Need to Adjust Your Financial Attitude? Start Here -- Now!
Dear Carrie: I'm 28 and trying to be smart about my money. My problem is that as soon as I pay down my credit cards, I start running them up again. The result is I can't seem to save, and I feel as if I'm fighting a losing battle. I know I need to adjust my financial attitude, but how? -- A Reader
Dear Reader: First, realize that you're not fighting a losing battle. The very fact that you see the problem and want to do something about it means you're already starting on the solution. And you're correct that it is a matter of attitude -- because if you start now to think and act positively, you'll be able to not only control your current debt but also get started on saving and investing for the future.
A lot of people your age think they are too young or can't save enough money to invest. But it doesn't necessarily require a lot of money. What it requires is a personal commitment to change not only your attitude but also your behavior. It won't be easy at first, but once you see the results, I believe you'll be motivated to keep going. Here's what I suggest.
Tackle Your Debt
Always having to pay off credit cards can be an emotional roller coaster. You pay the bill and feel great. Then you have no extra money, so you pull out the cards again, run up more debt and set yourself up for the same disappointment the next time a large bill is due. So come up with a realistic payment plan -- one that allows you to pay your debts and still have a little extra money in your pocket.
Take a look at your current income and expenses. Decide how much you can put toward your debt while still having some money for that meal out or that new sweater. If you create a balance between paying off debt and paying for the things you want, you'll be able to handle both better.
Take Charge of Your Spending
Now take control of your spending. One of the best ways is to make a commitment to cash. Using a credit card makes it easy to overspend. Instead, give yourself a set amount of cash each month to cover what you usually spend on discretionary things, such as meals out, haircuts and entertainment. If you come up short at the end of the month, don't automatically turn to a credit card. Rather, put off that expense until you have the next month's cash allotment.