Becoming The Wealthy You Podcast | How to Save Money, Money Management, Budgeting, How to Get Out of Debt, Money Mindset, Personal Finance

101. How To Break Free From the Credit Card Debt Cycle

• Germaine Foley | Life Coach, Financial Coach

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Speaker 1:

Welcome to the Wealthy Woman's Podcast, a podcast for high-achieving women who are great at making money but struggle to build wealth. You'll learn how to take control of your money, increase your net worth and make more. Ladies, it's time to create a life of more money and more freedom. Let's dive in. Well, hello there. Welcome back to the podcast.

Speaker 1:

Today, we are going to discuss how to break free from what I call the credit card debt cycle. This is something that I can personally relate to, and so can many of my clients, and I'm guessing that many of you can as well. Breaking free from the credit card debt cycle is usually at the top of the list when women come to work with me inside of the Wealthy Women's Academy, so if you are frustrated and stuck inside of the cycle of credit card debt, I can help you. It's actually one of my specialties. I broke free. I paid off over $200,000 worth of debt, and a lot of that was credit card debt, okay, and not only was I able to break free, but I was able to break free for good, and this is what I help my clients do inside of the Wealthy Woman's Academy, and right now I'm thinking of a few clients in particular, and they have broken free. Right, they are credit card debt free. We worked through strategies, we worked through the mindset drama. We got there and now their jobs are to stay free. Right, because there's one thing to get out of debt but there's a whole nother level of freedom when you are staying out of that debt.

Speaker 1:

Okay, and this is where the real work happens and, as you'll hear in a few minutes, some people they do manage to get out of debt, but they find themselves right back in it. That's the beauty of being in a program like the Wealthy Women. Some people they do manage to get out of debt, but they find themselves right back in it. That's the beauty of being in a program like the Wealthy Women's Academy, where you have the support, the guidance and the accountability. I know so many of you want that support and accountability. Right, because you've tried on your own so many times and then you find yourself just right back where you started. And so, inside of the Wealthy Women's Academy, I've designed it so you get all of that. You get the support, you get the guidance, you get the strategies and you get the accountability, helping you to not only get out of credit card debt but to stay out. You get an entire year to work on this, with me by your side the entire time, helping you to set goals, to get organized, to make progress, to reach your milestones, to reach your goals and to stay on track.

Speaker 1:

But here's the kicker not only to stay on track, but to get back on track after things go left right, because life is not perfect. Life doesn't happen in a bubble where everything happens exactly like you planned Right, and so sometimes you're going to make mistakes, sometimes you're going to get off track. But having the Wealthy Woman's Academy, having me, having the resources available to you to help you get back on track, is priceless, because the key is to keep going, even when you're tempted to give up and quit right, and once you can do that, then you're home free. If you know that, no matter what, even when you want to give up, that you're not going to give up because you know you have the support, the guidance and the accountability there for you, by your side the entire way. That is when you know you're going to make it Okay. So, listen, I want you to know that you deserve this type of support, and so if you're like yeah, I think this is what I need. I think this is the thing that can really help me. Then you're invited to go to germanefoleycom slash WWA that's Germaine with a G. Read all about the Wealthy Woman's Academy and, if it speaks to you, sign up, go all in on yourself, take that leap, go for it, because what's waiting for you on the other side is freedom. It's freedom from money stress. It's freedom from credit card debt. It's freedom from thinking about money all the time. Okay, so, if that's something you want and something you know you really could use in your life, all you gotta do again is go to germanefoleycom slash WWA and that's Germaine with a G.

Speaker 1:

Now, before we get into how to break free from the credit card debt cycle, let's look at the three types of cycles I see most. So the first cycle is this it's like a financial hamster wheel. I'm sure you know the feeling. You pay the minimum payments and throughout the month you may charge more. Maybe there's an unexpected expense that has come up, or maybe you're indulging in retail therapy, but either way, by the time the next bill rolls around, you've charged more and the interest rates are compounding. It's like a vicious loop that feels impossible to escape from, because, no matter what you do, the balance never seems to go down and the interest keeps piling up. You might find yourself swiping for convenience, to relieve stress or even as a reward, and as you do this, you just get pulled deeper and deeper and deeper. It's like you're trying to dig yourself out of a hole while someone is shoveling dirt right back in it.

