162. After A Big Trip, Here’s How To Fix Your Credit Card And Protect Your Cash Flow

We turn the post‑holiday credit shock into a practical plan: shrink the limit, build cash buckets and automate clean pay‑offs. We talk through the psychology of red balances, the banks’ incentives and how to set boundaries that stick.

• why red numbers trigger panic and overspending
• reducing the credit limit in steps with no score penalty
• splitting bonuses between pay‑down and a cash bucket
• using buckets for keeping, saving and giving
• automating monthly settlement and limit reductions
• saying no to bank‑pushed limit increases
• using accountability with a planner or coach
• building an emergency fund outside the card

Reach out if you have more questions on that or pop us a message in the chat

Transcript

Post‑Holiday Overspending Panic

SPEAKER_00 0:00

Hello everybody. Uh Bron, nice to see you. And we had a chat this week about credit card spending. And it probably highlights when you've come back from a holiday or a break and you went away and your credit card burnt a hole in your pocket and you're out of town and you just spent a lot more than you should have. You might not have had discipline when you're away. You're more tempted to spend. You came back end of the month. Oh my goodness, you get your statement and your credit card is sky high. Now what do you do? Do you panic? Paid off straight away? What do you do? I mean, so we were just just discussing how after a nice holiday or a nice breakaway, no matter when it is, you may have overextended on the credit card. And then what do you do from now? What do you suggest? Because you've been very good at your pockets and versions of yourself and how you control that. So what I've come back and I've spent too much. Now what?

SPEAKER_01 1:00

Okay. And it's

The Psychology Of Red Numbers

SPEAKER_01 1:01

such a good question. I actually have quite a few clients that come in, and I think this is really where that psychology of money plays a big part. Because when you open your bank accounts and you look at your credit card, what you've spent is a big red mark. It's got a negative, it's got red numbers, and then you can see this other little number of what's available. So let's say your limit's 10,000, all you have left is a thousand, and you see this hectic negative 9,000. That is playing on your emotions and you being able to regulate yourself. Now, as a spender, and you're also a spender, my credit card will always show me that red number because I I enjoy spending, and but what I've learned is to put a boundary in place, and how I've done that is instead of it being the 10,000 availability, because I just feel whatever that availability is, if you don't have that saving nature, it will always exactly terrible.

SPEAKER_00 2:10

Yeah, it always fills in that hole.

SPEAKER_01 2:12

Yes.

SPEAKER_00 2:12

No matter what number it is.

SPEAKER_01 2:13

Yes.

SPEAKER_00 2:14

Care, yeah.

SPEAKER_01 2:15

Absolutely. Until you've really worked worked on that enough, but I think the level of work that that needs is a lot deeper than than this solution. So for myself and a lot of my clients, they come to me and they show me what that's um that number is, and then they're getting a bonus or they're getting

Cut The Limit, Not Your Life

SPEAKER_01 2:35

something. And what people tend to do is they put that bonus in, and now it's 11 and it's a nice little positive 1,000 number.

SPEAKER_00 2:43

Another target. Yes.

SPEAKER_01 2:45

Three months later, we're back in that same position. So my suggestion is like, yes, pay it off. However, that works for you. If you do get a bonus, put it in, make it zero. If you need to pay it off monthly, but the biggest suggestion is reduce that amount. Now, when I say that, people kind of panic because, like, well, what if I need that 9,000 Rand?

SPEAKER_00 3:08

You mean reduce the limit?

SPEAKER_01 3:10

Yes.

SPEAKER_00 3:10

The whole. Yes. Okay.

SPEAKER_01 3:12

So um a limit that generally works is whatever that is a third. Reduce it down by. So let's say it was on that 10.

SPEAKER_00 3:22

10.

SPEAKER_01 3:23

Try reduce it down to a third. You don't have to do that straight away. You can phone your bank and say, please take off an extra 500 Rand of my credit card, and then whatever they take off, you reduce it by 500 that month. So next month it would be 8,500 that you'd have available. And you just get it down

Build Cash Buckets As Backup

SPEAKER_01 3:45

to that limit, that sort of feels okay.

SPEAKER_00 3:47

So the credit card companies will do that. You ring them and say reduce that limit, which is for what we can see, it's a hole or it's a target. So you just reduce that. Doesn't it affect you in any way, your credit score or anything like that?

SPEAKER_01 4:02

No, so that is the thing. We kind of need to have a credit card because you've got to be spending on there and showing it. But it doesn't matter what your limit is, it just matters that you spend on it.

SPEAKER_00 4:12

And you pay it off.

SPEAKER_01 4:13

Yes.

SPEAKER_00 4:13

Okay.

SPEAKER_01 4:14

And that's what we do. So we transfer our funds into the credit card and spend on the credit card every single month, but the limit is reduced. And then my suggestion is let's say, for example, it was you are reducing it now and you wanted to reduce it by a thousand Rand a month. Instead of reducing it by a thousand Rand, reduce it by 500 and create your own credit card bucket. So that if you needed that full nine, you've got your own money that you can go lend from to put into your credit card to make up for those different things that make it in another envelope or bucket as you've okay.

