Take our credit counseling advice to recover from a financial mistake.

Learning from a Financial Mistake

Unfortunately, a lot of learning in life comes from making mistakes. How you handle the experience can make all the difference in the lessons you take away from it.

For example, you have trouble with the snooze button. You repeatedly show up late to work and are fired over it. If you fail to see your own responsibility in this scenario and blame others, you won’t be able to move forward in the right direction.

Many financial mistakes happen with overspending and under-saving. Let’s consider some basic financial counseling principles to find out how you can recover from these two mistakes.

Financial Mistake 1: Credit Card Debt

If you are only making minimum payments or have maxed out several credit cards, it’s time to get back to the basics. First, understand that your credit limit isn’t actually money. You are borrowing money from the creditor to buy things. Next, the best practice for using credit cards is to pay off the entire balance at the end of the month. Finally, make sure you fully understand all the terms, interest rates and features of your card. This way you can avoid fees, interest rate hikes and maximize rewards. You may also discover that you need to close a few cards. Yes, this may hurt your credit score a little, but it will come back up.

Need some more practical applications to manage credit card debt? If you tend to overshop, avoid debt by eliminating credit cards from your wallet. Or avoid the stores that you splurge in regularly. Find ways to curb your behaviors. If you ran into large medical bills or unexpected repair costs, you should consider starting an emergency fund. Credit counseling can be another helpful resource if you have questions.

Financial Mistake 2: No Emergency Fund

The next financial mistake is under-saving. Emergency funds, rainy day funds, retirement and other financial goals all require you to not only save but to have a plan. Let’s focus on building an emergency fund to offset unplanned financial costs and consumer debt.

Emergency funds are a great financial tool to combat debt. Dedicating money for emergencies is really important when unexpected things come your way. If your car breaks down, the refrigerator dies, you get laid off and your cat needs to go to the vet all in one week, you’ll wish you had money earmarked for such events. Put away a little money each month. You can also direct any extra income towards your savings, like tips, tax returns, or money made from selling personal items.

Remember, mistakes can help us be better. Use these unfortunate situations to your advantage by learning and growing.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

A spending freeze is effective for getting back on track from your debt.

The Basics of a Spending Freeze

A spending freeze can last for as long as best suits your needs. It could be a week or a month. If you are doing a spending freeze on just a few budget categories, it could last for several months. Let’s break down the reasons behind the different lengths of time.

If you recently went on a bit of a spending spree, then a week long freeze might be just what you need. Think of it as a way to get back to your routine. A quick pause in spending can help shift behavior away from destructive habits that haven’t completely taken over and stop more personal credit card debt.

Another reason for a freeze might be due to a major purchase you recently made. Dropping a lot of cash or credit on a purchase can sometimes stretch the budget more than expected following that transaction. Therefore, a spending freeze can help to slow things down. It can also help to stop any thrill spending. I admit that spending money can be a hoot, especially a lot at one time. A spending freeze can act as a guard rail to prevent any overspending.

Do you have a major financial goal you are trying to achieve? Cutting back on a few budget categories can really make your savings add up fast. Clothing, entertainment, dining out are some of the common categories that can be put on hold while saving for a goal. Whether it’s managing credit card debt, saving for a down payment or putting money aside for college, a spending freeze can help.

More Tips for a Spending Freeze

Although it’s simple on paper, committing to a spending freeze can be difficult. Here are a few ways to help stay on track:

• Keep a small fund for “emergencies.” Try not to use it consistently. It’s for the tough times.
• Tell someone your plan. Having an accountability partner can be a great way to keep things on track.
• Create and display a visual reminder of your end goal. A little note to yourself on the mirror or a big inspiration poster can make a big difference.
• Start small. Try it out for a weekend and then add a few more days. You could also go on and off every other month.

Whether you need to save money or create better habits, a freeze on spending is a useful debt management tool.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

Avoid debt by carefully planning your Black Friday shopping during COVID-19.

Tips for Black Friday Shopping During COVID-19

The most important thing to keep in mind this year is your own health and safety. Avoiding crowded indoor areas is important to stop the spread of COVID-19. Because of this, you may want to avoid in-person Black Friday shopping during COVID-19 altogether. Instead, look for online deals. Even if you’re exclusively online shopping, the same rules of sticking to your budget still apply. Here are a few general Black Friday spending rules to follow:

1. Research deals and coupons online ahead of time for items you know you want to buy.
2. Set a budget for the total amount you want to spend this Black Friday. Once you reach that amount, it’s time to stop shopping!
3. Don’t spend more on your credit card than you can pay off when you get your next credit card bill. You always want to make sure you can pay your credit card bill on time and in full.
4. Don’t buy an item you weren’t planning to buy just because you found a “good deal.” You’re still spending more money than you intended, even if it was 50% off!

Alternative to Black Friday Shopping

Instead of Black Friday, you could observe Buy Nothing Day. It’s exactly what it sounds like: you don’t buy a single thing! Rather than getting caught up in the consumerism of the holiday season, use Buy Nothing Day as a way to spend time with family without spending money. It’s a great way to avoid overspending and accumulating credit card debt.

For many Americans, this year has been financially straining, and you might not have as much to spend on the holidays as you did last year. For those who lost their jobs and have still not made up for the lost income, holiday spending may be significantly lower than in previous years… and that’s okay! Your friends and family will understand, and the holidays shouldn’t be about spending money on expensive gifts anyway. Don’t spend money you don’t have and get yourself in debt because of the holidays. Stick to your own financial goals, and prioritize your needs over your wants.

If you struggle to pay off credit card debt, ACCC can help. Schedule a free credit counseling session with us today!