I’ve always thought of myself as pretty good at paying off debt. I paid off my student loans just 18 months after they went into repayment, and was totally debt free two years after setting my mind to it.
But there’s always been one type of debt that I’ve struggled with, and that’s credit card debt.
Over the past five years, I’ve had an on and off relationship with credit card debt. I’d be debt free for awhile, and then I’d snap and go on a spending binge, and before I knew it, I would be several hundred dollars in debt, with no real plan to pay it back.
I’d then move some money around, pay off the debt, but in a few months, I always found myself back in the same situation, with a little bit of credit card debt and no plan to pay it off.
It Starts With a Spending Binge
Recently, this pattern got a little more severe, and it was more than a few hundred dollars. It was more like $800. Here’s how it happened, and how it always happens:
I’m very disciplined with my personal spending, about 80% of the time. 80% of the time, I float along, not wanting anything, feeling totally at peace with my lack of spending. Then something will snap in me, and I’ll go on a bit of a spending binge, buying all of the things that I’ve been putting off purchasing. This time, it was:
- Massage therapy
- An eye exam
- Two new pairs of glasses
- New running shoes
- A new laptop bag
- A subscription to Headspace
- A bunch of other small purchases
Most of this stuff I’d been putting off buying for months until I couldn’t anymore. Suddenly, I needed to buy all of the things but didn’t have the money for it, so on to the credit card they went.
I’ve spent the last month or so diverting 50% of my freelance income towards paying off this debt, and I’m happy to say today I’m 100% credit card debt free.
But I’m also ready to step off this credit card debt treadmill once and for all, and that means examining how I enjoy my money.
A New Plan for My Freelance Side Income
My husband and I have the following understanding: 100% of the income from our full-time paycheques goes into the family pot, where it is divided up between living expenses and long-term goals. We also get a $100/month allowance from this budget.
But any money that we earn on top of that, any extra hours, additional paycheques, or in my case, freelance income, we can spend as we see fit without consulting the other.
We may choose to use that money for long-term goals (which is often the case), or we may spend it. The autonomy we have with this extra income is part of what motivates us to earn extra income.
Personally, when I bring in extra income, after accounting for taxes, 99% percent of the time I put it towards our long-term goals. When I was in debt, I used my extra income to pay off debt. Today, I use my extra income to meet my house down payment fund goals.
The problem with this strategy is that while I do get satisfaction from using my money to reach my goals, I am not enjoying my money. I’m not using it to enjoy my life today, and that deprivation usually results in a spending binge.
So going forward, I’m going to put 10% of my freelance income aside for fun money. I’ll keep these funds in a savings account, and whenever I need something like the items listed above, I’ll use cash, instead of putting it on a credit card.
This money is my anti-spending binge money, my anti-credit card debt money, whatever you’d like to call it. These funds will keep me off the credit card debt treadmill I’ve been on for the past five years.
Prioritizing Yourself Can be Difficult
Prioritizing myself won’t be an easy adjustment. My default setting is a relentless pursuit of my goals. Learning to slow down and enjoy life by prioritizing the spending I need to do today, goes against all of the habits I’ve spent five years establishing.
But I need to do this because the gazelle intensity with which I pursue my goals isn’t sustainable, not without at least a little pampering, which this money will provide me.
Not a License to Spend
I’m still only going to spend money when I need to, and putting money into this account for myself is not a license to buy a bunch of stupid stuff. When I need something, I’ll buy it, but I’m not going to go to the mall and shop just for kicks.
Before, if I needed something (for example, a hair cut), I would put it off and put it off and put it off until finally, I couldn’t avoid it anymore. I’d make the appointment, put the charge on my credit card, and then start moving money around to pay it off.
Now, if I need a haircut, I’ll just get one, and pay for it with cash I already have. How much healthier does this new habit sound?
Back to Finding Balance with my Finances
I wrote awhile ago about tapping the brakes on my house down payment fund saving to shore up my emergency fund and pay off this credit card debt. This new strategy for spending follows along the same theme of finding balance with my money.
I’ve been all goals, all the time, which, while it makes for entertaining writing, it isn’t all that healthy. Now I’m attempting to find a sustainable balance between saving for what I want in the future, and living my life today. I feel like this new anti-credit card debt strategy is one more step in the right direction.