The Best Way to Get Credit Card Debt Under Control

Credit cards can be a blessing or a curse — and usually, they are the latter. They are certainly convenient but, except in rare occurrences, credit cards should only be used due to the absence of cash. In other words, if you want to buy something but don’t have the money with you (or if it is too much money to carry), then you have a good reason to use a credit card. And it might be a good reason only if you know full well that you will pay off the balance when you get the bill because you have the money available.

Credit cards, by their very nature, enable us to simply spend money we do not have. This is not exactly news to most Americans. Most of us have credit limits that well exceed weekly, monthly, or even yearly income. This gives us access to a ridiculous amount of cash, but it also helps us to create a ridiculous amount of debt—and with the interest piling up every month, that debt can be very hard to eliminate. The interest penalties are the first reason I suggest you use cash whenever possible.

We all know the problems with credit cards. I’ve been there and back with credit cards and I know that some real-life situations require the use of credit cards. So, in that sense, we are fortunate to have access to them. However, once used, your number one priority should be paying them off.

The second reason to spend cash is that you will find yourself spending less. You will find that if it requires taking time to go to the bank to get cash, and then returning to the store to pay for the “got-to-have” item, you will likely lose interest in the item. What you are doing here is removing the impulse from the impulse-item buy! It’s easy to get all worked up and buy something on the spot, but when you remove yourself from the situation, physically access the cash, and then hand over cold hard cash to a salesperson, you’ll find yourself buying fewer impulse items.

The second you take out a credit card you’re paying with what seems to be play money. But if you take out $100 or $500 or more in real cash you may find your “need” for that item has changed. Or just as beneficial to you, you may find that you can live with a less expensive model.

The test of that spending is really one simple question: “Will this help me in the long run to be more financially secure?” In other words, is it an item, business, seminar, or course that will increase your income at a later date? I actually took advances on every one of my credit cards to start my investment business. Those advances paid for a computer, fax machine, training, and office supplies. It was the best decision I made because — unlike my prior spending habits — this one was entered into with the sole objective of making more money. This is the same basic premise as taking out a college loan in order to build a better career path.