Crack the Credit Card Habit

With the recession still fresh in our minds, it's very difficult to break the credit card habit and keep our finances really manageable. If you're finding it difficult to stop using the plastic instead of the cash you have, then keep reading and find out a few simple steps to weaning off the card and using the money you actually have.

First off, you have to remember that credit cards are there for emergency purchases. They aren't gift cards that you got for being a good boy/girl, they are an extension of money that you will have to pay back. So look at your necessities versus your luxury purchases, and cut back or entirely away at luxury expenses. If you really want to buy something to have, and you don't really need it, do your best to pay with cash so you don't worry about interest and you really know you have the money and aren't tempted by the "pay it back later" mentality.

You have to then commit yourself to paying off the entire credit card bill as quickly as possibly to get yourself out of debt. What I've found works best is look through all your credit cards. Which is the smallest debt? When you know the smallest and easiest to knock down, concentrate all your efforts on that card. For the others pay the minimum (or a little more if you can) to keep them from going up to high and keep on the good sides of the banks that gave you those cards.

Attacking the lower card will give you a great feeling, since it will be easiest to get rid of. Then, with those hundreds or thousands out of the way, you concentration on the next highest, and keep going until you have them all taken care of.

There is also something distinctly American about having as many credit cards as we possibly can. To alleviate this stigma, throw out every credit card offer you get. Also, to help even more than that, analyze how many credit cards you really need.

When you have the 5-6, or however many you feel appropriate, throw the others away one at a month. If you can do all of them at once I'm glad to hear it, but most people will find this difficult. Or, once you pay off the small ones, cancel them the second they are entirely clear. That way you are not tempted to use them, and you can't get yourself back into the debt hole credit cards form for us.

It's all a matter of knowing how much you can manage and dwindling your credit cards down to that level. Be patient, be committed, and you can get yourself out of debt and find yourself with just enough credit to be comfortable.