When you are trying to get out of debt, one of the first pieces of advice you may receive is to stop using your credit cards. The advice is sound, as using a credit card essentially means that you are using money that you do not have yet. While credit cards have many useful purposes, when you rely on them too much it can actually hurt your finances and result in you spending more money than you earn. This can have a snowball effect, as it will add to the amount of debt you owe every month, making it easier for you to fall behind on your payments and ultimately hurting your credit score.
Unfortunately, avoiding using your credit cards is something that is much easier said than done. Breaking the cycle of using credit is not easy, but there are some money-management strategies you can use to put you back in charge of your spending and help your financial future rather than hurt it.
Draft a Budget
Creating a budget is not glamorous or exciting, but it is a necessary step when you are trying to stop spending on your credit cards. While many people have been advised to create a budget, few people know how to actually do it. You can either use budgeting software to make it easier, or draft your budget manually.
The first step when creating a budget manually is to determine how much you earn every month and the total amount of your expenses every month. When calculating their income, many people simply use the amount they receive on their paycheck every week or every two weeks. However, it is important to consider any child support or government benefits you receive, and include those as well.
When determining your monthly expenses, start with your recurring expenses, such as rent, your mortgage payment, and the amount you spend on utility bills. Then keep track of your unexpected expenses, such as the daily coffee you buy on your way to work, and other habits that cause you to rely on your credit cards.
After you determine how much you earn and how much you spend every month, subtract your expenses from the amount you earn. This is your discretionary spending allowance, or the amount you have available to spend after all your other purchases and bill payments. If you do not have any money left for discretionary spending, or your amount is in the negative, you may be relying on credit cards too heavily.
At this point, analyze your spending habits and determine where you can cut extra expenditures. You can also figure out ways to earn more money, which will ultimately give you more in your discretionary spending allowance. While no one gets excited at the thought of creating a budget, it is an essential step when trying to figure out how to avoid using your credit cards.
Start Relying on Cash
After determining how much discretionary spending you have available every month, you should then start carrying that amount on you in cash. To ensure you do not run out before the week or month is over, you can divide it up by the number of days on your budget. Then, each day, only carry that amount. The trick is to stop carrying credit cards on you. This way, you are not tempted to use them for certain purchases and you will never spend more than you have because you have no other option. Additionally, you also will not go further into debt and will not rack up interest charges.
Once you run out of your discretionary spending, it is imperative that you do not spend any more until you have more available in your budget. Otherwise, you may inadvertently end up relying once again on your credit cards, defeating the purpose of only carrying that amount.
Use Debit Cards when Necessary
A debit card is linked directly to your bank account and so, they make it impossible to spend more than you have. However, you still need to be very careful because you obviously do not want to drain your bank account, which could result in you using credit cards rather than a debit card. If you find you are depleting your bank account on a regular basis, or close to it, you should then revert back to only carrying cash with you. Still, debit cards can bring all the benefits of credit cards, including allowing you to take money out of your bank account easily, and carrying plastic instead of bills and coins.
Make it Difficult to Access Your Credit Cards
One of the most effective ways to stop using your credit cards is to make it more difficult for you to do it. Again, one of the benefits of credit cards is that they are convenient and if you take that convenience away, they become much harder to use.
There are several ways you can do this including:
- Put your credit card on ice: Perhaps one of the oldest methods to make it more difficult to use your credit cards is to freeze it. Place your credit card in a dish, fill it with water, and simply freeze it. Once frozen, it will take several hours before the block of ice is defrosted, which should be enough time to realize you do not want that impulse purchase after all.
- Freeze the card: Many credit card issuers will offer to place a temporary hold, or freeze, on your card. You are still responsible for making payments on the card, but you will not be able to use it until the freeze expires.
- Cut the card up: When you want to stop using credit cards for a significant period of time, you should cut the card up. This will prevent you from spending on the card, but does not close your account, which can ultimately hurt your credit.
When these methods are not enough and you accumulate too much credit card debt, it may be time to seek legal help.
Call Our Debt Defense Lawyers in Florida to Learn About Your Legal Options
When you are suffering from debt, the first step you should take is to try and avoid using your credit cards altogether. Unfortunately, these methods are not always enough. If a creditor has taken legal action against you, it is important to know that you have options. At Loan Lawyers, we are debt defense attorneys in Fort Lauderdale who can explain what those options are, and advise on which one is best for you. Call us today at (954) 807-1361 or fill out our online form to schedule a free consultation with one of our attorneys.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations.Â Contact us for a free consultation and find out more about our money back guarantee on credit card debt buyer lawsuits, and how we may be able to help you.