Beating credit card addiction

A major change has occurred in the attitude most people have toward their homes. For many years, people have been using their homes to finance a lifestyle that they really couldn't afford. With inflated home prices allowing families to tap into their equity, people have used that equity to pay down their credit card debt. That might not have been a bad idea since interest on mortgages is tax deductible and lower than credit card interest. Now people are trying to beat credit card addiction.

The problem arose when the charging habit didn't change. The result was that with the downturn in the housing market, many people now owe more on their mortgages than their house is worth. To add insult to injury, they also have credit card debt since they didn't change their spending habits but continued to charge after paying off the original amount.

With the housing market taking a hit all over the country, people are protecting their main asset, their home. No longer are they trying to use their equity, they are now trying to build up some equity. With credit getting tight, people are realizing that cash is the best option. 

This is the year of the debit card, where the convenience of the credit card is paired with our grandparent’s views on never acquiring debt. A sign at a bank recently said it all "debit is the new cash". 

After many years of believing that with credit, you can purchase anything that you want, now, it is a hard transition to a cash economy. Families are hunkering down and learning to wait for major purchases. Budgets are making a comeback and saving has had a resurgence. The new catch-phrase is “living within your means”.

How can you wean yourself off of your credit cards? The first and most important thing you can do is remove them from your wallet. Place then in a plastic bag and put them in your freezer. This sounds drastic, but it works. They need to be unavailable except for an emergency and only a dire emergency. You need to be paying more than your minimum amounts on credit cards even if it is only $10 more. Call the credit card company and try to get your rate reduced. Don't cancel the card, you want to keep them open especially after you pay them off, this is good for your credit score.

Make sure that you have a debit card and when you are purchasing something, use it. This is going to require that you keep a very close eye on the balance in your checking account. If you go over your balance, the bank will cover the charge but you will pay dearly for this with fees and penalties. Don't assume that because you can use your card there is money in your account.

It is going to be like beating an addiction to go from a credit to a cash economy but if done slowly and carefully, it can be the best way to have financial security and to save cash. It is time to tighten your belts and change your ways so that you can help yourselves and your country to beat the recession that is looming on the horizon. If you stop paying interest to credit card companies, it is the ultimate way to save money. You can beat credit card addiction.