Avoid Using Credit Cards

Step1

Remember that every time you swipe a credit card, you're borrowing money you don't have, and digging yourself further into debt. Look at your credit card and repeat it to yourself, over and over again, until it's the first thing that comes to your mind whenever you see that card in your hand.

Step2

Scale back to one card. Close all the other accounts, and cut up the cards. Yes, closing several accounts at once may ding your credit score a bit, but if you're going to be living a debt-free lifestyle from now on, that little ding isn't going to make a difference. Credit scores only matter when you try to borrow money you don't have!

Step3
Leave your one credit card at home. It's too tempting to use it if it's immediately available in your wallet. Your credit card should only be used when you need to make an immediate purchase (like an airline ticket), but need time to transfer the money to your checking account (from a savings or other account). It should NOT be used to purchase items you don't have the money for! After using your card, immediately transfer the money you need and pay it off. Don't wait for interest to accrue.

Step4
Manage your money with an online tool such as Mvelopes, where you can see all of your accounts in one place. Log on every day to balance your checking account transactions and schedule bill payments, so you know exactly how much money you have available for each category (gas, groceries, clothes) at any given moment. See my article "How to Manage Your Money Online" for more info.

Step5
Use cash or debit card only. Now that you know exactly how much money is available, you'll be more likely to stay under that limit. You know what this means, though. When the money runs out, STOP SPENDING! If you use cash or debit only, you'll have no choice but to be more careful and deliberate about your spending.

Step6
If you're having trouble learning how to curb your spending, put cash into designated envelopes in your wallet or purse, and leave your debit card at home (to prevent overdraw and impulse purchases). When your grocery money envelope is empty, you have to stop, period. Studies have shown that the action of counting out dollar bills and handing them over is psychologically more painful than swiping a card, which is why you tend to spend less when using cash.

Step7
Attend a personal money management class like Dave Ramsey's Financial Peace University to give you a practical plan for eliminating debt and building wealth, and help keep you inspired, educated and accountable.

Step8
Get rid of tempting credit card offers in the mail. Log on to www.optoutprescreen.com and follow the directions to opt out of unwanted credit card offers and other financial junk mail.

Step9
Ask for help. If you still cannot seem to control your spending and impulse purchases, get whatever help you need, whether from a financial advisor or even a therapist who specializes in compulsive behaviors.