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The Convenience of Credit Card Debt

The following is another post from Lyle, a self-employed guitar instructor, performer, web-designer and blogger. For the past twenty years, he has adopted the tenets of voluntary simplicity to live a thrift shop life and has recently began blogging with these concepts in mind at The Joy of Simple.

If you read my previous guest post, How Being A Credit Card Delinquent Saved Me Thousands of Dollars, you might recall that for more than twenty years I had been happily credit card free…well…at least that’s the way it was until about six months ago when I received a MasterCard in the mail.

Credit Cards

How They Got Me

Normally I don’t fill out credit card applications, but I felt sorry for the woman who was being constantly passed by and ignored by this particular stores’ customers. So when she sheepishly asked if I wouldn’t mind filling out the application for some free doo-hicky, I nodded and signed on the dotted line!

To be honest, I never thought I would even receive the card because while I didn’t have bad credit, I actually have no credit. I found out that little fun fact as I was searching for an apartment to rent four years ago.

How I Mis-Handled It

To make a long story short, I did receive the card and was grateful that the credit limit was only $200.00. I figured this would be a great way to start rebuilding my credit, and really, how bad could I screw up with a limit of only 200 bucks!? Well…I’ll tell you how…by maxing out the card, which didn’t take a lot of effort or time, believe me!

A few dinners out with friends, a couple of trips to the grocery store and voila, a maxed out credit card! And even though the plan was to use the card for emergencies only – yeah right!! – and then pay it off immediately afterwards, that concept really did not go according to plan!

And Again

Funny thing happened though, as I eventually paid off the balance in full, I received a notice not long after that I was entitled to increase my credit limit. All I had to do was call a certain phone number and that would be that!

My first instinct was to decline their offer and run for the hills. Yet, I was curious as to how much they were willing to increase my limit…so I made the call.

Less than a minute later I was now the proud “owner” of a $700.00 credit limit. This was now a little more dangerous – relative to my cash flow – but I figured “Hey, I’m much more in tune with my simple living/frugal side – now more than ever – and I shouldn’t have any problem using the card responsibly and only when needed!”

Less than four months later, my card was nearly maxed out and really, what did I spend it on. A bunch of meals out with friends, a few Blu-Ray DVD’s that were on sale, some groceries when cash was a little tight, and that’s basically it.

Surprisingly, I realized that because of the card, and the fact that I wasn’t taking cash out of my pocket, I was buying more expensive brand name items at the grocery store, along with food items I never really bought before (tub of Ben and Jerry’s anyone!!). And when out at a restaurant, I was spending more than I normally would have if I was paying solely in cash! I mean after all, the surf and turf is only a few bucks more than what I was thinking of ordering in the first place so why not!

What was happening to me!!!???

I’ll tell you what, I was falling into the trap that many, many credit card holders fall into…the trap of convenience and forgetfulness. You obviously don’t forget that your spending money you may or may not have, but when all you have to do is input a PIN and your bill is taken care of, you may forget to parcel some cash away to pay that expense the day after! Do that more than a few times and it begins to add up…fast!

And Again?

Well, thanks to a decent paying web design gig, I was able to pay off the full amount, and wouldn’t ya know it, when my next statement arrived in the mail, there was yet again another notice stating that I could increase my limit if I wanted to! AND I DID!!! Was I crazy!? Possibly! But I was once again curious as to how much they would increase my limit to. A few minutes later I had my answer, $1000.00! And that’s where it is going to stay! No more limit increases for me!

I realize that this is almost second nature for some folk who have one, two, three or more credit cards taking up space in their wallets or purses. But I had been credit card free for so long that it was kind of exciting for me to see how far I could go. It was also a little scary! My previous history with credit cards was not good to say the least, and if they hadn’t taken them away from me, I would have probably had to deal with massive CC debt back in the day.

Well, sad to say, this pattern appears to still reside within me even though I have become a very different person since the 20-ish year old me. It’s kind of like being a chronic gambler where the call of the game is stronger than the will to resist. I actually surprised myself a few times on the amount of money I was adding up on the card and while I wasn’t pleased with my behavior, I kept on doing it. I guess some old habits are really hard to break!


Thankfully, things are a little different now as I leave my credit card home when I go out so I won’t be tempted to use it. This way, I’ll only spend as much as I am comfortable with spending in actual cash.

Once again, I have adopted a cash only lifestyle and will continue to do so. However, I will use the card every now and then to keep it active. I’ll make sure though that I have the cash on hand to quickly pay off the expenditure the next day so that my balance doesn’t creep up.

