Many of us can relate to this scenario: after diligently paying off our credit card debt, we feel a surge of relief and accomplishment. However, it’s disheartening to see our debt slowly creep back up over time, ultimately leading us to realize that we’re on the verge of starting the debt repayment journey all over again. It’s akin to constantly waking up from a recurring nightmare.
I’ve personally experienced this cycle over the years, but there’s one key step I took that ultimately made all the difference, ensuring I never fell back into debt again. I took the time to analyze my past mistakes and made necessary adjustments to my budget to avoid repeating them. Let me walk you through the changes I implemented:
Debt Payment as an integral part of the budget
Even after clearing my debt and reaching a balance of zero, I made a deliberate choice to continue paying $100 towards my credit card every two weeks. While this may seem unconventional—essentially creating a negative balance—there’s a crucial reason behind this decision: to cover recurring monthly and annual charges on my credit card. These expenses include subscriptions like Netflix, monthly donations, CAA membership, and life insurance premiums. After reviewing my credit card statements from the past 18 months, the math was clear: my fixed charges total approximately $2,200 annually. By paying $100 every two weeks ($2,400 annually), I ensure these expenses are covered, eliminating the need to carry a balance. Variable charges on my credit card are addressed immediately.
Increasing my food and gas budget
Amidst the current inflation, food prices have notably surged, causing me to frequently exceed my grocery shopping budget. To address this issue, I made a simple yet effective change: I increased the frequency of my bi-weekly trips to the grocery store. Since implementing this adjustment, I’ve experienced a remarkable improvement—I no longer exceed my budget, sparing me from resorting to credit card use. This straightforward budget modification is expected to save me hundreds of dollars annually. Same goes for gas, which has been hovering around 1.40 per liter for a year now, and now a lot more thanks to Trudeau’s increase to the carbon tax. Increasing my budget allocation by $50 bi-weekly was enough to offset any need to spend extra and put it on credit.
In other words, by carefully analyze my spending and taking precautionary measures to address them, has ensured that I don’t go back into debt anytime soon. This is not to say I will never go into debt, but it will at the very least ensure I don’t fall back into it easily and without a fight. By having this system in place, it makes it easy for me to manage debt and ensure I don’t have a debt relapse.