dave ramsey
Pay Cash: the Building Block of Financial Security

Since I’m often asked asked for advise and tips on dealing with the  family budget, my biggest concern hands down is the use of credit cards. I am about cause controversy, and play devil’s advocate a bit, so my apologies in advance, but the dangerous repercussions from credit card debt, the bondage that it holds over millions of families, and the fact that 69% of all bankruptcies filed state credit card debt as the #1 cause of bankruptcy gives me boldness to recommend CUTTING THEM UP.
If you are dealing with credit card debt, especially with consumer debt in your spending habits, that’s my suggestion.

Whoa, you are probably wondering where in the world this hard ball approach has come from? When I was writing my 30 days to More with Less, I had a whole bunch of blog posts started on Family Finances that never got finished (surprise, surprise). I shared about the Dreaded “B” word (Budget), and how to get started. Then I recommended assigning every dollar a job. Dollars are told what to do, and every dollar in our budget needs to have a task. There’s such freedom in understanding and figuring out what that means for your family.
As you know, I write a lot about the frugal lifestyle. My desire is to encourage you to be good stewards of your money and stretch them as far as they will go, so you can give generously and enjoy that hard earned money.  I am an expert in frugal living, but more than ever I am convinced that one can live a completely frugal lifestyle by thrifting, Grocery Guru couponing, repurposing etc, but if this ONE area of consumer spending isn’t under control, all the stock piling and Extreme couponing in the world will still be in vain. No one builds wealth with credit card debt. (Although I am sure one of you will be obliged to give me that “one exception,” but for all intents and purposes, you know what I mean. ;))
To live like no one else and be on that road to debt free living and out of consumer debt, getting rid of the credit cards is a mandatory step. This kind of discipline is HUGE, but as Dave Ramsey reminds us, “If you are sick and tired of being sick and tired, you are willing to pay the price for greatness.” It doesn’t take a rocket scientist to figure this out, but since personal finance is 20% head knowledge and 80% behavior, the items that stand in the way of true life changing behavior modification needs to be removed.
When we use credit cards, it’s not personal; it’s free cash without immediate consequence. Using cash for everything is SO personal and real. We are holding it in our hands one minute, and the next minute it’s gone. Visually, we see the cash leave our hands for that small soda that we sip in two minutes, and it’s painful. We work really hard for those dollars and personally, I re-evaluate how I spend them when they are in my grip.
I know many of you can attest to the fact that a huge problem with using credit cards is those “little” purchases. It’s a coffee drink here, a little snack there, a quick run through the drive through, all which cost next to nothing. When we receive the credit card statements at the end of the month those seemingly innocent expenses add up to hundreds of dollars.
A fixed amount of cash separated into budget items for the month instantly gets rid of that temptation. Now, we know changing our entire financial future isn’t as easy as that one “quick fix to-do” list, but it’s the biggest start because it’s immediate.
McDonald’s researched the use of credit cards, and they reported that people spent 47% more when using their credit card. It’s no longer digging to the bottom of the purse for a few extra quarters to spend on the dollar menu, it’s now, “Order what you want, honey, I can just charge it.” YIKES! That’s scary. (And our family has helped that statistic at some point.) Considering that 60% of people do NOT pay off their credit card each month, you don’t even want to do the math on how expensive that $1 burger ends up costing you.
So how many of you are at the point of being “sick and tired” financially?Are you ready to do something drastic to make a change in your family’s future?

Is cutting up or burning your cards (as this Financial Peace group did so well below) something you have considered as a starting point?
P.S. This post is not intended to cause condemnation or guilt for those in a life/job situation completely out of their control. If we’re in debt, we put enough of that on ourselves, and I’ve been there.  I’ve shared very openly about some of our difficult financial situations. In this unemployment post, I shared a time over ten years ago when we had to charge our groceries. A business situation occurred that was completely out of our control. That’s a completely different story, and we were just trying to stay a float. But with that circumstance, we learned some hard lessons, and put steps into place that allowed us to avoid that situation when life experience repeated itself last year.  It’s easy to make excuses and state all the reasons one should be ABLE to use a credit card, or excuses for why you have to use one, but if you are in consumer debt and still using credit cards to buy “stuff,” this post is for you to consider. In my opinion, with the state of our economy, it’s just not worth it.

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