Credit Cards - Can You Do Without Them?
By Terry Rigg
As we all know credit card debt is out of control.
The credit card debt is currently $8400 per household
at an average annual percentage rate of 14.7 percent.
In fact, about 18% of all consumer spending is on credit
cards and is expected to reach 30% by 2006.
If you pay your credit cards off each month or don't
mind paying the interest they charge, by all means use
them. However, entirely too many households are
experiencing serious problems paying their bills because
of their credit card debt.
Why do most people have credit cards? I believe that
it provides a buffer just in case something comes up
that they don't have the cash to cover. At least that's
the original thinking.
In reality, once you have a credit card it is much
easier to use than it is turning loose of your cash,
even if you have the cash to pay for it. Also, we
buy a lot of stuff with credit cards that we wouldn't
normally buy if we had to use real money.
I have nothing against credit cards. They are handy
and can provide some very valuable rewards like
frequent flyer miles. However, in many cases the
rewards are over shadowed by the interest charged.
I like cash much better. You don't have to sign anything
and when you pay for something that's all it will cost
you. No interest, no bills, no late fees and no
penalties.
There are no special secrets to saving money to use
for the things you need, however, there are a few tricks
that many use.
Two of the best known, but underestimated, is saving
your change or the dollar bill savings plan. Most people
don't believe that these will provide enough money to do
any good.
When my wife and I first started saving our change we
were surprised that we could save about $75 a month just
by emptying our pockets and purse at the end of the day.
Believe me, at the time, I wasn't making much money and
$75 seemed like a lot especially because we didn't miss
it at all.
The dollar bills savings plan is just as simple. You
never spend a dollar bill. If you buy something you
simply use a larger bill. At the end of the day take
all of your dollar bills and put them in a jar or box.
It adds up quick.
There are a lot of ways to save money to avoid the need
to use your credit cards but the key is to make it as simple
as possible. Another important element is to think of
that money as your "Crisis Fund" and not to be used to
pay for your pizza on Saturday night.
The answer to the question posed in the title of this
article is "Yes, you can do without your credit cards."
You need to remember, when you use your credit cards you
are using your future income not only to pay for the
items you buy but also the interest and other charges.
Since these charges can add up quickly you need to think
long and hard before you buy anything with a credit card.
Terry Rigg is the author of Living Within Your Means - The Easy
Way
http://www.homemoneyhelp.com/ebookadpage.html and editor
of The FREE Budget Stretcher Newsletter and Budget Stretcher
web site
http://www.homemoneyhelp.com. He has 25 years of
experience counseling individuals and families concerning their
personal finances.
