slay-dragonOh – the credit card. Those January bills come in after the holidays and it can be a bit painful to open them. Somehow the holidays end up costing more than you planned, if you even had a plan.

You are not alone. Almost three quarters of Canadian polled in a recent survey said they have personal debt and 38% said they were very anxious about it. Perhaps you are part of the 16% of Canadians who said paying down debt is their number one priority for 2014.

Start by taking some simple steps to tackle your credit card debt and create better habits for your spending. These tips will help you curb the spending on your credit cards, pay down the debt and keep more money in your pocket.

Cool it down
Create a “cooling off” period for credit card purchases by making it harder to get at. Take your card out of your wallet and put it somewhere that is less accessible.
A simple and effective way to cool it down is to place your credit card into a container with water and store it in the freezer. Want to buy something off budget? You have to wait until the container melts giving you some time to consider your decision.

Remember it isn’t yours
Understand who owns the money. If you think that the credit available on your credit card is your money, think again. You are borrowing it, and often at 19-28%. When you consider a purchase on credit and you know you don’t have the money to pay for it, add 20% to the price. NOW, decide if you still want it. Sometimes we just need to think about how much more expensive it will be using the credit card company’s money when we can’t pay it off right away.

Work from zero
Sometimes it is necessary use a credit card. To make it easier to keep spending under control, focus on getting your lowest balance card to zero. When you must use a credit card, use the one with a zero balance only. Only charge amounts you know you can pay off by the next billing cycle.
Paying a $250 card balance back to $0 gives you a lift and you are become much more aware of the money spent on the purchase.

Consider consolidating your credit card debt into a personal loan or line of credit. This can be an excellent strategy to decrease interest costs and accelerate your debt repayment. It is critical that you have your spending under control before you consolidate so you don’t just refill those credit cards as soon as they are free again. Go back to Cooling it Down and Work from Zero for tips.

When you have credit card debt that you want to pay off, your first priority is to stop the bleeding. Get clear on how much your life costs and for what the cards will be used. Choose to stick to your plan and not spend money you don’t have. Set up tricks, tools and systems for yourself so you stay smart and get ahead.

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Personal finance expert, Karen Collacutt is founder and CEO of Make Friends with Your Money.  Karen works with ambitious people who are making good money but are wondering where it all went at the end of the month. She helps her clients to get clear on their money life challenges and opportunities, matching their money to their goals.  They build a plan, confidence and peace of mind around their money. Certified Money Coach and Certified Financial Planner, Karen brings over 15 years of finance and business experience to her clients. Coach, speaker, author and change catalyst for those ready to create a positive and empowered money life, Karen delivers a fresh perspective on how to make friends with your money.

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