Paid off credit cards killing your finances!

Most of my clients tell me this isn’t true, because they pay their card balance off in full each month. I say, “That’s part of the problem!”

We all have a propensity to spend up to what we know we can afford to pay off each month. Those that carry and grow their balances have a whole different set of problems.

The ability to say “yes” to many impulsive and usually small purchases adds up over time. I consider these purchases to be an “impulse buy” if you did not have these items in mind before you began shopping. Every day at grocery stores, convenient stores, restaurants and anywhere you break out the plastic, you probably don’t think twice about what the bill is before signing off.

My unscientific studies have shown that after 25 years of watching clients use credit cards religiously, (and pay off the monthly bill) spend an average of 20-33% more (impulse buys) than they would have had they spent cash. Let’s do the math for a minute on that: For every $1,000 you spend each month, that would mean $200-$333 was spent on very “marginal” buys. You could buy a plane ticket every other month with the savings (you don’t need the mile points). I contend that you couldn’t remember what most of the charges were on your credit card bill from 6 months ago. Yes, I define these unmemorable charges as “marginal” or easily done without. So, many of the items we purchase add little value to our lives. What if we put away an extra $300/m. for a family vacation instead of all the impulse buys we make?

Meanwhile, many parents are struggling to find enough money for:

College savings
Retirement
Insurance
Emergency Funds

WELL MAYBE IF YOU WEREN’T BLOWING IT ON STUPID STUFF YOU WOULDN’T HAVE THIS PROBLEM!

How many pairs of shoes does your family own?
How much do you spend on technology gadgets and monthly service bills?

My challenge to you is to “get off the crack pipe” I mean credit card addiction. It might be easier to kick a crack cocaine habit than it is to break the credit card habit at the register.

If you agree that you may be coming up short as it relates to where you are financially, would you be willing to go cold turkey (except gas) and quit using your credit card? You would put a lump sum of cash in your wallet or purse every week and that is what you would use for all your spending money. The result will be far less impulsive purchases and more money left over at the end of every month. I guarantee it.

Ideally, you would pair this with new monthly savings plans. For instance building up cash reserves, saving more for retirement or college, etc. This has worked for many of my clients and myself, and be life altering in many cases.

Try it and give me your feedback.

http://www.lifeplanningtoday.com/2016/01/28/trimming-the-fat/