Is your New Year’s resolution the same every year: no more credit card debt? Jack Han reveals six ways to reduce your debt for good.
December 28, 2009
We all think about our New Years resolutions during the fireworks and the final minutes of the year, but most of these convictions are driven out of our minds by the celebrations and the bad habits of the past year. However, one recurrent resolution for many Australians is to reduce credit card debt for good. So how can we make a resolution and stick to it to become debt free?
- Be realistic and set achievable goals- Having just a few goals will be enough for the New Year. If you plan to reduce debt, buy more things, and save heaps of money at the same time, you will have more luck winning the lottery. We don’t need to take on the world, so think about why reducing credit card debt is the most critical part of your 2010 plan.
- Break down your bigger goals into smaller ones - For example, reducing debt can be broken down into finding a lower rate, or smaller credit card fees. Try to be more specific by aiming for small weekly goals rather than big end of year goals, which could help you build regular habits such as increasing repayments and lowering your spending.
- Find alternative ways to curb your financial habits - For example, if you usually go on a shopping spree to reduce stress, alternatives such as exercise can be healthier. And if you find online shopping too tempting with a credit card, consider shopping with a debit card, so you know that you are actually spending your own money.
- Tell others about your resolution - It is surprising how obedient we become under the watchful eyes of our peers, so having someone to be accountable to can really help you stay on track. They can even help by catching up with you while shopping to make sure that you don’t fall off the wagon.
- Leave room for mistakes - A good resolution gives us room to recover if we make slip ups like over-spending or missing credit card repayments. Make sure your repayment plan allows you to account for human error.
- Ask for help when you need it - Clearing debt is a big task, so you can use all the help you can get. Start by comparing credit card rates online to find the cheapest options, and then ask your trusted financial institutions about ways to consolidate your debt.
Everyone deserves a fresh start in 2010, so make yourself a resolution to achieve financial freedom in the New Year. And it’s not just about money – at the next New Years party, you will really have an achievement to celebrate.