How to match your spending with your values in 2021

Many Americans struggle with credit card debt. If you’re in that number, focus your spending on what matters most to you


This past year has forced us to adopt a lot of new habits. We miss some things terribly. Yet most of us can probably also identify some things we spent money on pre-pandemic that we don’t value all that much, and we’d be fine cutting back in the future.

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You don’t have to be in credit card debt for long, even if you’re not rich.

That’s my biggest take-away from our annual state credit card debt burdens study. If you earn your state’s median household income and put 15% of that amount toward your state’s average credit card debt, you’ll be debt-free in eight to 15 months, depending on where you live.

That’s a really big deal because if you only make minimum payments, you’ll be in debt for about two decades and you’ll incur many thousands of dollars in interest charges.

The typical minimum payment is just 1% of the balance plus interest, which helps illustrate why 15% of the median household income is a much better target. To be clear, the best approach would be to pay in full if you can, but that’s not always possible. We chose 15% of the median income as a guidepost because it’s both realistic and aspirational.

Most credit card debtors (56%) have been in debt for at least a year, including 37% who have been in the red for at least two years, 25% for at least three years and 15% for at least five years. Another 7% can’t recall how long they’ve carried credit card debt.

Credit card debt is easy to get into and hard to get out of. A big reason for that is the average interest rate, which is over 16%.

Read more from our credit card experts.

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Debt reduction strategies

While 0% balance transfer cards and low-rate personal loans have gotten harder to obtain this year (lenders tightened their approval standards due to worries about the economy and jobs), nonprofit credit counseling represents a backdoor into a money-saving debt consolidation loan.

You could also lower your interest rate with flexible payment options offered by your current card issuer. Examples include American Express’s Pay It and Plan ItCiti Flex Pay and My Chase Plan. With these, you might commit to a 12-month payback plan and pay fees equivalent to a 7%-10% APR rather than dragging along more expensive open-ended credit card debt for years.

Again, the main point is that you need to avoid the minimum payment trap. Pay well more than the minimum and shorten your payback cycle. A penny saved is a penny earned, after all, and we’re talking a lot more than pennies here.

If you finance $1,000 of holiday purchases at 16% and only make minimum payments, you’ll be in debt for approximately three years and will pay close to $300 in interest. And that’s on top of what you might already owe. Roughly half of Americans have credit card debt, and the average is $6,300, according to the Federal Reserve.

Any extra money you can direct toward your credit card debt represents a guaranteed return of whatever your interest rate is – often 15% or more. That’s probably higher than you’d earn in the stock market (and with a lot less risk).

See related: 3 best strategies for paying off credit card debt

Focus on what matters most

I’m a big believer in matching your spending with your money values. This past year has forced us to adopt a lot of new habits. We miss some things terribly. Yet most of us can probably also identify some things we spent money on pre-pandemic that we don’t value all that much, and we’d be fine cutting back in the future.

Restaurant meals are a good example for me. While I feel bad for the struggling restaurant industry and the people who work in it, I honestly don’t love dining out. I’ve cut way back on my dining expenses during the pandemic, and this is a trend I should probably continue even after the virus passes. I’d rather spend my money on other things.

I used to cut my own hair, and that’s a practice I’ve revisited during COVID. My wife even let me cut her hair for the first time, and it went surprisingly well. I did a lot of painting around the house this summer (you can learn a ton on YouTube). I earned several hundred dollars giving my opinions in online surveys and focus groups. We’ve always done our own house cleaning, lawn mowing and snow removal.

Of course, we also spent a lot of money this year, including some home renovations that were beyond my skill level, a bunch of new furniture and a larger car. Our life will soon change dramatically with the addition of a second child. There was a lot we wanted to do to prepare, and we customized certain aspects of our home to reflect our priorities, our changing lifestyle and the fact that we’re spending way more time here.

See related: How the pandemic has changed credit cards

Everyone’s decisions are going to be different

Figure out what’s most important to you and focus on that. If you view frugality as deprivation, that’s the wrong mindset. Instead, save on what you don’t value in order to spend more money and time on what you do cherish.

Teaching yourself to do certain household tasks, for example, could be rewarding and free up funds for something else (like paying off debt, saving, investing or even splurging in another category). Are you paying for streaming subscriptions you’re not watching, a gym membership you’re not using or fancy clothes you think you need to impress other people? On the other hand, maybe you have more money than time and you should outsource that cleaning, cooking, painting, etc.

A great year-end money exercise is to evaluate your spending in the context of what you really value. The closer you can match your spending to your values, the richer you’ll feel.

Have a question about credit cards? Email me at and I’d be happy to help.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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