Mindy Neira, a financial planner in Westwood, New Jersey, recommended that if you're having trouble managing your card debt, take stock of your spending. “The first step is to observe, without judgment, where her money goes,” she said, including housing, food, entertainment, travel and loan payments.
Then set a goal for each category. (Ms. Neira said she preferred setting goals to making a strict budget to account for monthly variations.) Ask: “Can I change things? Can I spend an extra $25 a month to pay off the debt? Keep in mind that if it took you years to build up your card balance, it will also take time to pay it off, so set realistic expectations.
If you have balances on multiple cards, it's a sign you're spending beyond your means, said Rob Williams, managing director of financial planning at Charles Schwab. He advised paying off the card with the highest interest rate first by making a payment greater than the minimum. (This is sometimes called the “avalanche” method: As you pay off that card, you make minimum payments on the others. After you pay off the first one, start paying more than the minimum on the card with the next highest rate, and so on. .)
To avoid racking up debt again once you've paid it off, try using a waiting period when shopping online, said Luis Rosa, a Las Vegas financial planner. Place the item in the digital shopping cart, he said, but wait 24 hours to pay. “You may decide you don't need the item,” he said.
Another suggestion: Use two separate checking accounts, said Alvin Carlos, a financial planner in Washington, DC. Use one for fixed essentials like rent, mortgage, or loan payments. Then, decide how much you can spend on fun, like dining out or shopping, and transfer that amount to the second account each month. That way, Carlos said, it is not necessary to stop and think about each purchase. Check your balance weekly and when it gets close to zero, you're done spending until next month. (Ask your bank to make sure there are no additional fees for a second spending account.)
