This challenge is for you if you want to make a plan to pay off your credit card debt.
When you finish this 4-part challenge, you will have a written plan of attack for paying off your credit card debt that fits your unique financial situation.
Credit Card Debt in 2023
Total credit card debt reached a record $910 billion in the fourth quarter of 2022, according to the latest report from Experian.
This tells us that an enormous number of people have credit card debt. Please don’t let anyone shame you about having credit card debt.
People have credit card debt for many reasons - not just because they have a spending problem:
Job loss during the pandemic is the cause of a great deal of credit card debt.
I’ve worked with people who have had to rely on credit cards to pay their bills when they were out of work due to a serious illness. I did it when I was so depressed that I couldn’t work. When my cash emergency fund ran out, I opted to use credit cards vs depleting my retirement account.
Some people’s rent has been raised so high that they have to rely on credit to pay their other expenses.
Some people haven’t saved for an emergency and have no choice but to put large expenses like car repairs on a credit card.
One of my own issues is charging something to “get the points” and sometimes forgetting to pay it off. I have all of my cards set to pay the minimum payment so that I never accidentally miss a payment, but sometimes I forget to log in and manually pay off the new charges.
And finally, some people do have spending problems that result in massive credit card debt.
Not All Debt is Bad
I disagree with any financial advisor who says ALL debt is bad. It’s how the wealthy get wealthier. They leverage the purchase of assets by going into debt.
There are gurus who say we should pay cash for major purchases like cars and houses. But who’s been able to buy a house with cash since the 50s? Very few of us. Even in the 1950s, mortgages existed.
It takes major denial to say that everyone can live without ever using a credit card. In fact, I’ll go so far as to say there are positive reasons for responsibly using credit cards:
Credit card accounts, when paid off every month, help build a good credit score which is required to qualify for a mortgage, business loan, or car loan.
Credit card accounts offer bonuses like cash back and airline points.
Credit cards provide a Plan B for emergencies when your emergency fund is new and you haven’t reached a full 6 months of income in savings.
Obstacles to Paying Off Credit Card Debt
Besides the obvious reason of not having enough cash to pay off credit cards, let’s go deeper than that:
Inflation and rising interest rates are making it harder to get out of debt.
On top of that, most people I’ve worked with experience procrastination as the biggest obstacle to getting their money under control. Even people with high incomes and more money than they know what to do with procrastinate about getting it organized and under control.
Procrastination is an avoidance tool - the dread of facing it (and rightly so because for most people, tackling credit card debt seems like a huge mountain and you’re facing it while standing below sea level.)
Procrastination has been around for millennia - the Greek word for procrastination is translated: the state of acting against one's better judgment. Can you relate?
Are you ready to get started? In Part 2, you’ll learn how to make a decision to make a plan that fits your unique financial situation.
Don't know where to start? Book a FREE 30 minutes phone call with Karla HERE
Check out my video playlist on credit card debt here on my TikTok profile page.
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