Credit card spending, home equity and payday loans make it possible to spend more than we earn. While it can be great to have the flexibility ready access to cash or credit provides it is a sure bet that the convenience will eventually become a headache brought on by run away spending.
Studies have shown that consumers tend to spend more when using credit than they do when using cash. It seems that credit makes it easier to disassociate ourselves from the act of spending and we rarely give much thought to the mounting costs of credit until the bill arrives. It is only after the bill arrives that the realization sets in – credit card spending is out of control. You can get your credit card debt back in control before the creditor phone calls begin or your hair falls out from worry and stress. Start with the following steps:
1.Make a commitment to live on cash
Sometimes we buy things that we simply don’t need just because we have available credit. Each time you are faced with a purchase, pause and decide if you are confronting a need or a want. If the item or service is not something that you need do not buy it; instead save the money or rework your budget so that you can make the purchase with your available cash. If the item is something that you do need, be sure that you are getting the best deal for your money.
2.Make a budget and stick to it
Very often credit card spending for ordinary items is the result of a lacking or poorly developed budget plan. Many people who earn decent money still find it difficult to make it from one pay period to the next because they spend their pay without a plan. Make a budget each pay period that includes all anticipated expenses. You should also be saving for unanticipated and irregular expenses such as taxes or quarterly insurance payments so that poor planning doesn’t force you to turn to your credit cards for financial rescue.
3.Delay gratification
You have probably heard this advice and it is still useful; delay major purchases at least twenty-four hours. In that time you will clearly be able to differentiate between needs and wants. You will also have time to explore more cost-effective options.
4.Understand your spending motivation
If spending money that you do not have, i.e. charging items that you otherwise would not be able to afford is therapeutic for you in the moment it is a good idea to examine your motivation. For instance, what was happening before you felt moved to spend? Have you noticed a pattern? Are there other, more constructive ways to fill the need that spending fills for you?
5.Leave the credit cards at home
You can’t use them if you don’t have access to them. Leave all of your credit cards, except one for emergencies, at home.
With time you will be encouraged and motivated to continue living on cash as you see your balances decline. It may take some time, but keep at it. After all you didn’t accumulate the debt overnight and you won’t retire it overnight, either.