To be honest, having a credit card is not all bad if handled responsibly, and the silver lining, at least for me, is that my credit rating seems to be on a positive up-swing. And even though I won’t be looking for a loan, or wanting to apply for a mortgage in my lifetime – yes I know, never say never – at least I’ll have a decent credit rating…which was my intention all along.

So, are you as responsible as you would like to be when it comes to credit cards? Or are they just a dang too convenient when cash flow is kinda tight?  Take care and all the best!

How Being A Credit Card Delinquent Saved Me Thousands of Dollars!

The following is a guest post from Lyle, a self-employed guitar instructor, performer, web-designer and blogger. For the past twenty years, he has adopted the tenets of voluntary simplicity to live a thrift shop life and has recently began blogging with these concepts in mind at The Joy of Simple.

My First Credit Card

I received my first credit card back in the summer of 1979 at the ripe young age of 18. I had just started working at a new job and figured it was time to start building up a solid credit history. At least that was the plan. Secretly though, I think I just wanted to be able to buy stuff regardless if I had the money for it or not.

You see, prior to that fateful day, I was only able to make purchases if I had enough cash on me or was willing to save my money to buy those big ticket items I seemed to crave back then. With a credit card however, I no longer had to worry about such mundane measures as saving money for an item or two, or three. I could simply hand over my precious piece of plastic and my consuming needs and desires would instantly be taken care of. Chargex anyone!?

The Problem

Over the years to follow I became a spending machine. I could easily buy nearly anything I wanted and I was the life of the party. Dinners with friends, drinks at clubs with women whose names I hardly knew, trendy-ish clothes, even hair styles! If you could name it chances are I was charging it, even when those silly Credit Card company letters were arriving at my door asking me to stop. I mean, “yeah ok…I’m way past my credit limit, but hey, I’m paying the minimum every month so what’s the problem!?”

Turns out that the problem was that I was out of control and soon, so were my credit cards as the CC companies and associated banking institutions froze my cards, ordering me to bring them back to my bank branch for “disposal”. It was a most embarrassing endeavor to have a bank teller take scissors to my valued plastic money as she gave me a look of both sympathetic understanding and cold disdain!

Wash, Rinse, Repeat

Now I wish I could say that this only happened once and that I had learned a very valuable lesson, but sadly, I cannot.

Over the years – my supposedly adult and mature years – I fell into the same spending habits and scissor cutting results, no matter how good my intentions were at the beginning to do what was required of me. I was truly a credit card delinquent!

This was also compounded by the fact that my credit balances found their way to numerous collection agencies as I ended up not paying back the credit card companies. After all, if I couldn’t use their cards anymore, why bother paying them back. This was, and of course is the wrong attitude to have, but that’s how a credit card delinquent rolls!

In my defense, I did end up paying back what I owed, but let me tell you, I took my sweet time doing so.

How I Turned Things Around

So, by now you may be wondering, “ok, so how did you manage to save yourself thousands upon thousands of dollars?” I did it the old fashioned way, the way my mother did it and her mother before her, with good old cash!

I now pay for everything in cash, and if I need something that is more than I have to spend on that item, I simply save up my money until I have the amount needed. Anybody remember lay-away? I was the KING of lay-away :)

In all seriousness though, you would be surprised at how little you buy when faced with having to shell out hard earned cash money from your pocket or bank account. All of a sudden, the value of a dollar means so much more. The extra amount you might not have even thought twice about when putting something on credit all of a sudden becomes a mind-full concern, and rightly so!

The convenience and ease of credit card spending made me NOT question my spending habits until it was too late. If I had kept this up, I would literally have spent thousands of dollars easily over the years through unnecessary purchases and more importantly, high credit card interest rates, since I was in no financial position to pay the card’s balance off each month.

Me at 52

It has been over twenty years – I am now 52 – since I had a credit card and believe me, I do not miss it. I would hope that today’s me, would be more responsible, but really, do I want to take that chance? I have been able to do all that I want to do without the plastic. Surprisingly, my credit rating is fine, as I found out while looking for an apartment to rent a few years ago. And while I might have an issue applying for a bank loan or mortgage, these are financial activities that I do not ever see myself doing, so I have no worries in that department.

And when I do need a credit card, like if I need to purchase something online for my The Joy of Simple blog  or an Amazon gift item, I have a friend who graciously does it for me and I pay him back immediately…in cash!

So…can you live your life without incurring massive and ongoing credit card debt? Do you worry about becoming a credit card delinquent?

If so, then the obvious solution would be to ditch the credit cards and pay off your debt. Sounds simple, but as you probably already know, it is anything but simple.

If You Use Cards

Now I can hear what a lot of you are thinking: “But Lyle…what if I wanna keep them cards…you know…for emergencies and such? “

I hear ya!

