There is little doubt that credit card debt is stressful.  You wonder when, or even if, you will ever be able to pay it off.  You struggle to make payments and it doesn’t seem to lower your debt enough.  You worry that one little emergency will undo every little bit of progress you’ve made so far.

Even with a budget and payment plan in place, the debt can still hang over you like a dark cloud.  You cannot feel relaxed until it is cleared away, which may be a long time yet.

At times, it can feel overwhelming, and you may even be tempted to go buy something just to feel a little better.  Stress can lead you to make mistakes and give into temptations.  You might think you’ll feel so much better if you get a new pair of shoes or if you buy the latest gadget.  You may even make excuses to justify the expense.

Of course, that’s something you do not want to do!

However, you should take the time to do something for yourself every once in a while.  That doesn’t mean going on a shopping spree or anything that’s going to increase your debt.  Take time for yourself in ways that won’t cost you money.

Read a book for recreation.  Maybe have a nice bubble bath and read while you relax in the tub.  If you don’t live alone, hang a “Do Not Disturb” sign on the bathroom door so no one will bother you.

If it’s pleasant outside, sit out on your backporch or in the backyard and have a glass of iced tea.  Or, maybe a soda.  If it’s too cool for a cold drink, maybe have a cup of coffee or hot tea.

If it’s cold outside, perhaps you might want to build a fire in the fireplace and spend some time in front of the crackling wood with a nice cup of hot cocoa.

Or, set aside a day each week to play board or card games with friends and family.

If you’re married or otherwise share in the credit card debt, be sure that both of you do something to relax so that both of you can get your mind off of the debt for a while.

The key is to do something fun, something relaxing, something that will take your mind off of your debt for a while.  Just make sure it’s something that won’t cost you money!

The Bottom Line

Credit card debt can really put you under a lot of stress.  While you may not be able to get rid of the debt as quickly as you would like, you can take steps to reduce the stress it creates.  Remember to take a “timeout” from your credit card debt and do things to take your mind off of it.

People often don’t take into consideration interest charges when figuring in the cost of something they purchase with a credit card.  Of course, if it’s paid off by the due date, there may be no interest charges and they only end up paying the actual price of the item.

However, if not paid off right away, interest will be added on top of that purchase.

For example, let’s imagine you purchase something for $100 on a credit card with a 12% APR.  If you don’t pay that off by the due date, it will cost you $101.  The next month, if not paid off, you will owe $102.01.  And so on.

Of course, that may not seem like much, but most people don’t stop at just one $100 purchase, do they?  And, even if they figure it will cost them a couple bucks in interest, they don’t think of all the other items they’ve purchased that will also cost them a couple bucks in interest.

Imagine that’s $1000 (either 10 $100 purchases or one $1,000 purchase).  Now, instead of $2.01 after a couple months, it is $20.10.  And it keeps going up and up.

Think Paying Cash Will Help?

Some people do realize this, and so they stop putting new purchases on their credit card.  They will only purchase new things if they have the cash to pay for them.

Of course, this is good, as it helps you build the habit of not making purchases you cannot really afford.  It’s too easy to just say “charge it!”  But, by forcing yourself (or being forced) to pay cash, you learn to manage your money better.  You learn to prioritize.  You don’t buy stuff unless you really need it or can afford it.

For the most part.

This habit will also help you to keep your credit card debt from increasing and getting worse, so long as you are still making payments and not using the money that should be used for your credit card payment to buy more stuff.

Debt Costs You Money!

As long as you are in debt, it is still costing you.

Let’s say you have no credit card debt and you buy something for $100.  How much does that cost you?  Well, it costs you $100.

But, let’s say you have credit card debt and you buy something for $100.  How much does that cost you?  Well, that’s going to vary depending on your amount of debt, but it will cost you more than $100.

How so?

If you spend $100 to buy something, that’s $100 you did not use to pay down your credit card debt.  So, while you didn’t add a new charge to your credit card (which is good), you didn’t lower your credit card debt at all, so, effectively, that $100 spent is still going to cost you another $1 the first month (assuming a 12% APR), then another $1.01 on top of that the following month, and so on.

That doesn’t mean you should go ahead and put it on your credit card, though.  It just means you shouldn’t spend money on things you don’t absolutely have to.  While you are under the burden of credit card debt, you should buy only the things you need, and not the things you want.

