This is part one of my eight-part series on how you can beat the banks at their game and get yourself out of debt.

Is your credit card debt spiralling out of control? If so, you are not alone.

According to ASIC’s Money Smart, Australians currently owe $32 billion on their credit cards. That’s an average of about $4,300 per credit card holder. What’s more, the average credit card holder who pays an interest rate of between 15-20% forks out about $700 in interest per year. (“Credit card debt block”, September 8th, 2016) That’s a lot of money going down the drain.

People often feel powerless when it comes to their credit card debt. I see so many clients who have taken too long to act, needing advice on how to get rid of debts totalling tens of thousands of dollars.

How can you ensure this doesn’t happen to you? The good news is you CAN gain control of your credit card debt. The first step is to change your money mindset.  

You must begin with savings in mind®...

One of the biggest financial lessons I learnt from my money-savvy mother was to “save for a rainy day, as you never know what will happen”. Saving is a form of risk mitigation. Yet, in a society such as ours where it’s the norm to spend and amass as much as possible, saving is not a priority.

I call this the “Consumerholic” mindset. It took seed in the 1980s – an indulgence decade that hooked people on credit cards. Most of my generation – Gen X – got swept up in the credit card craze, and credit cards became "normal" for the generations that followed. I have seen clients use their credit card as if it was their personal fund. Their credit cards allow them to purchase whatever they want, whenever they want, so they don’t bother about saving.

We live in a society that struggles to save. Part of this problem is caused by the false sense of security people have about their jobs. Workers assume wages will continue to rise, so they kid themselves that they will be able to pay off their debts more easily in the future. But when they do receive a wage rise, the extra income is used to expand their lifestyle rather than pay down their debts.

How to make saving a habit?

Savings should be your “first expense”, not your last. Tell yourself, “I need to save X amount of money from my disposable income before I spend it on anything else.” Make it a priority.

You may think it’s difficult to save. It’s not. Start by putting aside $50 a week. Place it into an interest-bearing account you aren’t allowed to touch. You can even make this an automatic process so you don’t forget and aren’t tempted to spend the money on something else.

Once saving this amount becomes a habit, it’s easy to build on it. Increase your savings incrementally. Add an extra $10 a week, every second month, and see how quickly your savings grow.

Saving means you won’t have to rely on your credit card for all your purchases. You won’t have to waste hundreds or thousands of dollars on interest. And it is never too late to make it a habit. Start saving now, because you never know when you will need it in the future.

Stay tuned next week for Part 2: Practice Resourceful Habits – Manage Your P&L.

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Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter—  is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence® - Anchored in Values. She believes that people can become financially liberated by developing a healthy relationship with money. Learn more about being money intelligent www.moneyintelligence.com.au