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Life with Credit After Divorcing Debt

Sandra Sherk

If you've recently overcome your toxic relationship with debt, congratulations! This is no small feat. It can feel a lot like getting out of an unhealthy relationship with a spouse or partner—it’s not easy, but you’ll be better for it.

And now that you’ve cut those ties, it’s important to move forward in a positive way that doesn’t put any unnecessary pressure on you. (I’m sure you’re already sleeping better at night, and relieved that those collection calls have finally stopped!) Here are six ways you can start building a positive relationship with credit and your money that moves you towards your financial goals, and so you don't fall back into old habits.

6 Ways to Create a Positive Relationship with your Money

1. Avoid credit cards (at least for a while).

Just as a marriage counsellor would likely suggest that you don’t rush into another relationship, a certified credit counsellor would suggest you don't break out the credit cards just yet. It’s important to know and accept that you can be on your own and that you don’t have to rely on credit. So, make it a goal to only use cash or your debit card for a period of time.  

2. Accept some accountability for your past debt.

It’s important to acknowledge your role in the relationship you had with your debt. If you continue to blame others, such as thinking “the banks shouldn't have given me those credit cards” you won't be able to move forward in a positive, constructive way.  After all, you made the decision to use the cards, despite perhaps knowing you couldn't pay the balance off in full at the end of the month. It is a show of strength to admit you made some mistakes, and that you learned from them, and now you’re ready to make a positive change. For years I've been telling my clients that they can’t change the past—but they can learn from it!

3. Take control of your finances.

Learn to handle your money and be in control of your financial life. Yes, this means the “B” word—budgeting! If you don't like the idea of a budget, think of it as a spending plan. And by creating a realistic spending plan, you will know what you can (and can't) afford to spend and thereby avoid having to rely on credit.  

4. Establish a savings plan and savings account.

It’s important to regularly put funds away to achieve your goals. Maybe you want to go on a cruise, buy a new car, or redecorate your living room. With proper planning, you can create the savings you need to meet these goals. And your bank or credit union can help make saving easier. If you use online banking, you can set up automatic transfers from your main account to a savings account specifically for the goals you have in mind. You can also go to your bank and ask them to transfer funds each payday to your savings account or TFSA. It might also be a good idea to speak with their investment specialists, so you can learn how you can make your money grow faster and work harder for you. And when you have any extra funds, such as tax returns or overtime pay, squirrel it away into that savings account before you have a chance to spend it.

5. Know your money-spending triggers.

Scared you'll fall back into old habits? It’s important to know your triggers, and avoid them by changing up your routine if you need to. Perhaps this means avoiding the mall when you're feeling down or stressed out. Go for a walk to clear your head instead, or meet up with a friend for coffee or tea. (It’s cheaper than dinner, and cheaper than buying those shoes you really don’t need!) For others, their lunch break might be the time when they spend the most money unnecessarily. Make it a habit to go for a walk instead, or read a book, get in a 30-minute workout, do research for a personal project, or make this your time to catch up with old friends (or your mother), and return those emails you've been putting off. The point is to manage your life in a way so you avoid those triggers that can lead you back into debt. 

6. Be mindful with credit cards.

Once you’re feeling stronger, you may decide you want to start a new relationship with credit cards. But remember, you are in control—not them. Don’t use credit because you don’t have the funds to make the purchase; you want to avoid another toxic relationship! While it can be tempting to make minimum payments only, our Debt Calculator will show you just how long it will take to clear that debt when you only pay the minimum, and how much interest you'll pay. (All of a sudden that top you bought on "sale" can end up costing you three times as much in the interest you'll pay.) So, clear the balance every month and avoid interest charges. You’ll be glad you did! And if you know you can't pay the balance in full at the end of the month—you guessed it—put the credit card down. Remember, credit cards can be a tool that can help build up your credit if you use them wisely; otherwise, they'll make you pay...literally.

You know the old saying, 'Today is the first day of the rest of your life'? Well, you’re living debt-free, so let’s keep it that way! Of course, if you feel you’re slipping up, don’t be afraid to ask for help. Speak with a caring credit counsellor by calling 1 (800) 267-2272 and booking a free counselling session. It's 100% free and confidential, and our counsellors can help you learn to manage your money, establish goals, take control of your finances, and learn to rebuild your credit. It’s a brand new day, and time to enjoy debt-free living!

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Topics: Debt Management, Credit Cards

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