This hasn’t always been the case. Credit cards have been really useful to me in the past. They were my safety net when I was short on cash, my fail safe Ialwayshavethecard back up plan.
But then I realized that credit cards had me trapped in an ugly cycle. Sure, I paid off my cards regularly, so I didn’t have a problem right? Wrong. Here is why:
1. Using a credit card clouds your true cash flow picture. The reality was I was spending more then I made in some months, and using bonuses and tax returns to ‘catch back up.’
2. Managing multiple accounts is hard. I once messed up a $100 credit card bill payment that resulted in multiple obnoxious phone calls and a blip on my credit. This still makes me angry.
3. You spend more than you would with debit or cash. This is just a fact. Enough said.
4. Only 25% of people pay off their credit cards in full every month. Which means unless you are in the minority, you don’t use credit cards responsibly.
Do I have you convinced yet? Here is what you need to do to stop the ugly cycle.
First, stop using your cards.
Immediately. Fully. Its nearly impossible to stick to a plan to pay off your cards when the balance is still going up every month.
Second, figure out how to pay down the balance.
After you have stopped using your cards for a couple months you will understand your ‘true’ monthly expenses. At this point you will be able to set up a realistic plan to make a fixed payment toward your debt each month.
When you start seeing your debt decrease every month it will feel SO GOOD, I promise. You will gain momentum, freedom and won’t think about that silly plastic for another hot minute.