Speaker 1:

Can you relate to that one? I know back in the day when I was really unaware of how to get out of credit card debt, that was me right. I was using the cards frequently and only really paying the minimum, and compounding interest was just coming and coming and coming, and it was like I was just never going to break free from it. Okay, so now let's look at the second cycle. You're making payments more than the minimum, in fact, because you're wanting to get ahead, right. You're like I'm paying more than the minimum, I'm going to put a little extra on the principal. I'm going to do this. I'm going to do that because you are trying to do the right thing. But even though you're chipping away at the balance, it feels like you're just treading water. You make extra payments here and there, but interest keeps building up and life's unexpected expenses force you to use the card again and again. You're putting in the effort, but the progress is so slow. It feels like you're barely moving forward. It's like running on a treadmill working hard but not getting anywhere. Oh my gosh. I can totally relate to this one, because it's like you're trying to do the right thing. Everybody tells you oh, pay more than the minimum, always pay more than the minimum. But the truth is that's not how you get out of credit card debt. How you get out of credit card debt is to never, ever, pay any interest, right, it's whatever you spend. You pay it off that month, right? But a lot of us are trying to do it this way too, and it just it's like treading water, because you may make an extra payment, but the interest just negates all of that money you put on it.

Speaker 1:

And here's the third credit card debt cycle. Now this one can be so frustrating, and I know what this feels like as well. You work really, really hard to pay off your credit cards. You actually pay them off. Maybe you use willpower, you put yourself on a strict budget and you pay it off. Maybe you got a windfall of some sort, maybe a bonus at work. Maybe you sold some property and you have extra money and you pay it off right, you could have even taken out a consolidation loan or a 0% interest credit card, right, and I'm not saying I recommend you do those things. I'm not saying I recommend a 0% interest credit card or a consolidation loan. That is for another episode. But maybe this is how you've paid off your credit card in the past, and so with that, you feel this huge relief. And so with that, you feel this huge relief like you're finally free. You might even swear to yourself I'm never letting this happen again.

Speaker 1:

No-transcript. Maybe the refrigerator breaks, maybe you're invited to a weekend getaway with friends and you weren't planning for that. Or maybe you just want to treat yourself after work one day and you just go on a splurge and before you know it, the balances start creeping back up again and suddenly you're right back where you started. It's exhausting and it can feel like you're stuck in a revolving door that you cannot step out of, no matter how hard you try to fix it right. This was another one that I can really relate to. Right, you pay it off. You're like I'm done, I'm not going back into this anymore. I'm not even putting the card in my purse, I'm hiding the card from myself. And then guess what happens? A couple months go by and you're right back at it again and you find yourself right back in the same position you were in earlier. Which one of these can you relate to? I know I can relate to all three. Maybe you can relate to just one of them, or maybe you can relate to all three of them, no matter which cycle you're in. This is what I want you to know.

Speaker 1:

No matter which cycle you find yourself in, you can break free from it, period. You can break free from it. You are not stuck. I know it feels like you are, but you're not. It's just going to take some new ways of thinking, feeling and acting. You're going to have to start thinking differently about credit cards. You're going to have to start thinking differently about the money that you bring into your life and what it is used for. You're going to have to start feeling motivated and feeling empowered instead of disempowered and demotivated when it comes to building wealth. You're going to have to start doing things differently and you're going to have to stop doing other things right. So if you want to change. You cannot keep thinking, feeling and acting the same way, period. I wish that I had better news for you, but I don't. If you want to change, if you want to break free from the credit card debt cycle, you're going to have to do things differently than how you've been doing them.

Speaker 1:

Okay, and this episode I want to walk you through how you can break free from the credit card debt cycle through the lenses of the four stages of change. So, in order to change any area of your life permanently, you go through the four stages I'm going to walk you through today. Some people may go through these stages really fast and it may seem like they make instant change, and others may move through the stages a little bit slower. Now here are the four stages Awareness is stage one. Stage two is intention. Stage three is decision and the final stage is discipline. Okay, so let's go through each one of them individually through the lens of like. Okay, how do I break free from credit card debt using the four stages of change? So again, the first stage is awareness.

Speaker 1:

So, in order to break free from the credit card debt cycle, you must become aware, or admit to yourself, that you are indeed in a cycle, and so if you can relate to the three scenarios I gave you, then you, my friend, are likely in a credit card debt cycle, and the first stages to changing that is to admit it to yourself and to become aware of it. Now this is not a time to judge yourself or beat yourself up. This is actually a time to feel relieved. You can feel like, oh, that's what's going on. I'm in a cycle. It's not that I'm out of control or that I'm bad with money. I'm just in a cycle that I can stay in or break free from. The choice is actually yours. You can decide that I'm going to break free from it or you can stay stuck. Either one is available to you. Now the awareness stage is just where you recognize it and acknowledge it. You acknowledge the patterns and the motivations that are keeping you in the cycle.

