Have you ever thought your credit card spending was in check, successfully lowering your balance, only to suddenly face a surprise hefty monthly, semi-annual, or annual charge? For instance, this week I was billed $120 on my credit card for a domain name and website renewal that had slipped my mind. What’s worse, since I hadn’t remembered it, I hadn’t budgeted for it either.
These unexpected charges can really hit hard and catch you off guard, jeopardizing your credit card balance. It’s crucial to confront these surprises head-on, or your credit card debt will remain out of reach and take longer to pay off.
Anticipate and Allocate
So how do you deal with this issue of unexpected unforecasted hits to your credit card? You start by going over your credit card statements from the last 12 months.
You then make a note of any recurring monthly, quarterly or annual charges that are in excess of $50 (this amount could vary depending on each person’s situation, debt level, income etc) .
Next, determine whether you genuinely need or can cancel each charge. For instance, weigh the importance of an annual CAA/AAA charge of $120 against its necessity for you and your family. If so, keep it. What about an annual magazine subscription that you have been paying for years, but hardly have the time to read them when they come to your door? As you can see, these may be family decisions, but the time you spend going over these big and recurring bills will pay huge dividends in the long term, in terms of money saved and reduced credit card balance.
Once you have decided on what to keep and what to eliminate, take a moment to do a quick calculation of what you will save from all the charges you will be cancelling. This calculation provides a psychological boost, allowing you to visualize the results of your efforts and understand how they contribute to your improved financial future.
Lastly, mark your calendar or create a list with the dates of these monthly, quarterly, or annual charges to eliminate future surprises. It’s one thing to anticipate and allocate for these charges, but it’s even better when they’re not unexpected.
In the realm of personal finance, being proactive holds the key to mastering your credit card journey. By anticipating and allocating for unexpected charges, you’re not just safeguarding your budget but also taking charge of your financial destiny. Remember, the true power lies in your hands as you navigate the twists and turns of credit card expenses. With these strategies in your arsenal, you’re equipped to face any surprise with confidence, ensuring that your credit card balance remains manageable and your path to financial well-being is paved with foresight and control. So, take the reins, and let your proactive approach guide you towards a brighter and more secure financial future.