How do you stop digging yourself deeper into debt?

It’s a question we hear a lot here at Geezeo, and that’s no surprise. Americans carry a lot of debt and it is easy for mounting debt to grow. Sometimes, it grows faster than you can pay it off and that can be very stressful.

So here are five sure-fire strategies to help you help yourself:

1. Give Yourself a “Time Out”. Parents know the “time out” routine. You can do the same with your credit card. Vow to wait 48 hours before you buy anything. If you still must have it in 48 hours, then buy it — with cash. Don’t have the cash? Don’t buy it.

2. The $100 key rule. Actually, this can be the $50, or $25 rule. Commit yourself to never spending more than X amount when you go to the store for something else.

Say you go to the store to buy a new shirt for work. You estimate a new shirt will cost you $40. Do NOT leave the store with any additional purchases that add up to an additional $100 (or $50, or $25). Set your spending target amount BEFORE you go shopping. Do not change this magic number.

Here’s the key: that’s $100 (or $50, or $25) you’re not spending in CASH. You see: we’re assuming you’ve decided not to use your credit cards. This rule helps keep your cash flow flowing — so you’ve got an extra $25, $50, or $100 to put towards credit card payment.

3. Stop using your credit cards. Hello, obvious! If you’re in the habit of leaning into your credit cards this can be tough. Some ways people have gone cold turkey: freeze your cards in the freezer. Give your cards to a trusted friend to keep. Start carrying cash when you go out and do not take your cards with you. Get professional help if you can’t stop spending on them…

4. Delete your cookies! Those who prefer the twice-gratification of online shopping (once when you buy, another buzz when you get the item)… delete your browser cookies! These “helpful” cookies remember your credit card numbers. Delete them so you must dig out your credit card in order to purchase something (after your 48 hour time-out rule is observed, of course).

To delete cookies using the Firefox browser, go to Tools > Clear Private Data… > check “cookies” and hit the “clear personal data” button. Browsers like Internet Explorer and Mac Safari offer similar cookie cutters.

5. Count to five. If you can’t seem to wait 48 hours (and that should tell you something!), at least count to five. Count five good reason why you must purchase this item. Hint: the reason “because I don’t have cash” is not acceptable. Count to five with all your cash purchases, too.

Here are five related questions borrowed from the environmental movement. Ask yourself these before splurging on stuff you don’t really need:

Simply put: look carefully at every purchase. You cannot dig yourself out of debt without curbing your spending habits. Share the tips that have worked for you.

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This entry was posted on Tuesday, August 12th, 2008 at 10:03 am and is filed under Budget. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.