Speaker 1:

The patterns could be something like maybe you just spend more than you make and you use credit cards to do so. Maybe you make $10,000 a month, maybe you bring that home, or $5,000 a month, or $6,000 a month, whatever your income is, but you're spending a couple thousand dollars more than that, or a few hundred dollars more than that, and you're using credit cards to do that. So, no matter how much you make, you're spending more than you actually bring in on a monthly basis. Maybe that's the pattern you need to become aware of. Like, oh, I'm actually spending more than I make every month. Some of us may not even realize that we're doing that, because it's so easy to do that with credit cards that you just oh, I'm just going to put on my credit card, so you end up spending way more than you actually make. The other pattern you might notice is that, oh, whenever I, you know indulge in retail therapy, whenever I impulse spend, I use my credit cards. Oh, okay, maybe that's something that I can look at.

Speaker 1:

Another thing could be that you just don't have an emergency fund. So anytime anything unexpected occurs, you have to use your credit cards. Because you don't have an emergency fund, you don't have savings there to cover expenses that are coming, maybe even expenses that you do anticipate, like travel and things like that. You're not putting money aside for that, and so when it's time to go on your annual vacation, you're just putting it on a credit card, and then there you are again. And then some of the motivations could be, you know, thoughts like I'll pay it off, or I'll think about it later, or I'll get to it eventually. Right, you kind of put it off, or I'll think about it later, or I'll get to it eventually. You kind of put it off into the future and you really don't think about it. And in order to bring that awareness to you, you need to shine a light on those thoughts and say no, I need to think about this today. Do I want to put myself in that predicament in the future? And it's so easy to have these unconscious thought patterns like that and you don't even know they're there. And that's what's motivating you to stay in the credit card debt cycle, because you're like, oh, I'll pay it off later, or I'll use my bonus and pay it off, or I'll figure it out. Right, you just push it off Now.

Speaker 1:

A key insight to awareness is this Awareness alone does not create change, but it does open the door to the possibility of change. Right, many of you are here. You're seeing that, oh, I'm in a cycle. But just because you know you're in a cycle doesn't mean you're ready to break free from it or that you're going to break free from it. But awareness is essential to change. It's the first step, okay. So now let's look at the second stage of change, and that is intention.

Speaker 1:

Intention is about setting a clear desire to change, but it remains passive unless followed by action. Right, it's like, okay, I'm going to do this, yes, I want to do this. I have the desire to break free from the credit card debt. So it's like I want to do this and not I'm going to do this. Actually, right, it's like I want to do it, I'm intending, but you haven't really committed yet. Intention gives you direction, but not momentum. It's like entering an address into your GPS but not yet driving right. You can be like I want to go to California and I'm putting the address of the location, but I'm not driving yet. Right, you know where you want to go, but you're still in your original location.

Speaker 1:

Many of us find ourselves stuck here for a very long time, intending to build wealth, intending to save, intending to beef up your investments, intending to get out of debt, intending to make more money, but we never actually move forward. We never take the first step to making it happen. Good intentions alone are not enough. Yeah, you do need them to change. Like, if you have good intentions, that's great, but that's only the second stage of change and too many of us stay here way too long. You might be listening to the podcast, and you've been listening for a while, and you like what I say. You like the ideas and the concepts, but you haven't taken action. Then you are probably in this stage. Right, you know that you wanna break free from credit card debt. You know that you wanna build wealth. So you have the awareness and you have the desire. Right, you want to do it, you have the intention, but you haven't made any progress. Then this is probably where you are on stage two and you don't have to stay here, but so many of us stay here for way too long.

Speaker 1:

Here's a key insight for this stage. Again, this is an important stage because it's where you can get clarity around your intentions, around breaking out of the credit card debt cycle. But, again, you cannot stop here. This could look like, you know, you're looking at different things you can do. You're exploring ways you can, you know, get a grasp of your spending and you're exploring ways you can get out of credit card debt. You might be Googling, you might be listening to podcasts, you might be watching YouTube videos, but again, you just have the intention. You haven't really gone for it yet. Right, this could be the stage of planning and gathering ideas and strategies, like I said, that you intend to put into action in the near future.

Speaker 1:

But again, too many of us stop here, we don't go far enough, we don't take that next step, which leads us to stage three of change, and that's all about decision. Decision is a firm commitment to yourself and it's making a no matter what promise to follow through. Decision is where change becomes inevitable and your commitment becomes rock solid. It's about driving the car in the direction the GPS tells you to go right. So remember, if you want to go to California, you got to start driving. You can't just put the address in the GPS and think that's going to get you there. You actually have to put in the effort and make that trek. Even if you're in New York, you can still get to California if you don't quit and if you decide that's where you're going.

