Over Your Head in Credit Card Debt

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creditcard350x350Over Your Head in Credit Card Debt

More than a regular yoga practice, minimizing credit card debt is a sure way to lessen stress and find more bliss in your life. If your credit card payments are taking too much from your earnings – or you find that you’re only paying off the interest portion month after month – you’re teetering on a fight-or-flight response filled with anxiety and fear.

Credit card debt

Credit card debt can be destructive to your health – the anxiety is there day after day. It can also be destructive to relationships when the one you love and share your life with learns that you’re running up debt. Borrowing money for new home or major purchase depends on the health of your credit score.

Your credit score and use of credit cards are as much like the delicate balance of a headstand. Similar to floating into a headstand to create harmony in the mind and body, a strong credit score will bring more harmony into your life as you align and balance your credit card spending with your earnings.

The Real Problem with Credit Cards

Perhaps you’ve noticed that your credit card bills are rolling in with larger and larger balances even though you’re making your monthly payments. You’re not alone. 2014 saw an increase of 3.3% in credit card debt while income is only growing at 1.7%. At this rate, more of us will be carrying a larger debt burden and losing sight of what we want our money to do for us, whether it’s that dream home, a well-deserved vacation or your early-stage business.

If you’re only making minimum payments (some 2-3% of your outstanding balance) and have a interest rate in the 18 – 20% range, you’ll find yourself in a downward spiral and end up paying more in interest than your original purchases. If you happen to miss a payment, your pain and anxiety is increased with a late fee plus the negative impact on your credit score.

What To Do

Getting rid of credit card debt is a step-by-step process. While you’ve probably heard these recommended steps before, it’s always good to reinforce these simple (but often difficult) steps.

  • Track what you spend. By writing down everything you spend money on (no matter how big or small) for 7 – 14 days, you begin to see where you actually waste money. Be sure to not change your behavior when you’re recording your expenditures – this is a great chance to see those habits we like to avoid.
  • Use cash. After you’ve tracked your expenses, switch your payment habit from credit to cash. It will be challenging. Plan to set aside at least $300 – 500 in cash that you will use for purchases over the next month.
  • Check the interest rates on your cards.Consolidate as much of your debt on the card with the lowest interest rates. Consider offers from your bank to transfer higher-interest debt to a lower-interest card. Be sure to carefully examine the offer and avoid possible pitfalls.
  • Cut your credit cards in half.Feel empowered and take action — literally cut a credit card in half (and again and again) next time you have a large balance on that card. Make a commitment to pay off the balance step-by-step, month-by-month.
  • Meditate first, spend later.Impulse spending is one of the hardest habits to break. But you can do it. Think of this step as a meditation, the intention with which you start your yoga practice. The next time you see something that you absolutely fall in love with – that you have to have – walk away until you have 24 hours to think about it. Taking this time will allow you to assess if you have the resources to make the purchase and, perhaps more importantly, you’ll know for sure how deeply you love and need it.

Headstand

For more on the how’s and why’s of managing your credit cards:

As Motley Fool recommends, be sure to talk with your bank about programs set up to help pay off debt. And don’t forget to negotiate with your card issuer for a lower interest rate.

Just think of how steady that headstand will be when you’ve found that inner strength to realign your financial priorities and set yourself free from credit card debt. You’ll feel like you’re floating in space — free from attachment and aversion.

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