By Terry Rigg
As we all know credit card debt is out of control. The credit
card debt is currently $8400 per household at an average annual percentage rate
of 14.7 percent. In fact, about 18% of all consumer spending is on credit cards
and is expected to reach 30% by 2006.
If you pay your credit cards off each month or don't mind paying
the interest they charge, by all means use them. However, entirely too many
households are experiencing serious problems paying their bills because of their
credit card debt.
Why do most people have credit cards? I believe that it provides
a buffer just in case something comes up that they don't have the cash to cover.
At least that's the original thinking.
In reality, once you have a credit card it is much easier to use
than it is turning loose of your cash, even if you have the cash to pay for it.
Also, we buy a lot of stuff with credit cards that we wouldn't normally buy if
we had to use real money.
I have nothing against credit cards. They are handy and can
provide some very valuable rewards like frequent flyer miles. However, in many
cases the rewards are over shadowed by the interest charged.
I like cash much better. You don't have to sign anything and
when you pay for something that's all it will cost you. No interest, no bills,
no late fees and no penalties.
There are no special secrets to saving money to use for the
things you need, however, there are a few tricks that many use.
Two of the best known, but underestimated, is saving your change
or the dollar bill savings plan. Most people don't believe that these will
provide enough money to do any good.
When my wife and I first started saving our change we were
surprised that we could save about $75 a month just by emptying our pockets and
purse at the end of the day. Believe me, at the time, I wasn't making much money
and $75 seemed like a lot especially because we didn't miss it at all.
The dollar bills savings plan is just as simple. You never spend
a dollar bill. If you buy something you simply use a larger bill. At the end of
the day take all of your dollar bills and put them in a jar or box. It adds up
There are a lot of ways to save money to avoid the need to use
your credit cards but the key is to make it as simple as possible. Another
important element is to think of that money as your "Crisis Fund" and not to be
used to pay for your pizza on Saturday night.
The answer to the question posed in the title of this article is
"Yes, you can do without your credit cards."
You need to remember, when you use your credit cards you are
using your future income not only to pay for the items you buy but also the
interest and other charges. Since these charges can add up quickly you need to
think long and hard before you buy anything with a credit card.
Terry Rigg is the author of Living Within Your Means - The Easy Way
http://www.homemoneyhelp.com/ebookadpage.html and editor of The FREE Budget
Stretcher Newsletter and Budget Stretcher web site
http://www.homemoneyhelp.com. He has 25 years of experience counseling
individuals and families concerning their personal finances.