Consumer Credit Counseling Service News Articles

Are you stuck in debt? These are the continuation of warning signs.

• OVERWHELMED BY STUDENT LOANS

Student loan debt has reached $1.5 trillion! And more than 9% are at least 90 days late.

Solution: Speak to a school loan counselor to identify options like income-based repayment or consolidation. Avoid it in the first place: grants, scholarships. Weigh the cost v. your earning potential as a guide to loan totals.

• YOU ALLOW FOMO TO DICTATE YOUR SPENDING

One of the biggest causes for overspending and debt is FOMO. It’s a real thing.

Solution: Use cash instead of credit to really think about your spending decisions. It’s a form of mental accounting.

• YOU HAVE YOUR FINANCIAL PRIORITIES MIXED UP

One of the most common mistakes is to think that when it comes to credit card debt, that you need to save and invest at the same time. Any money that you are putting towards saving is money you aren’t putting toward paying down debt.

Solution: Savings = earned 1 – 2% inerest; pay off interest on 10%+. Period.

• YOU SET UNREALISTIC GOALS FOR YOURSELF

Having a plan to pay down debt is a great starting point; however, if you make your goals too lofty, you’ll set yourself up for failure. You’ll likely get discouraged and may end up giving up, preventing you from reaching your goal of paying off your debt.

Solution: Keep your goals reasonable. Start with a goal of paying off one card. Use the avalanche or snowball method.

• YOU JUSTIFY CC SPENDING BECAUSE OF THE POINTS YOUR EARN

Bottom line: If you are carrying debt, you are negating the value of your points.

Solution: Switch your everyday purchases to cash or debit to ensure that you are paying off your CC purchases in full while working on paying off debt.

• YOU DON’T DIFFERENTIATE WANTS V. NEEDS

Example: Your TV breaks and you head to buy another. Do you really NEED the larger one? In the store you may notice the difference between a 55 and 65 inch screen, but at home you’ll realize you’ll be fine with a smaller TV.

Solution: Set a budget before you walk into the store. Stick to it.

• YOU GO OVERBOARD DURING THE HOLIDAYS

Don’t start off the new year in debt. If you don’t pay it off quickly and turn to credit again every holiday season, your debt will mount.

Solution: If you have a weakness, find support. Get support for building a habit of saving rather than spending. Lock up the credit cards during the holiday shopping season. Avoid spending time with others who overspend.

• YOUR FOCUS IS ON THE SHORT TERM RATHER THAN THE LONG TERM

Stop focusing on the now and instant gratification. Think long term. EX: Regularly charging coffee to your CC, even if only $5. If you’re doing that twice a week, $10 adds up quickly. If you’re not paying off in full each month, paying interest on two cups of coffee may raise your cost to over $20. Even if it is convenient and tastes good, remember how much further your money can go.

Solution: A change in your spending mindset can help you break this debt-causing behavior. Look at your expenses as TIME. (It’s the ONE thing you don’t get more of in life.) Then stop and think is two cups of coffee worth an hour of my time? $15/hr job minus taxes, expenses, etc. = $9. This is especially important mental exercise for larger purchases. How many extra years am I willing to work to pay off that car or TV? Set a goal for your future and remind yourself of them daily.

AGAIN: It takes hard work to get out of debt and stay out of it, but when you do, you take back control of your life!