The Bottom Line

Debt makes everything more expensive for you.  Even if you pay cash for new purchases, that’s cash that’s not paying down your debt, so your debt continues to grow due to interest charges.  That’s why it is important to reduce your spending as much as possible, focus on buying only the things you need, and using your extra “spending cash” to pay down your debt.

Once you have your debt paid off, then you can begin to buy things you want—just don’t charge them!

Plenty of people have accumulated a lot of debt on their credit cards and many are struggling to pay it off.  These days, some are experiencing problems because of unexpected job losses or other declines in income, but, for many, the root cause of credit card debt was a bad spending habit.

The Credit Card Trap

Using a credit card can result in spending more than you might otherwise have spent.

The problem is that many people have viewed their credit limit as though it represented available spending cash and not as though it represented funds they could borrow.  For example, let’s imagine a person has a credit card with a $5,000 credit limit.  That represents $5,000 the credit card company has allowed them to borrow from them with the expectation that the person has the means and intent to pay it back.

Let’s say that person takes home $500 per week.  (That’s $500 of cash in hand, after income taxes and others taxes or fees have been deducted.)  In a typical month, they have $2,000 in spending money.  So, had they no other expenses, they could pay off $5,000 in credit card debt in 3 months.  More realistically, it may take them 6-12 months, depending on their expenses.

The trap that many have fallen into is treating that $5,000 credit limit as though it were additional spending money.  That is, they might spend $2,000 a month, and then think that they can “spend” another $5,000 by charging it on their card.

Of course, you can see the problem.  If they are spending $2,000 a month, which is their full income, how can they pay back that $5,000 they borrowed on their credit card?

That may be an extreme example, of course.  They probably wouldn’t borrow that $5,000 on their card all at once.  It’d likely be a hundred here, a hundred there, fifty here, a couple hundred there, and so on.  They don’t have cash in their wallet, so they use the credit card.

Sooner or later, by treating that credit limit as though it were spending cash, they will run into problems.

The Minimum Payment Trap

Another problem is that of minimum payments.  If you make only the minimum payment on your card each month, it may take you years to pay it off, during which time you’ll end up having paid for more for your purchases than what they would have cost you had you paid cash.

Too often, people, especially those struggling financially, will look at that minimum payment and think they only have to pay that this month, so they’ll just pay that amount to save money.

While it may save money in the short term, it is going to cost in the long term.  Whenever possible, pay as much more than the minimum payment as you can afford to pay.  Determine your own minimum payment—something more than the credit card company’s minimum payment—and pay that amount each month.

A Growing Balance

Keep in mind how much purchases will really cost you if you don’t pay them off quickly.  Let’s say you have an APR of 12%.  Each month, you will be charged 1% on your balance.  So, if you buy something for $100 and have a 30-day grace period on purchases, your first month after the grace period will cost you $1 in interest.  After two months, it will be another $1.01.  After three months, add another $1.02.  So, after three months, it’s cost you an additional $3.03 on that $100 purchase.

Maybe you don’t think that’s much.  But, it will continue to increase until you’ve paid it off.  Imagine if, instead of $100, it was $1,000.  The first month after the grace period will cost you $10.  After two months, add $10.10.  After three months, add another $10.20 to the balance.  So, that $1,000 purchase has already cost $1,030.30.

The more time goes by, the higher it goes.

If you have paid cash, that $1,000 purchase would have cost you $1,000.  By putting  it on a credit card and not paying it off right away, it could cost you $30 more, depending on how long before you are able to pay it off.

So, that irresistible sale on something you’ve wanted for ages, but don’t really need, might not be as great a bargain as it seems, if you charge it and end up paying more for it in the long run.

The Right Credit Card Attitude

You should create a budget for yourself and/or household.  Write down all your income and expenses.  Figure out what you can afford to spend each month, and stick to it.

Use a credit card for convenience, and charge only what fits in your budget.  Don’t buy things you won’t have the cash to pay off at the end of the month.  If you’re already over budget for the month, don’t charge new purchases, especially if they are not necessities.

Of course, emergencies sometimes happen and you think you have to use your credit card to cover them.  You should avoid this if possible.  When you create your budget, set aside a specific amount of money each month to be saved in an emergency fund.  That way, when you do have an emergency, hopefully the money you’ve saved for that purpose will be sufficient to cover it.  In such a case, you could charge it on your credit card, knowing that you do have the cash saved up to pay off that new debt.

The Bottom Line

Credit cards are a great convenience, but make sure you manage your use of them and don’t allow credit card debt to become the boss of you!