May 2006 Using Credit Cards Wisely No, we aren't going to suggest ripping them up — well not all of them For those of us who find credit cards an all-too-easy way to run up unnecessary debt, there is some bad news: You're going to have to learn to live peacefully with plastic. The Internet has pretty much sealed our fate as commerce increasingly occurs online, and the ticket to ride is a credit card account. Find the root of your problem There are three types of people. Those who don't have credit card debt. Those who have unavoidable credit card debt, where they may have used the credit card to cover a medical emergency or their income is just not enough to cover basic expenses. And there are those of us who needlessly spend beyond their means. It's the last group we are discussing here. For some of us the problem is that the credit card abstracts the situation just enough. All month long we wield our card with confidence as if it were a Samurai sword. Then when the bill comes we feel like committing Hari-Kari. For many the credit card postpones reality just enough to get us into trouble. People often say, "With the credit card, I don't feel like I'm spending money." If this is you, the answer is pretty simple: Commit to spending cash only. Leave the credit card at home and if you want a $40 lunch or $400 golf clubs, you'll have to visit the ATM. Many people find that parting with the cold hard cash slows their spending considerably. Meet the shoppers If converting to cash doesn't slow your spending, you're somebody who likes to spend regardless of how the transaction takes place. This is a bit harder to fix. Spenders can be filling a psychological need by shopping. They can also simply have given in to the consumer culture that is so pervasive in America. Some questions to ask yourself: How do I feel when I spend money? What would happen if I didn't do any non-essential spending for a week? If I had to make a choice, would I rather have a nice wardrobe or a nice car than a sound financial footing? Answering these questions honestly can be a good start to eliminating your credit card debt. Slowing your spending Unfortunately you can't afford to spend six months figuring out "Why I spend." If your credit card balance is really an "imbalance," you've got to slow spending now. Some ideas: Create a list of fun, free activities than you plan to do in the next week. Try to do them all and distract yourself from spending. Any activity you don't complete, roll it over to the next week. Keeping yourself so busy that you don't have time to spend, you might just teach yourself that you don't need to spend to enjoy life. Identify when and where you spend and avoid those situations. If you like to shop at the mall, stay away for awhile. Also, don't read the ad pages in your newspaper. If furnishing your home has become a financial problem, don't watch the decorating TV shows. Make a list of your dreams. Is your spending impeding on them? Sometimes it's just a matter of staying focused on priorities. Put your list on your bathroom mirror if you need help staying focused. Each month, you get a credit card balance. But if you can't pay off the bill each month, they should call it an "imbalance." Make it a priority to keep your spending in check. $3 a Gallon? Workin' It Summer Finance Camp Two Minute Quiz Using Credit Cards Wisely Saving Strategies Part Four Short on Cents Past Issues

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