Want to Fix Your Debt? Do This One Thing First

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Unfortunately, paying off debts once and for all is difficult.  The way to achieve this goal is to find extra money in your budget, and systematically apply it to your debts until all debts are paid off.  This is a simple, unavoidable fact.

However, people have a difficult time following that prescription because they use credit cards for their expenses.  Continuing to use your credit cards is analogous to digging a hole with one hand, and then tossing dirt back in the hole with the other.  Going cold turkey is one approach.  You simply stop using all forms of credit until you dig yourself out of debt.

Resist the Urge

Resisting using credit cards is very difficult for many people. And just like quitting anything else cold turkey, falling off the wagon is easy to do.  So, the first thing you should do in your efforts to pay off your debts is this: Immediately stop using credit cards for your daily and monthly expenses.

Stopping the use of credit cards is like stopping the bleeding.  If you don’t have an emergency fund, you must use credit for big expenses that surprisingly pop up.  Other than those situations, use only cash and your checking account (with or without a debit card) to cover your monthly expenses.

Of course, this is not the only thing you need to do.  But it is the first thing, and you must become disciplined about it. No restaurant meals, no groceries, no gas for your car using your credit card.  All these expenses and others should be paid in “real time,” using money you possess at the time of the purchase.  Breaking the cycle of “buy now, pay later” is critical.

Are you someone who likes to use credit not only for its convenience at the time of purchase, but also for the convenience of tracking the expenses?  If you are carrying a balance, don’t do this.  Start using cash and see how quickly you get back on the straight and narrow.  Once your credit card debt is paid off, you can determine if you are disciplined enough to use the card for your purchases, for ease of tracking.

The Good Old Envelope System

If carrying around a wad of cash is stressful, consider using the time-tested envelope method.  There are apps and other tools you can use to manage this process, but plain old envelopes work just fine.  Label each envelope with a monthly expense category and insert the necessary cash amount you’ll need for that purpose.

When you need groceries, for example, use your cash out of the grocery envelope.  Best practice is to also keep good notes about how much you started with in each envelope and what you spent it on.  Be sure to track any transfers between envelopes during the month.

Use Autodraft or Pre-Paid Cards

If that sounds too tedious, investigate having all your monthly expenses set up to autodraft straight from your checking account.  Or use your checkbook to pay for groceries (yes, people still do that!).

Another way to avoid carrying around a wad of cash is to use cash or a check to buy prepaid cards, the cards you can purchase that are like gift cards, not credit cards.  For example, if your grocery budget is $600 per month, and you get paid bi-monthly, then after you receive your pay, pull out $300 cash and buy a grocery store gift card.  Watch the balance like a hawk as you pay for groceries and you won’t have to maintain receipts to tally at month’s end.

Do these methods require some legwork?  Absolutely.  But if you are serious about ending your debt once and for all, the first thing you must do is stop using credit for your regular expenses.  Do this and the rest of the process of debt-payoff will then fall into place.


Do you find it hard to curb your use of credit?  What tips do you have to share?


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