SPEAKER_00 4:55

So that's so you fill that with with money, not with credit.

SPEAKER_01 4:59

Yes, because it's the same thing, except this way it's yours and you're actually earning the interest. Okay. I mean, originally when I started that I had 22 different accounts because I had to have one for gifts, for clothing, for this, for that, because I needed a bit more discipline.

Discipline, Accountability, And Banks’ Incentives

SPEAKER_01 5:18

But now I'm at a point where I have a giving bucket, a keeping bucket, a saving bucket. So for holidays and things that happen within the year, I've got finances in my bank account for that. For keeping for the rest of the month, I've got some money in there. For giving, buying gifts, doing things for the children, I've got things in there. And that's almost like layer one. Your bank account needs to have these different buckets and layers, and then you've got to go to your investments, which is saving through, you know, a provider towards five-year term goals or shorter term goals and retirement. So I think it's really looking at it holistically. But if you can start with that reducing of the credit card, it's it's really first price. And your thoughts on credit cards and how to pay it or what to do?

SPEAKER_00 6:11

It just seems exactly whatever the limit is, it it gets filled up, no matter what it is.

SPEAKER_01 6:17

Overdrafts too.

SPEAKER_00 6:18

Yeah, exactly. The same thing. It's almost like there's a a bad vibe around those things because I just I mean, my my view is don't have a credit card, but I hear that what you said you'd you need some credit score to enable you to have a good banking record as well. But it's almost if you didn't need a credit card, it would be a far better way of not having it.

SPEAKER_01 6:39

But I think always have one. Make it a thousand rand. Make your overdraft a thousand rand and your credit card a thousand rand, and that's it.

SPEAKER_00 6:46

The problem is that sorry to drop, the problem is a thousand, you pay it off nicely, they give you one and a half next month. You know what I mean? They keep on enticing you into this debt, and that hole gets filled. So it's your discipline to go back and say no, leave it at a thousand rand.

SPEAKER_01 7:00

And that's also where I think you know it's so vital that you have a financial planner or you have a coach, someone to keep you accountable, someone that you can go and check in three months, in six months. Have you done that? Because if you are doing something on your own, it is very easy. If you know your partner keeps buying chocolates and putting it in the in the cupboard, you're gonna go eat the chocolates. But if you can put that boundary in place, you won't you won't do that.

SPEAKER_00 7:25

Yeah, and it's the same as mortgage as well, the the bonds. You know, you you know, your investments you get in enticed to put away more every month. If you debit order, every year it'll go up by 10%. That's compounding, that's more money for you in the future. You don't get encouraged by the banks to increase your your home loan by 10% every year, because that'll reduce the the the number of years you paid dramatically. Yeah. And if you if you got uh enticed not to increase your credit card limit, you won't be in this debt situation. But the banks have got a different business model, they want you to get into debt. We say no, don't do that. Be more disciplined and get out of debt, and that's a very good way of doing it.

SPEAKER_01 8:09

And the thing is,

Automate Payoffs And Ongoing Reductions

SPEAKER_01 8:10

like money uh needs to flow somewhere, it's either gonna flow and be spent or it's gonna flow and be saved. So if someone gets a bonus, you kind of spend that bonus. You either spend it on saving into your RA, saving into your savings, or spending it. It's still a form of spending. And the same works with the credit card money that comes in because you are seeing that as an available thing to use, and you will use it if you aren't able to keep that as your emergency fund. Then you just need to understand you need a different form of emergency fund.

SPEAKER_00 8:45

Correct. So I mean, so my advice that you've given me today that I hear is ring the bank, reduce that limit, put some of the money into a separate account that's your money that you can access as though it's your own credit card, and don't be tempted to go further. Try every month pay your credit card off, spend on it because it's convenient, but when the statement comes, you settle it. And that you'll always stand in good stead and your credit rating will be excellent.

SPEAKER_01 9:17

And I think you can automate that. So you can you can phone up your bank and you can say, please automatically reduce my credit card limit by 500 Rand a month. Because if you have to phone in every month, you're gonna do it this month and you're not gonna keep doing it. But if you do get a bonus, um try settle that straight away. But don't settle the total. Like let's say the total's ten and you've and you've got ten. Rather settle it by five and reduce it to five thousand and put the five in a a separate bucket so that you can go and use that, and then that that five that's there, you can tell them reduce it by 100 Rand a month.

Wrap‑Up And How To Reach Us

SPEAKER_01 10:00

Reduce it by 50 Rand, 500 Rand, whatever works, because you won't actually feel it, and then it will be at that right amount.

SPEAKER_00 10:06

And you can also tell the bank that whatever the outstanding amount is that that must be settled so that it it's a clean card every month, you can do that as well.

SPEAKER_01 10:14

Absolutely.

SPEAKER_00 10:15

Great.

SPEAKER_01 10:16

Yeah, and just reach out if you have more questions on that or pop us a message in the chat.

SPEAKER_00 10:20

Yeah, thanks very much.

SPEAKER_01 10:22

Thanks.

SPEAKER_00 10:22

Thank you, everybody. Bye. Bye.