How To Stop Using Your Credit Cards
By Miriam Caldwell. Money in Your 20s Expert
Miriam Caldwell is a freelance writer with a specialty in personal finance. She believes that you can lay a solid foundation by starting to manage your finances in your twenties.
First, you need to sit down and look at your income and your expenses. Track your spending habits so that you can see where you are spending your money. This is important so that you can change the habits that are leading you to use your credit cards each month. This will help you to really begin to make changes.
Second, you need to sit down and write down a budget. You need to set up a reasonable limit for all of your expenses. The key to making this budget work is to know where every dollar is going to go. Your income and expenses should equal the same amount. (Money you put into savings would be considered an expense in your budget.)
Third, you need to start following your budget. You may need to switch to cash to prevent yourself from overspending at the beginning of the month. You need to track your spending, so that you know how much you have left over in each category after you spend your money.
Fourth, you need to stop carrying the cards with you. You may choose to carry one care for emergencies (like paying the tow truck when your car breaks down), but only if you will not use it for other expenses. Simply not having the option to use your cards will really help you to stop using them. Once you have paid them off you may want to close your credit cards .
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Fifth, plan your month carefully, and keep your priorities straight. Remember that food, shelter and power come before your new shoes, iPhone or game system. If you do not stick to your budget in all categories you may run out of money for the necessities.
Sixth, save money for an emergency fund, so that you do
not need to use your credit cards during an emergency. Until you are out of debt an emergency fund of about $1000.00 should cover most emergencies, and after you are out of debt, an emergency fund of three to six months of expenses should be enough. There are many reasons to have an emergency fund. and getting out of debt is just one of them. This can also protect your savings .
Seventh, make a plan to get out of debt. Getting out of debt will free up money so that you can cover your needs, and have money leftover for your wants. This is a huge step in getting ahead financially, and you will be amazed at the freedom it affords you.
Make your credit cards hard to access. Freezing them in a big block of ice is really not that bad of an idea, but you may also want to delete the numbers from your online stores memories, which will make it harder to shop there as well.
Tracking your expenses and following your budget is the best way to stop yourself from running out of money each month. Although these activities can be tedious and time consuming they are essential to help you gain control of your finances.
Transferring your high interest rate balances to a new credit card with a lower rate can speed up the process, but only if yo do not use the cards for any additional purposes.
Learning to stop relying on your credit cards is just one step you can take to start cleaning up your finances today. With work, you can be a much better financial situation.
Remember that credit cards are not really bad. They are a tool that is easy to mismanage. If you know that you cannot manage them correctly, it is best to avoid having them at all. You can avoid using them by using your debit card instead in most situations.
What You Need:
- List of income and expenses