9 Simple ways to avoid overspending on your credit card

This is a guest post from Andrew Wang who also publishes a blog on making money.

Purchasing a large number of different items on your credit card, as well as paying certain bills with a credit card can very quickly send your card up to the limit. Before long, many people quickly find themselves overspending on their credit card and incurring fees and charges that mount up quickly. To avoid overspending on a credit card, there are a number of practical steps you can take. This will help control your spending and keep you within your credit limit.
Here are 9 ways to reduce the chances of overspending on your credit card:

1. Know your credit limit, you can quickly assess if the item you wish to buy or the bill you wish to pay is going to make you exceed the credit limit set by the credit card company. You can then avoid the situation of using your card and exceeding your credit limit.

2. Keep your credit card receipts. Always keep your credit card receipts after you spend money on the card and keep a tally of what you spend. You can use this in conjunction with the previous step to make sure that you are always aware of your spending and spending limits, as to avoid credit card charges for going over your limit.

3. Establish on line bank account. Setting up an on-line bank account linked to your credit card will allow you to quickly transfer money onto your card if you are in danger of going over your limit.

4. Use for specific purchases. By using your credit card for specific purchases or specific bill payments, you are much more in control of what it is being used for, therefore you are less likely to overspend on unexpected items.

5. Pay with cash. Whenever you can, try and get into the habit of carrying cash. You know exactly how much cash you are carrying, which means that you are less inclined to make an impulsive purchase because you have your credit card with you.

6. Open with lower limit. When you first open a credit card account, insist on having a low spending limit on the card. Credit card companies are always keen to “bump up” your credit limit as they know you will use the extra credit and have a greater chance of going over your credit limit, thereby incurring charges and fees.

7. Know what you are purchasing. Before you go shopping with your credit card, look at the items you have previously purchased with your credit card and give them an “Objective Valuation Rating”. Rate each item on a scale of 10 and only consider further purchases on the item you wish to purchase if it scores over 8. This really helps you control your spending, and it also reduce the chances of overspending on your credit card.

8. Don’t take it with you. Keep your credit card at home. This means that your card is not available when you see something you are tempted to purchase. This also means you will be in a better place to keep a tight control of all spending on the card.

9. Pay it off. When paying your credit card bill, pay a little extra on the card. That way you are actually increasing your credit limit and reducing your chances of overspending and having to worry about fees and charges.

Reduce Financial Stress, Simplify Your Personal Finances

Stress is a physiological response. Whenever your brain senses stress, adrenaline and cortisol are activated to raise your awareness and energy. However, not every stressful situation requires you to fight or flight. For example, financial stress is often a debilitating mental burden that reoccurs in a chronic manner. Yet there’s no need for your body to fight against a mailed-in bill and running away certainly won’t help, but your brain is still able to understand the consequences of financial problems. Fortunately, extensively reviewing your financial situation and simplifying as much as possible can drastically reduce financial stress.

The Benefits of Organization

Organization is one of the primary elements of successful finance management.

In our case, this means the organization of every aspect of personal financing. The idea is to organize cluttered finances and simply things during the process. Categorizing all personal finance files does this. For example, you’re likely going to use the following categories:

Tax files and returns
Investments and retirement
Credit cards
Savings and checking accounts
Car and other bills

Initially, it’s ideal to organize these categories using folders and a bin. Sub sections reserved for invoices, outstanding bills and receipts can be created for further simplification. To reduce even more clutter, it’s possible to scan your files categorically save them onto your hard drive to create a organized digital record.

Embracing Technology

With organized personal finances, you’ll at least know where to store your bills and files as your hair turns grey from stress. Now, to actively combat personal finance stress and continue your crusade of simplification, it’s time to embrace technology by learning and using a personal finance software program.

The latest editions of residential-level finance software programs are packed with stress reducing features such as the ability to keep track of checking, savings and credit card accounts linked directly to your online bank as well as PayPal accounts. Budgets can be easily created and manipulated to help you find the most optimal compromise between finances and lifestyle.  Most also include various financial calculators to give you a clear picture of your mortgage or home refinancing options.

Assimilate or Eliminate

By now, you may have organized your personal finances and simplified things with the help of a personal finance software program, but you still have to continue the simplification process by cutting out the excess and solving two problems with one solution.

Look through your investment and retirement portfolio. Have multiple 401k accounts or one too many mutual funds? It’s likely time to roll it all over into a solitary IRA account and cut down on the investments until you’re only left with your prime mutual funds to manage. This process of simplification through assimilation should also be exercised on your insurance finances and telecommunication bills. By purchasing auto and home insurance from one provider as well as opting for a bundled telephone-Internet-television package from a telecommunications company, you’ll minimize the number of bills to keep track of while likely enjoying a small discount.

You may also find it necessary to simplify through elimination. This is particularly useful for bank and credit card accounts. Pay off the balances on those credit cards you hardly ever use because one or two credit cards for small and big expenses is often more than enough. Similarly, there’s often little need in keeping more than one checking and savings account open. It simply leads to more paperwork management, which is exactly what the simplification process is designed to combat.

There’s no telling how much money, time and strands of hair you can save by simplifying your personal finances to put an end to chronic stress. It may seem difficult to get started, but the stressful day-to-day burden of dealing with cluttered personal finances is ultimately more debilitating than simply working through the process of simplification.

This is a guest post by Connor Groening. He is freelance writing who’s main objective is to educate individual on how to be financially smart. He can be reached at connorgroening@gmail.com if you have any questions or would like to contact him.