How to live Credit Card free in 2021
Posted January 2020
6 Tips for eliminating debts and living life stress-free...
A new year often comes with new financial resolutions.
If you’re one of the many Kiwis across the country who has decided to finally cut up the credit cards this year, we’re here to help. Today we’re sharing some top tips for ways you can start living your best financial life without debt slowing you down.
These include:
- How to create a budget (and stick to it!)
- Why it’s important to set up an emergency fund
- Alternative forms of financing
Let’s get cracking…
1. Create a budget and stick to it
You’ve probably heard this one before...
...but creating a budget really does help.
Budgets allow you to monitor your weekly ingoings and outgoings, as well as identify any money left over after bills and expenses are paid. This can help you put extra money into an emergency fund or savings account instead of letting it evaporate into thin air.
Budgeting is easy when you use our free guide & template!
2. Set up an emergency fund
Emergency expenses can pop up at any time.
They could be from the loss of a job, car repairs, or vet bills for your fluffy friend.
Whatever the reason, emergency expenses give you little to no warning or opportunity to save, so you’re often forced to pull out your credit card in order to pay whether you can afford to or not.
That’s why an emergency fund is so useful. Building one is as simple as putting $5, $10, or even $15 away into a high-interest savings account each week until you have a reserve that’s large enough to comfortably support yourself if you were to be without income for three to six months.
3. Use a debit card
Are you still holding onto your credit card out of convenience?
If so, it might be time to change things up!
The days of needing a credit card to shop online are long gone, with the likes of visa debit cards offering a smarter, more savings-savvy way to shop without the risk of ending up in debt.
Debit cards only use the funds that are available in your account, so there’s no risk of spending money you don’t have. There are also no interest charges, only the one, small annual card or account fee. It’s that simple!
4. Track what you spend
This one goes hand-in-hand with creating your budget.
Tracking what you spend is a great way to keep yourself financially accountable.
Are you a prodigious spender? Tracking where your money goes each week can help you identify any unnecessary expenses you may be forking out for - like subscriptions you no longer use.
An easy way to do this is to print off your account balance and highlight any unnecessary amounts that could be tucked away to help you save a little more each month.
5. Utilise interest-free payment options
Credit cards are still a great way to get something now and pay for it later.
However, going into debt to do so isn’t always a smart idea.
Instead of forking out money you don’t have, consider using interest-free payment providers like Afterpay, Laybuy, or Zip. Which one you use will depend on what your retailer of choice has available.
These payment options still allow you to make your purchase, instead of paying it off across a series of equal weekly or fortnightly payments all while avoiding the debt and high-interest repayments that come with credit cards.
6. Take out a personal loan
Sometimes you need a little extra cash.
Whether it’s to fill the gaps or help with a big purchase, a personal loan may be the way to go.
With options for both secured and unsecured loans, a personal loan often comes with low interest rates and fees so you can pay back the loan amount quicker instead of just paying the accumulating interest as you would on a credit card.
Mindful spending is your key to living a debt-free life
Living credit card free may seem impossible, but with a few of today’s financially savvy savings practices in place, you’ll be well on your way to cutting up your credit card and living your best financial life in the years to come.
Want to know your options?
Try our personal loan calculator.