Choppin Credit Cards

Albert Einstein said that “compounding interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”

This week we’ll explore repeatedly accumulating credit card debt. Throughout this week’s issue, we’ll:

• Understand why it hurts so much

• Dig into the details as to why you’re doing it

• Solve the problem and make credit cards our b***h

• Use dog photos as headers because they’re more fun than pictures of credit cards

MILLENNIALZ RULE

• Phantom Wealth is about as valuable as a ghost in a jar. And it’s plaguing a lot of millennials. But, millennials are becoming more wealthy. 👍

• 49% of millennials expect their finances will get better in 2025.

• Financial independence finally tops traveling for the majority of us. Yeah! We’re finally adulting!

• Baggy cargo pants are making a comeback. And other toxic millennial traits you probably didn’t know you had.

Lingchi 

Repeatedly Accumulating Credit Card Debt

"I'll just put it on my card" – famous last words from people who think Future Them will somehow be richer and more responsible.

Spoiler alert: Future You is currently screaming into a pillow looking at the minimum payment.

Repeatedly accumulating credit card debt can create a financial burden that lasts months or years. And doing it again and again reduces how much you can save for retirement, you miss out on lifelong accumulations of compounding interest, or being able to buy things that actually make you happy.

What starts as an insignificant financial decision has a long-term impact. Not only does it accumulate interest, but it means it takes away from being able to spend cash on the things you love and enjoy - or from things you can invest in to create more wealth in the future.

Ever notice how credit card companies basically run financial frat houses? "DUDE! Sign up NOW and get 50,000 POINTS!!!" Yeah, like it’s a basketball game.

Meanwhile, the fine print is whispering, "...and we'll be taking your firstborn child at 29.99% APR." The CFPB actually started cracking down on switch-and-bait tactics late last year.

Here’s how it impacts you directly:

1. Incremental accumulation: Over time, the large pile of small purchases starts to take away from what you can use to buy essentials. Non-essential items like clothing, music downloads, or impulsive online shopping contribute to the growing debt. Yes, Netflix is also considered non-essential.

2. High interest rates: Credit cards typically carry high interest rates, which can cause the debt to grow exponentially if not paid off quickly. Small balances can become substantial over time due to compound interest.

3. Reduced financial flexibility: As debt accumulates, it limits your ability to save for emergencies or invest in opportunities, creating a cycle of reliance on credit.

4. Impact on credit score: High credit card balances relative to credit limits can significantly damage your credit score, affecting your ability to obtain favorable terms on future loans or even secure employment.

5. Psychological toll: The constant worry about making payments and managing debt can lead to increased stress, anxiety, and even depression.

6. Opportunity cost: Money spent on interest payments represents lost opportunities for wealth building, such as investing in retirement accounts or saving for major life goals.

7. Risk of default: As debt becomes unmanageable, the risk of defaulting increases, potentially leading to legal actions and long-lasting financial consequences.

In Hansei, we’ll explore how you can become more aware of your spending habits and consciously try to avoid the trap of gradual but significant debt accumulation.

It’s easy to beat yourself up over finances. Try not to be hard on yourself. Hansei is for improvement.

If you need to cry, don’t do it on your devices. Don’t waterlog the device and miss out on how to save your credit crisis.

Here’s an ad for mushroom coffee, which you’ll probably use a credit card to buy:

Kickstart your 2025 healthy routine

Upgrade your day with award-winning DIRTEA Coffee Super Blend. For people seeking sharper focus, a calm mind, and lasting energy:

• Over 1,000mg of Lion's Mane per Cup

• 80% less caffeine than regular coffee

• Made with the highest quality Organic Certified ingredients.

Shop now & save 30%.

Hansei 

Cut the Cards (Not the Cheese)

Evaluate and reflect on why you’re using credit cards. Remember, this is an opportunity to evaluate what you’re doing and identify ways to get better.

If you’re still spending $2500 to make $100, start there.

It’s time to finally show those Wall Street financial bros who is the boss…in the most passive-aggressive way ever. You cute little nerd, you.

1. Honest self-assessment: Take a step back and objectively examine your spending habits and financial decisions without judgment. Look at your credit card statements for the past few months and categorize your expenses.

2. Identify patterns: Look for recurring themes in your spending. Are there particular categories where you consistently overspend? This could reveal areas where you're most vulnerable to accumulating debt.