One recommendation I would suggest is to hand over your credit card(s) to your spouse or a close and trusted friend for a week. Then take enough money from the bank that will cover your essentials like food, gas, and Friday’s Family Pizza and Video night.

As you go through the week, if there are any knee-jerk reactions to what could have been an impulse buy, make a note of it. If you ran out of cash and had to get more at the bank, make a note of it.

At the end of the week, you should have a decent idea of how life without a credit card feels.  Add up the amount of money you would have spent on credit were you able to make those impulse buys and unnecessary purchases.  Once you see those potential lost dollar amounts, how do you feel?

If it makes you feel good for not having used your credit card, try another week. If it makes you feel less in control of your finances, or really antsy because you weren’t able to “buy that thing you just had to have!” then maybe a visit to Dave Ramsey’s website is in order.  :-)

Seriously though, the idea here is to see if you can get through a few weeks just using the cash you have on hand. If you find that are seriously dependent on your credit card(s) and that you cannot really live life as you’re accustomed to on just your weekly or bi-monthly pay-check, then maybe it’s time to reevaluate the role of your credit card(s) vis-a-vis your overall pecuniary satisfaction and life happiness. Or not!

I realize that not everybody will turn out to be a credit card delinquent like I was, and that some of you, maybe even the majority of you are fiscally responsible in all areas of your financial life. But, if this post hits a little too close to home, you might want to rethink your credit card spending and work on cutting that card out of your life, before some bank teller does it for you.

Crystal’s Comments:  I use credit cards and pay them off every month (we only spend what we already have).  I like the cash back rewards.  Do you have a history with credit cards?

Had to Switch to a New Credit Card

My husband and I use credit cards.  Sorry if that offends your sensibilities, but we use them like cash and pay them off every month.  We are not the norm and we know, but cash just falls out of our wallets like water.  We can’t even tell you exactly where it all went.  We have credit card charges staring us in the face all month so we know exactly how “bad” we’ve been.  We’ve never missed a payment or paid a cent of interest (*knock on wood*).  Okay, so now that all of the justifying is taken care of, lol, here is the actual post.

Our Main Cards

We try to stick to just two credit cards at a time – a Discover and a Visa of some sort.  Those cards have been the Discover It (we just recently switched from a basic Discover account and love it), and we have been using a Pentagon Federal Credit Union Visa.

But PenFed sent me a letter saying that they were going to start charging us a $25 annual fee.  Crystal doesn’t do credit card fees.  A credit card company gets 3-6% anytime it is swiped – there is no dang reason to charge you to use them.

I looked at travel rewards cards, but the only way to really take advantage of them is to churn credit cards a bit, and that seems very time consuming to me even though I know it works like a charm.  I just rather not have our credit pinged over and over right now since we may be buying another rent house next year or the one after OR refinancing our house if rates spontaneously drop again.

Our New Credit Card – Chase Freedom Visa

All of that said, I found a Visa that seems a lot like our Discover card – the Chase Freedom Visa:

  • 1% cash back on everything (same as Discover It)
  • 5% cash back on rotating categories that change every 3 months (same as Discover It)
  • PLUS an extra 10% bonus at the end of each calendar year since we have a Chase checking account
  • You can use your cash back rewards as cash or to buy discounted gift cards (like a $50 Starbucks gift card for $45 or a $50 Bath and Body Works card for $40…this keeps our friends in Starbucks as little gifts and keeps us in nice hand soap)

Still a Discover Fan

Even though that extra 10% is very tempting, I still think our Discover It will be our primary use credit card and the Visa will be for anybody that doesn’t take Discover.  It’s hard not to be loyal to Discover – they have seen me through 3 online card thefts and even reimbursed me for my first smart phone when it was stolen in 2011 thanks to a built in insurance policy for using Discover to buy your stuff.  So we’ll stick with what works, but I am much happier with this Chase Visa than I was with the Penfed one.

Heck, the Penfed customer service rep even seemed a bit annoyed with me when I called to cancel.  Instead of trying to keep my business, she said “You want to cancel instead of using one of our services to keep the card free?”  Why yes, I rather cancel than take out an unnecessary loan.  Airhead.

So, are you a credit card person or a cash person?  What works best for you?

If you are interested in signing up for Discover It
and receiving a $50 Cashback bonus with your first purchase within 3 months:


Please note that you have to apply through that link above or another referral link specifically to receive this $50 bonus!
You can also email me and I can send you your own link.

Savings Account Offer

You can also check out the going savings rates like below by clicking here!

Amex with a great interest rate:


Rate (0.85%) – Apply Now

My Dad Died Happy

This is a guest post by Kevin McKee, co-founder of Reward Boost and founder of personal finance blog Thousandaire.  I’ve been reading Thousandaire forever and highly recommend it and checking out Reward Boost today!

