of expenses .
That ’ s bad news because it means an emergency will make going into credit card debt an enticing option , especially if it ’ s not possible to borrow from friends or family or cut back on spending .
“ You have to build your savings first before concentrating on debt ,” says Steve Repak , a Charlotte , North Carolina-based CFP professional and author of “ 6 Week Money Challenge .”
He suggests building your short-term savings to at least $ 500 while making only the minimum payments on your existing credit cards before you start concentrating on your debts . That way , you can tap your savings instead of swiping your credit card if you have an unexpected expense .
“ For consumers that have debt and their income isn ’ t high enough to save anything , they either have to reduce expenditures or increase their income , and the best-case scenario would ( be ) to do both ,” Repak says . “ Supplementing your living expenses using credit cards cannot be a solution .”
Who this strategy is good for : Potential layoff victims .
6 . SWITCH TO CASH If your goal is to pay off your credit card debt , the last thing you want to be doing is adding to that debt by continuing to charge your expenses .
“ Quit using your credit cards ,” Repak says . “ It seems like a no-brainer , but sometimes it is easier said than done .”
Paying with cash not only prevents you from accumulating more debt , it can also help you spend less overall because of the psychological pain of handing over those $ 20s .
Switching to an all-cash spending plan can help you cut spending by as much as 20 %. It requires you to plan ahead and makes certain purchases -- like the ones you make through the Amazon app on your phone -- inconvenient if not impossible , so you ’ re less likely to make them .
Who this strategy is good for : Anyone who can ’ t trust themselves with a credit card .
When it comes to eliminating debt , there ’ s no such thing as a quick or easy fix . But that won ’ t keep people from trying . And that ’ s what keeps debt reduction services in business .
Robert Rhinesmith is a Registered Investment Advisor , Applewood Capital Management Associates , LLC .
32 HimPower August 2017