Before Declaring Financial SOS, Cut Up Your Credit Cards

credit: batega

American families have discovered an almost iron-clad method for debt control and financial well-being: cutting up their credit cards.

Begin by closing all of your credit card accounts. If there are one of two that give you great discounts, keep them, but make a promise to yourself that you will always pay the bill of in full. Then, draw up a budget, and take into account paying off debts, saving for future events, and treating yourself to the occasional vacation or expensive treat. Pay for everything in cash - either with money itself, checks, or your debit card.

Your methods will differ depending on your needs, but consider the following options. One possibility is to put all funds in envelopes at the beginning of each month, sticking to your budget through forced reduced spending. Also, when you’re ready to pony up for a big purchase, remember your cash advantage: you’d be surprised how much you can negotiate when you’re ready to pay in cash.

Keep in mind that only using cash does not a responsible spender make - overspending is easy with cash, too. The key is to make a budget, and stick to it exactly. The extra cash left over in your bank account should go towards savings, retirement funds, and occasional big purchases.

Tags: Budgeting | Credit & Debit Cards | Debt Management | savings