Clients often come to me with out of control Credit Card debts. This is a simple exercise to solve the problem.
Take any old Credit Card statement and go through every item. Divide each item into one of three headings:
- Would buy that item again if I had to relivethat day
- Not sure I would buy that item
- OOPS!
(Finance Charges fall into OOPS category.)
Examine the OOPS items. Is there a pattern? What can you learn from the pattern?
Now work out what percentage of your purchases fell into each category. If the OOPS amount is above 30% of your bill, you are like a child in a sweet shop. Cut up your card until you have paid up all your debt.
If NOT SURE and OOPS are above 30%, you need to put your card away for a while. It needs a breather.
If the NOT SURE and OOPS are below 15%, then the problem is not your expenditure, but your income. You need a new job with a bigger salary.