Speaker 1:

Think of decision as drawing a line in the sand that says I'm changing, no matter what it takes. I'm breaking free from this credit card debt cycle, no matter what I'm done, I'm changing my life. Now I have to tell you, this is where the Wealthy Women's Academy can really support you so much, because once you make the decision that your life is going to change, you're ready to go, you're ready to rock and roll. You're ready. You know that, no matter what, you're not going to quit. So that means you're going to get the results right. And inside of the Wealthy Women's Academy, you get the strategies, you get the mindset tools, you get the coaching, you get the celebrations. All of these things help you along the way. It helps you to stay motivated, it helps you to keep going, it helps you to continue to follow through every single day on that decision to change your life. And again, if you're interested and you want to learn more about it, I have a whole webpage dedicated to it. It gives you all of the information, all of the things you get. It's included on this page. All you have to do is go to germanefoleycom slash WWA. Again, that's germane, with a G dot com slash WWA.

Speaker 1:

Okay, so now let's look at the final stage of change, which is stage four, and that is all about discipline. Discipline is where the real growth occurs. It's acting on the decision over and over and over again, even when you don't feel like it. Discipline is about using your prefrontal cortex, that higher part of your brain, that smart, intelligent part of your brain, the planning part of your brain to lead and not allow emotions to drive impulse spending that makes you spend more than you make and derails your plans to get out of credit card debt. This is where you honor your decisions every day, choosing to prioritize long-term financial well-being over instant gratification and temporary comfort.

Speaker 1:

Here's a key insight into discipline. Discipline strengthens with practice. The more you exercise it, the more natural it becomes to make financial choices that serve you. Right? So here's an example Inside of the Wealthy Woman's Academy. I teach you how to make all of your money decisions ahead of time using your prefrontal cortex. Right, you get to think about the month ahead and we do this on a monthly basis. Right? So you get to think about the month ahead and you get to decide how you want to use your money, how much extra you're paying on your debt, how much you're putting in your emergency fund, how much you're going to just enjoy right? All you have to do all month long is to just honor those decisions after you make your plan. This is what it means to be disciplined. It doesn't mean that you're going to be super restrictive and deprive yourself, because, remember, we're accounting for fun, we're accounting for self-care, we're accounting for the things that truly matter to you.

Speaker 1:

When you plan your spending ahead of time the Wealthy Woman's Academy way, right, I feel like I have a very unique way of teaching all of the money concepts I'm sharing with you. But especially when it comes to planning your spending ahead of time, I do not believe in strict budgets. They don't work right. They backfire ahead of time. I do not believe in strict budgets. They don't work right, they backfire. They make you have to rely on willpower, and we, as humans, we have a very finite amount of willpower and once it runs out, it's like we go and splurge and we just release all the steam that we've been holding in.

Speaker 1:

And so when you create a plan ahead of time the way I show you how to do it you're accounting for all of the things that you enjoy, right. You give yourself an amount of money that you can spend how you want. You do all those things. And so, even though you're doing that, it doesn't mean that your primitive brain isn't going to want to revolt. It's still going to want to do more than you allotted to yourself, and that is where discipline comes in. And so this is where you tell yourself nope, this is what I gave myself to do whatever I want with, I am going to be disciplined and I'm going to follow through on my commitments. I'm going to follow through on the promises that I made to myself, and inside of the Wealthy Women's Academy, you learn to do this.

Speaker 1:

We have not been taught how to keep our commitments to ourselves. We are really good at keeping our commitments to others, but not to ourselves, and this is what you learn in the academy. And if this is something you know that you want in your life, especially looking ahead into 2025, this is the perfect time to say I am done right, I'm moving from awareness, I'm moving past intention and I am deciding that this is the life that I'm going to live, and I want help doing it. You are invited again to go to germanefoleycom slash WWA to learn all about the Wealthy Woman's Academy and to join us. I would love to be your guide the entire way as you not only break free from the credit card debt cycle, but as you build real, lasting wealth.

Speaker 1:

I hope this episode was helpful and I will see you next week. Bye-bye, hey, before you go, if you're ready to create a life with more money and more freedom, then you're invited to join the Wealthy Woman's Academy, my signature coaching program, where you'll learn how to take control of your money and build wealth without sacrificing your lifestyle. To get started, head on over to germanefoleycom slash wwa, that's Germane with a G. See you over there. Bye-bye.