7 smart moves to curb your credit card spending
We know how easy it can be to plunk down a credit card and figure, "I'll just pay it off tomorrow."
But a buy-now, worry-later attitude is a surefire way to plunge yourself into debt, making it impossible to save and get ahead in life.
That's why Interest.com has come up with 7 smart moves that will get your credit card spending under control. Use one. Use them all. Here they are:
Smart move 1. Study your spending.
Keep a receipt for everything you buy, and record those purchases in a spending journal. Review each charge and ask: How will I feel about this purchase when the credit card bill arrives?
Then pay close attention to your statements as they come in instead of shoving them into a filing cabinet. Once you see how much you're charging and how much interest you're paying, it'll be easier to stop using them.
Even better, create a smart and sensible budget that ensures your hard-earned dollars are being spent on what you value most.
Smart move 2. Cut up your cards.
Is that a scary idea to you? What's worse, not having that new sweater or living in debt for the rest of your life?
Set aside one or two with the lowest interest rates and fees. And no store cards — they usually carry the highest rates.
Then take the scissors to the rest. Call the issuing banks and ask them to close the accounts.
Be aware that your credit score could fall, because you're reducing the amount of credit you have without substantially reducing what you owe. The formula used to calculate your credit score punishes consumers who have used more than half of their revolving credit.
For most of us, that's a small price to pay. The more credit cards we have, the more we're tempted to use them.
But if you have bad credit and can't afford to lose another point off your score, just destroy the cards but leave the account open.
When the cards expire and new ones arrive in the mail, you'll just need the willpower to whip out those scissors again.
And get those card numbers out of any online shopping sites. Leaving them in the system makes it that much easier for you to click "buy."
Smart move 3. Put your cards away — way away.
Let's face it: Impulse spending is the root of many plastic-induced problems. Forcing yourself to avoid impulse purchases is similar to placing a cookie jar out of a child's reach.
Lock up your card with all your important papers at home or, better yet, in a safe deposit box.
Plastic freezes well, too.
Fill a plastic container with water, add your credit card and place it in the freezer. By the time it thaws, you've had time to think about whether or not you really need to buy something.
An alternative: Put your cards in a bag of dry dog food and seal. You'll need a very good reason to carry a card that reeks of Purina.
You can also give your cards to a trusted family member or friend — someone trusted enough that he or she won't give them back without some thought.
Smart move 4. Hold your breath.
Vow to wait 24 or 48 hours before buying anything with a credit card, including online and catalog purchases. That's often enough time for the urge to pass.
Mull over this question, too: Do I need this item or simply want it? Figure out what it would cost you in interest over the course of a year. Where else would you spend that money?
Smart move 5. Buy and budget with cash.
One way of spending only what you have is to establish how much you have to spend each week on everything except recurring bills like rent or a mortgage and utilities.
Go to the ATM Monday morning, withdraw that amount from your checking account and use it to make all of your purchases throughout the week. You'll be much more aware of where your money is going and much more thoughtful about how you part with it.
If you don't feel comfortable carrying cash, get a debit card that pays for purchases directly from your checking account. Each time you use it, subtract the purchase from your weekly spending limit. Don't spend any more than if you were doling out cash.
You can also budget your month via gift cards. If you only shop at one grocery store or get gas from one station, buy (in cash!) a gift card for the amount you're budgeting for the month. Once it's gone, it's gone. Not only does this get you to stop charging, but it budgets your life.
Smart move 6. Lean on a buddy.
For bigger purchases, make a list of must-haves that you intend to buy with your credit card. Then share that list with a money-savvy friend or family member.
Ask that helper if there's a way to avoid using your credit card for a purchase.
Or perhaps you can brainstorm an alternative solution that doesn't involve buying the item at all. For instance, with an office store down the street, getting a copier for your home business may not be cost-effective.
A credit-check buddy might also help you see ways to reduce an expense, such as holding off for a good sale or promotion. After all, sweet rewards often come only to those who wait.
Smart move 7. Build up savings.
Don't throw every penny you have at the balance. What happens when unexpected expenses like car repairs, doctor's bills or a friend's wedding come up? You'll be hitting the cards again.
Paula Langguth Ryan, author of Bounce Back From Bankruptcy, recommends making the minimum payments on your credit cards until you build up a savings account.
"If you're putting all your disposable income into debt repayment to pay off the debt as fast as possible, you don't have any other choice but to charge unexpected expenses," she says.
Don't feel like you aren't making progress. You're already stopping the debt cycle by not using your cards.