I always have to chuckle whenever I catch one of those money makeover TV shows that feature debt-laden folks chopping up their credit cards to thunderous applause and cheers.
As it does with most situations, popular media tends to oversimplify debt and people’s response to it, as if responsible credit card use is always an either/or proposition: Folks either handle their credit responsibly or they go nuts and have to resort to a ceremonial card-cutting.
I’m no fan of credit card debt, mind you, but I think most adults can move toward a healthier relationship with credit and still keep the cards.
If you’re ready to slay those credit card balances and avoid future debt by phasing out the daily use of plastic, here’s how to get started (scissors not required):
It may seem obvious, but it’s the first and most important step. Deciding to live differently and spend differently is an achievement all its own. If you’re already a fan of this site and have read this far, no doubt you’re considering making a change in your relationship with credit and how you spend. So far, so good. Commit to the idea of phasing out daily credit card use from your life and realize that some tough adjustments lie ahead — and some sweet rewards.
2. Take a look at the numbers
Credit card statements include the amount of interest a cardholder has paid year-to-date. They also tell you how long it will take to pay off the debt and how much interest you’ll be charged if only minimum payments are made. Trust me: The numbers can be startling and eye-opening. Use the data as part of your own mini-intervention to motivate a change in your behavior.
3. Keep the cards at home
If you have some basic self-discipline, there’s no need for a dramatic credit card-cutting scene. As long as you’re not paying a steep annual fee, keeping a couple of major credit cards on hand for emergencies is smart fiscal strategy. The challenge is knowing when to use them (seldom) and when to keep them safely tucked away (most of the time). If it helps, consider keeping the cards out of sight to avoid the temptation to grab them on your way out the door.
4. Go green
I’m a big fan of cash, but I have to admit, it’s seldom seen in the wild anymore. To help avoid the pull toward convenient credit, reacquaint yourself with the green stuff (they still make it). That may mean visiting the bank more often or making larger withdrawals each time you use an in-network ATM. Again, self-control and discipline rule the day. Keep enough cash on hand for your daily needs, but budget your spending. If cash inevitably burns a hole in your pocket, use a debit card for day-to-day needs and track your expenditures and your balance online or with an account register (they still make those, too).
5. Go public
You don’t have to share the details of your entire financial picture, but it does help to declare your intentions to turn over a new financial leaf. When you’re trying to change any habit, getting close friends and family on board helps avoid awkward situations, motivates you toward your goal, and gives you a support network that you can be accountable to. Besides the encouragement they offer, your friends and family just may be inspired to make some financial changes of their own.
6. Track your success
Monitoring your efforts to phase out daily credit card use and taking a moment to reflect on your success is the ultimate motivator. Take a look at your dwindling credit card balances as each shrinks from a combination of bigger payments and fewer new charges. Understand exactly what that means — less money wasted in interest charges and fees, less stress, movement toward a healthier credit score, and greater financial freedom.
7. Reward your progress
Rewarding yourself along the way not only reinforces the changes you’ve made, but the wisdom of your decision, too. As you reach each marker that you’ve set for yourself — seven days without using a card, 30 days card-free, an old balance paid off, etc. — celebrate your success with a small reward. Enjoy a lunch out (cash only, remember), a small splurge, or just bask in the enjoyment of achieving what you set out to do.
Easy credit, the tendency to overspend, and the overwhelming acceptance of plastic as a means to pay for everything from home repairs to hamburgers have helped make consumer indebtedness a chronic condition for many in this country. Any movement against the tide is nearly a subversive act, but one that’s essential for genuine financial stability. As you chart a new course for yourself with spending and credit, stay focused on the reasons that first inspired you and the future savings that will propel you toward your next financial goals.