As humans, we’re programmed to spend. It makes us happy until the bill arrives. Before you know it, you’re over your head in debt and don’t know how to get out. This usually leads to bad credit and serious financial issues.

Fortunately, there are ways to fix bad credit and it starts with changing your bad spending habits. 

Stop Using Credit Cards

Credit card debt is one of the easiest ways to get in over your head. It’s easy to swipe plastic at the register and not think about your budget. What happens when the bill arrives? 

If you only make the minimum payment, interest charges accrue, adding up fast. Before you know it, you’re over your head in debt and your credit score drops dramatically. If you want to fix bad credit, stop swiping plastic. If you can’t pay cash, don’t buy it.

Know your Spending Triggers

Be mindful of your spending. How were you feeling when you spent it? Was it a certain time of day or were you in a specific mood? ‘Retail therapy’ as many call it causes many people to spend money to feel better. It may feel good at the moment, but when the debt adds up and you can’t pay your bills, it creates an even worse mood. 

Separate your Savings

Not separating your savings from checking is a temptation to spend. Your checking account is your ‘spend’ account. It’s how you pay bills and go to the store. If the money is there, you’ll likely spend it

Instead, pay yourself first and transfer funds from checking to savings on payday. Put your funds in an online high-yield savings account. Not only will you earn higher interest rates, but the money is also harder to access, which means fewer impulse buys.

Stop Eating Out

According to a Capital One Canada study, 72 percent of Canadians eat out at least a few times a month. Eating out costs the average Canadian $200+ per month. This doesn’t include coffee shop stops either, which at least 50 percent of Canadians indulge in daily. 

Rather than eating out, plan meals at home. Make a weekly or monthly meal plan and take a couple of days of the month to prepare meals ahead of time. Knowing you have food in the freezer that you can pop right in the oven may decrease the number of times you eat out.

Write out your Goals

You can’t fix bad credit unless you set a goal to do it. Write your goals down – there’s something realistic about seeing them in writing. You’ll see what you need/want to achieve and may feel more motivated to put steps in place to make it happen. 

Create a Plan to Meet your Goals

You know your goals, now you need a plan to meet them. Typically this means creating a budget. You need a plan for your money so you send it to the right places. Your budget should include money for fixed expenses (housing, transportation, food, etc.) as well as variable expenses and savings. 

If you aren’t sure what your expenses are or how much money you bring in each month, pull your bank statements from the last few months. Evaluate them closely, categorizing your spending, and calculating your take-home pay. Look at categories you overspend and may need to cut back and create a plan.

Fix your Bad Credit Today

If you’re ready to fix your bad credit today, it starts with stopping your spending habits. Look honestly at your spending, figure out where you can cut, and start slow. As you achieve your short-term goals, keep adding to your goals, cutting back more and more, until you’re debt-free and living a cash lifestyle.