We’ve all been there. The family vacation is over, the hamper is full of dirty laundry and you are facing the credit card statement that covered the vacation deposits, the actual costs and those little extras you splurged on while you were away.

For some, that’s how it starts. One indulgence that cannot be paid off in a given month and now there’s a balance owed, and interest is starting to accrue. For others, using credit cards to spend more than they have in a given month becomes a habit.

At SUM180, we recommend that everybody pay off credit card balances as a top priority, and that once they are paid off, you continue to pay off your credit cards every month, with few exceptions. Experience shows that if you cannot pay off credit cards monthly, by definition, you are living beyond your means.

Every penny you pay down on your credit card saves you a lot of money in the long run.
Every penny you pay down on your credit card saves you a lot of money in the long run.

Why? Interest on credit card debt is usually many times more than that of other kinds of debt, and also many times more than what you could make if you put this same money in a savings or investment account. So every penny you pay down on your credit card saves you a lot of money in the long run.

What works for me when the vacation bill is due is to trim the luxuries like putting off the manicures, paring down the iTunes bill, and bagging lunch instead of dining out.

Savings on these items can add up fast and allow me to direct the extra cash to pay more than the minimum payment each month. After some sacrifice, the credit card balance will be zero, and I will recommit to keeping it paid off each month thereafter.

Of course, there is an alternative approach that always worked for my college roommate. She put her American Express card in a plastic cup, filled it with water and put it in the freezer. (Obviously that was long before ecommerce was born, but the principle is a good one.)

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