Have you ever been in this situation? You’re making steady progress, regularly paying down a significant debt. But then, your last big payment of $450 was essentially neutralized by your annual $450 gym membership. In other words, you took one big step forward, only to take another right back. Sure, you need your gym membership, but the impact would have been easier to handle if you’d been aware of this upcoming payment and could prepare for it in advance.
Anticipating major credit card payments is key to a successful debt repayment plan. The solution isn’t necessarily to avoid using your credit card but rather to be mindful and proactive about upcoming large expenses. For example, each year, I’m caught off guard by a $200+ annual life insurance payment that hits in late November, just as we’re nearing the holiday shopping season. And I’ve been making this payment for nearly a decade. I’d be much less surprised if I had a better sense of when these payments were due and how much they would be.
Create a System to Anticipate Large Payments
After years of feeling caught off guard by large expenses, I decided to take action. I reviewed the past 12 months of credit card transactions and noted any significant payments of $100 or more, whether monthly or annual. I then created a calendar to track each of these, calculating the total amount of these larger payments and dividing it by 12. This way, I know how much is needed monthly to cover all these automatic withdrawals and can avoid the shock when a big expense comes due. Not only does this approach provide a clear overview of upcoming expenses, but it also helped me identify unnecessary payments I could eliminate. Seeing these expenses on a list, and recognizing the cumulative impact, made it easier to cut out non-essential costs.
This system has made debt repayment and management significantly easier. Even if you need to maintain all your credit card payments, being aware of upcoming expenses allows you to be better prepared for them. Psychologically, this approach helps you avoid the crushing feeling of disappointment that arises when a big payment is followed by an unexpected expense, potentially neutralizing or even exceeding what you just paid. By having a clear view of your financial landscape, you’re not only reducing stress but also staying empowered in your debt repayment journey. This proactive planning can truly make a difference in achieving long-term financial goals.