If you’re in the middle of paying off your credit cards, and if you are following the Dave Ramsey or Avalanche method (whereby you throw as much cash as possible to paying down your debt) you may be making a terrible mistake. Some people earmark so much money towards paying down their debt, they leave very little cash or spending money to handle their day to day obligations. What happens is these folks wind up with so little spending money over the course of the month, they find themselves short on cash and guess what? They reach for that charge card again and ring up more debt. Duh?
The only true way you are going to pay off your credit card debt once and for all is to simply STOP USING YOUR CREDIT CARDS. Even if you just make the minimum monthly payment and NOT make another charge, that card will get paid off. Of course, this advice doesn’t apply to those people who pay their charge card balances in full each and every month. This advice is for those who have a revolving credit card. Negotiate for a lower interest rate, stop using them and pay as much as you can comfortably afford each and every month.
Leave a bit of cash in your wallet for wiggle room (in case something other than an emergency comes up) and do your best. Just stop using those cards. Stop relying on them to make ends meet. If you are then there is something seriously wrong with your budget. You’re living above your means and it’s time to start cutting down your expenses.
As a person who recently paid off four credit cards, I feel your pain. It’s NOT easy to put those cards away and reconfigure your financial lifestyle. I had gotten so used to whipping out those bad boys that I actually went through withdrawal pains when I decided to pay off my debt in full. It took me a few months, but it’s done. Those cards are neatly locked away for good (don’t cancel your cards because it lowers your FICO score). Just stop using them and switch to a cash-only spending basis.
I made the mistake of paying too much money towards my debt thus leaving me with very little cash to handle my day-to-day expenses. So, I started re-using the credit cards and charging coffee, lunch, haircuts and other little odds and ends back on my credit card, totally defeating my original purpose. Once I stopped doing that (and it was very, very hard because I had to say NO to myself or use actual cash to buy a coffee…..stupid!) I was able to pay off my credit cards in full.
Now, instead of paying off the zero-interest cards, I have a zero-balance credit card.
Much, much better.
Live well and prosper, my friend. Live well and prosper.