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  • Writer's pictureVictoria Wallis-Smith

Start with... savings

When we have credit card debt, our first thought is usually “I need to get rid of it!”, making extra repayments with every spare dollar.


But your first step should be... building your savings.

With high-interest rates on credit cards, it might seem crazy – but trust me – work on building up your savings before every spare dollar goes to paying off your credit card debt.


By saving for future expenses, you can stop relying on your credit card – and break the cycle of debt.


The debt cycle

Meet Oprah.


Oprah has a credit card debt of $3,000 – she used to be a bit of a shopper but is much more intentional with her spending these days.


Oprah is working on her money management and trying really hard to clear her credit card debt. The minimum monthly repayment is only $60. But she knows the interest costs are high and extra repayments are important, so she’s paying $200 each month to her credit card.


But, she has no savings.


So, when Oprah’s car needs a repair that costs $200, she doesn’t have the cash to pay for it – and you guessed it, has to use her credit card.


After paying $200 off her credit card this month, her balance owing is still the same. And Oprah still has no savings.


If another unexpected expense happens, with no savings in place, the credit card will need to be used again.


That’s the debt cycle!


Breaking the cycle

Oprah is on an emotional roller-coaster. She feels like she’s doing the right thing by making extra repayments – like she’s finally getting ahead with her finances. But every time an unexpected expense happens, she’s frustrated – and discouraged.


Will she ever break free of debt? She could – if she made saving a bigger priority.


Instead of paying $200 off her credit card, what if Oprah pays $100 – and with the remaining $100, she can start saving.


After only a few months, Oprah is in a better position if an unexpected expense happens.


She’s getting off the emotional roller-coaster of credit card debt – and gaining some breathing space.


Savings is the key

Emergency savings is often overlooked – but it’s one of the most important savings buckets Oprah is going to have.


And once that bucket starts filling, she can turn her attention to savings for other big expenses. The temptation might be to start planning for a holiday, but what about other big expenses that can be hard to budget for. Things like:

  • Car repairs and new tyres

  • Replacing white goods

  • Home maintenance (if you’re a homeowner)

For Oprah to be truly confident with her money management she needs to save for all these things while paying off her credit card.


Then she’ll truly break free from the cycle of debt.


Nutshell is here

If you:

  • Have debt you want to tackle.

  • Feel you should be doing better.

  • Get stressed by money.

It doesn't have to be that way... have a chat with Victoria Wallis-Smith and discuss how a Flying Start money coaching session can help you.




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