough cash to cover it?
There are so many “what ifs,” and they keep you holding onto your credit card just in case. But the balances on your cards are killing you! They are hard to pay off because the interest piles up before you can get any traction.
I know what this feels like. It’s scary, but it’s time to break up with the credit card. Just like an old boyfriend you knew wasn’t the one, you dreaded the breakup process, but you knew it was for the best!
Today I’ll give you 7 tips to help you break up with your credit card for good! Your breakup won’t work unless you’ve set yourself up for success and you’re committed with these 7 tips.
7 TIPS TO BREAK UP WITH YOUR CREDIT CARD
1. Know How Much You Make and How Much Can Spend Every Month
This is important because if you’re currently making $3000/mo and spending $4000/mo, your credit card breakup isn’t going to go very well. You have to get to a place where you can live within your means before you can completely cut those cards up and walk away!
To do this, go through a past month of spending and total it all up. How does it compare to your income? Your income should be the limit on what you can spend every month.
2. Use a Budget to Keep You Organized
A zero-based, budget-by-paycheck budget is the best way to go if you want to create a really specific budget and pay off debt. Zero-based budgeting means you plan every dollar you make before you even get it. Every dollar has a name and a plan before the month even starts!
Not only that, but you’ll want to budget out each paycheck too. A monthly budget is too broad. You need to look at what bills and spending the cash from each paycheck is actually going to be paying for and figure out when and how much you can spend!
Related reading: How to Make a Budget: Step-by-Step Guide
3. Save an Emergency Fund to Prevent You From Falling Back on Your Cards
You will need an emergency fund before you can confidently break up with your credit card. Big expenses will pop up in your life that you can’t cover with your income, and it’s too easy to grab a credit card and swipe, thinking you’ll pay it off later. This leads to a cycle of credit card use that is hard to break.
Saving up a small emergency fund of $1000-$5000 is a game-changer! As you go along in your month and something pops up, you’ll reach for your Emergency Fund instead of your card! Then, replenish it as soon as possible.
Related reading: Should You Save More Than $1,000 in Your Emergency Fund?
4. Physically Cut up Your Credit Cards
After you’ve gotten on a budget and have an emergency fund saved up, you can confidently cut up those credit cards! You don’t have to stress about needing them again because you’ve built up protections for yourself with your budget and emergency fund.
Keep in mind that if you close your credit card accounts, it can negatively affect your credit score.
However, this is essential for some people who really need to get rid of credit cards forever because the temptation to spend money they don’t have is too strong.
You can also just cut them up and leave the accounts open, but completely stop using them.
Some people even freeze their cards in a chunk of ice so they can’t use them on impulse but they are accessible in a true emergency. I don’t like this method. If you’re serious about moving on from credit card debt, get out the scissors!
5. Switch All Your Online Accounts From Credit to Debit
If you’re serious about breaking up with your credit cards, you’ll need to delete all credit card numbers from your online shopping and bills accounts! Trust me, don’t skip this step! Amazon and Target will remember your card and make it easy to spend if you don’t go delete the card number and replace it with your debit card number.
It’s easy to remember which accounts you need to switch over. Just go through a few of your credit card statements and note which accounts are attached to your card, then go switch all of those.
6. Always Pay For Needs First, and Wants Last
If you regularly get paid and then go splurge on things you’ve been wanting, it’s no wonder you have to reach for your credit card to pay for needs when payday is still a few days away!
You can’t neglect your needs, so out comes the credit card to save the day.
If you stick to paying for needs first (food, shelter, transportation, bills), you’ll be more able to say no to your credit card later on in the pay period when a want comes up that you can’t afford. Timing matters on this one!
7. Calculate How Much Your Interest is Costing You
Look up the interest rates on your card statements and write down how much interest you’re currently paying each month. How much is it? Is there anything you’d rather spend that money on than interest? That should be enough motivation to kick these cards for good!
Related reading: How to Pay Off Debt Fast with the Debt Snowball Method
And that’s it! Once you’ve completed the breakup and you get in the habit of living within your means, it gets easier!
You will feel so much control, pride, and accomplishment and you will be on your way to greater financial peace and wealth for your family.
Are you ready to break up with your credit card?