3. Analyze external factors: Consider how recent economic changes might have affected your finances. For instance, many Americans have seen increased monthly bills, particularly in insurance premiums and utilities, which has impacted their ability to pay down credit card balances3.

4. Evaluate your financial knowledge: Reflect on your understanding of credit card interest rates and how compound interest works. Many people underestimate the long-term impact of carrying a balance.

5. Assess your emotional triggers: Consider whether stress, anxiety, or other emotional factors are driving you to use credit cards more frequently. The psychological toll of debt can create a cycle of stress and further spending.

6. Review your income and budget: Reflect on whether your current income is sufficient to cover your expenses. If not, consider why you're using credit to bridge the gap instead of adjusting your lifestyle or seeking additional income.

7. Examine your financial goals: Think about your long-term financial objectives. Are your current habits aligned with these goals? If not, identify the disconnect between your actions and aspirations.

8. Consider external influences: Reflect on how societal pressures or marketing might be influencing your spending habits. Are you trying to maintain a lifestyle that's beyond your means? Do you need anything from [insert your own ridiculously-priced designer name here]? ←No, that wasn’t a typo.

By engaging in this deep, honest self-reflection process, you can gain valuable insights into the root causes of your credit card debt accumulation.

This understanding is the first step towards making meaningful changes in your financial behavior and developing strategies to reduce and eventually eliminate your credit card debt.

Kaizen

Have you ever wondered what the best way to get out of credit card debt is? The answer is to stop spending on credit. It’s that simple.

It’s not that simple…

Following are some ways to theoretically shred the cards you have and start moving toward a life that involves a lot less debt. And plastic.

Don’t worry, we’re not coming for your coffee or Netflix subscriptions:

Spending Habits
Challenge: Spend Less in Specific Categories

Adjustment: Implement a "24-hour rule" for non-essential purchases.

Implementation: Before making any non-essential purchase, wait 24 hours. Use this time to reflect on whether the item is truly necessary.

Challenge: Reduce Impulsive Online Shopping

Adjustment: Unsubscribe from promotional emails and remove saved payment information

Implementation: Spend 30 minutes going through your inbox and unsubscribing from retailer emails. Delete saved credit card information from online shopping accounts.

Tools: BlockSite, Stop Impulse Buying

Financial Knowledge
Challenge: Learn More About Credit Card Interest

Adjustment: Educate yourself on compound interest

Implementation: Spend 15 minutes each day for a week reading about how credit card interest works. Use online calculators to see the long-term impact of carrying a balance.

Tools: USAA Educational Foundation

Emotional Triggers
Challenge: Stress-Induced Spending

Adjustment: Develop alternative stress-relief methods

Implementation: Identify three free or low-cost activities that help you relax (e.g., walking, meditation, reading). Then actually do them. And plan to do them.

Tools: happify, Calm, Meetup

Income and Budget
Challenge: Income not covering expenses

Adjustment: Create a zero-based budget

Implementation: Allocate every dollar of your income to specific categories, including debt repayment. Review and adjust this budget weekly.

Tools: Rocket Money

Challenge: Using credit to bridge income gaps

Adjustment: Explore additional income sources

Implementation: Dedicate 2 hours each weekend to researching and applying for part-time or freelance opportunities in your field.

Tools: Upwork, Fiverr

Financial Goals
Challenge: Current habits not aligned with long-term objectives

Adjustment: Visualize and regularly review financial goals

Implementation: Create a vision board or digital wallpaper with your financial goals. Set a weekly 10-minute appointment to review these goals and your progress.

Tools: Monarch

External Influences
Challenge: Societal pressure to maintain a certain lifestyle

Adjustment: Practice gratitude and contentment

Implementation: Each night, write down three things you're grateful for that don't involve spending money. Review these entries weekly to reinforce appreciation for non-material aspects of life.

Tools: A sweet journal

Debt Repayment Strategy
Challenge: Overwhelming debt across multiple cards

Adjustment: Implement the debt snowball method

Implementation: List your debts from smallest to largest. Focus on paying off the smallest debt first while making minimum payments on others. Celebrate each card paid off as a milestone.

Tools: Snowball Calculator

By consistently applying these small, manageable adjustments, you can gradually improve your financial habits and work towards reducing your credit card debt.

Remember, the key to kaizen is continuous, incremental improvement over time.