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The first step to escaping credit card debt is to destroy that little piece of plastic that got you into trouble in the first place. Forget about those tactics such as freezing it or leaving it at home because that just won't work. Believe me, I know. There will come a time when it seems that the only way you can survive is to use the card, and if you haven't destroyed it then that is what you will do.
It's easy to kid yourself that you'll pay off the balance at the end of the month, but ask yourself this: If you are going to pay it off at the end of the month, can't you just wait till the end of the month and pay cash? Once you have a growing credit card debt then the only way to become debt free is NOT to use the card.
Destroying a credit card is a very empowering thing to do. Think of it as one in the eye for those greedy companies who thrive on other people's misery, because that is exactly what credit card companies do. They don't make money out of people who pay their balance each month, they prefer the ones who pay the minimum amount – and the bigger the outstanding balance the better it is for them. Resolve today to fight back and become empowered by destroying your credit card!
But don't think that cutting up the card is the end of the story. Oh no, there are some some fun ways of enjoying the experience too. Before employing any of these methods however, it is important to first cut the card up into several pieces with a pair of scissors (make sure you cut through the card number and the signature strip).
Armed with your freshly cut up credit card you might like to consider:
Fire – Do you have an area in a back yard where you can safely burn things? There is nothing more satisfying than the ritual burning of a credit card.
Earth – Dig a hole at least 18 inches deep and bury the offending card. If you want to be really thorough, you could dig several holes and split the pieces up.
Water – If you live near a river or the sea then place the pieces of your credit card in a weighted bag, take a boat trip and at a suitable moment drop the bag over the side.
Air – Wait for a particularly windy day and then climb to the top of a steep hill. After a brief moment to remember the debt, scatter the pieces into the wind.
Whichever method you employ, I suggest you accompany the occasion with a glass of wine to celebrate your future debt free life.
You are probably by now thinking my ideas are a little crazy? Maybe so and I admit that I write this just a little tongue in cheek, but paying the credit card companies hefty interest charges each month is completely insane. Think about it…
How often have you seen someone going through their wallet searching for a credit card in the checkout line- and were shocked by the number of cards they had in their wallet? Credit cards can be used as a form of identification when applying for a major purchase, or when renting a car; and they can be used for convenient purchases that you won't have to pay for until a month after you buy them.
Except, that's not how it usually happens. Typically, people who have an abundance of credit cards use them frequently, and have to carry a balance from one month to the next because they are unable to pay each card off in full when the bills come in. So what happens then? Credit card holders are being charged high interest rates for each of their purchases, sometimes up to 24%! Credit cards are habit forming. It is very easy to pull out a piece of plastic, swipe it through the register and buy something you couldn't afford otherwise. It's tempting to think that the money will come later, and you'll pay for it then. More often than not, the bills are more than the money you have later to pay them with. A study in 1999 showed that consumers in America used credit cards to charge over $1.2 trillion.
Even with this kind of negative usage, credit cards, when used properly, are a terrific source of financial convenience. The trick is to not over indulge yourself when you use them.
It's also helpful to keep only one or two credit cards available to you at one time. Even if you receive a new credit card offer in the mail every day, you should stick to having a general use credit card (one that can be used for any kind of purchase), and one for emergencies. An emergency credit card allows you the peace of mind of knowing if an unexpected expense comes up that you have to pay, but don't have the extra money available to pay it, you at least have a backup in the form of a credit card that will allow you to pay for it.
Using a general use credit card should be done with extreme discipline. Select one that offers rewards, cash back or other features that you can benefit from. Make your weekly purchases on your general use credit card, from gasoline to groceries, and keep track of your purchases so you know how much money you are using on the card. That way, you will know when you've reached your spending limit for each week based on the amount you have budgeted for such purchases. Set aside money from your paycheck each week for your credit card. When the bill comes in the mail, immediately send out the check for the FULL AMOUNT. This avoids finance charges, but has allowed you to earn interest on the money for the full month that you kept it in your bank account prior to mailing the payment!
When you use a credit card for your every day purchases with the discipline required to keep your spending in check, you are going to benefit greatly from the rewards programs and interest free purchasing power you get when you pay off your balance each month in full. You are able to keep higher amounts of money in your bank accounts for longer periods of time, allowing the money to earn a little interest before the credit card payment is due. You also are building a strong credit rating by making purchases and paying them off each month, and will help you when it's time to apply for a mortgage or large loan for a new car or boat or other high ticket item.