This is a happy story, I promise.

Yes it does end with my father dying from cancer, liver failure, and a variety of other ailments. However, the days before his death were incredible.


My father was a Captain in the U.S. Marine Corps and served as a helicopter pilot during the Vietnam war. On one of his missions he was captured and held by villagers hoping to get a ransom from the Vietcong.

After 63 days of being tied to a tree, he heard a helicopter. The US military found him and the rest of his crew and rescued them.

That’s all my dad told me about his time in the service. I may have the story wrong, and heck it may not have even been true, but one thing is certain: my father was very troubled based on his experiences in the military.

When he made it back to the states, he did some work as a military policeman, met and married my mom, had two kids, and they separated soon after. My dad has always been a charming man, but he never did quite figure out how to deal with what happened to him in the marines. I think you would call it PTSD, although I don’t know if it was ever diagnosed.

He drank and smoked heavily every day I’ve known him. It was his way of dealing with what happened to him, but it also drove a lot of people away. He and my mother have never been on speaking terms as far as I can remember. As of 6 months ago, he was not on speaking terms with any of his five siblings.

Then he got really sick.

The drinking, smoking, and possibly Agent Orange caught up to him and he was diagnosed with esophageal  cancer. The tumor got so big he couldn’t swallow solid food or even liquids in his last days. He could barely talk. He was only 59 years old.

You’re probably thinking, “I thought this was a happy story.” That was just the background information. Here comes the good stuff!

The Last Days of My Dad’s Life

My dad was placed into hospice care at the VA hospital in Reno. My step-mom told me well in advance and made travel arrangements to go see him. I just bought a house and I’m saving up for a wedding so I really don’t have extra money for plane tickets. Fortunately though I’m kind of obsessed with credit card rewards and frequent flyer miles.

It cost me 15,000 miles and $5 to fly from Dallas to Reno, and then 18,000 points from a separate rewards account for the flight home. Out of pocket it only cost me $5 to go spend time with my dad before he died. How cool is that?

About a week before I was going to fly out I got a call from my step-mom saying he was getting worse and I should move my flight and get there sooner. If I had bought a regular ticket I would have had to pay $150 change fee plus the difference in the cost of the flight. With a frequent flyer ticket, changing the date only cost $40. I probably saved over $1,000 total on travel with points.

A year earlier my mom had cancer and I used points to fly my fiancee and I up to see her. Again, I probably saved $1,000 on those flights. Points and miles have been incredible to me, and I want to help other people earn as many rewards as possible. That’s why I created a site to help people find the best credit card rewards called Reward Boost. I hope you check it out, because you never know when you might need to see a sick family member and don’t have thousands of dollars to pay for it.

Anyway, back to the happy story. I moved up my flight and saw my dad. He was really happy to see me. Two days later my sister showed up, and he was happy to see her too.


Then something really incredible happened; his sister showed up. He had recently reconnected with her over the phone but hadn’t seen her in years. You should have seen his face light up when she walked into the room. It was incredible.

Then his brother and another sister flew in a few days later. He had been estranged from these two for decades. No phone calls, no Christmas cards, nothing. They walked in the room and I saw that face again. Whatever happened between them in the past didn’t matter. The four of them were able to spend time together just like they did when they were growing up.

You should have heard the stories they talked about for those few days. I learned things about my dad as a kid that I never would have known otherwise. They didn’t have the best childhood, but they sure do have some great memories.

My dad could have lived another 20 years and probably never reconciled with his siblings. If one of them had gotten terminally ill I’m pretty sure he wouldn’t have gone to visit. He was stubborn like that.

But they visited him and he was so happy for it. I know that he passed away with the understanding that his siblings loved him even after all that time apart. There’s something very powerful and healing about reconciliation, especially between siblings.

Wouldn’t Have Missed It For The World

Those few days were some of the most powerful days of my life, and I would have been there no matter what the cost. But it was wonderful knowing that I could use rewards points and miles for my flights and keep on saving for my wedding next year.

My dad is in a better place now, and he went there knowing his family loved him very much.

Crystal’s Comments:  I am all teary-eyed.  This is the most real, sweet, and positive post for credit card reward miles that I have ever read.  I am so very glad those rewards let you see your dad there at the end.

Need to Change from Discover More to Discover It…

Okay, so I have written about using credit cards for everything we’d normally buy anyway and getting cash back for it.  My favorite credit card company, Discover, has apparently created a new card – Discover It.

Looking Into a New Card

Here was a comment that my blogging buddy, Andy from Tight Fisted Miser, left on one of the guest posts here on February 5:

Crystal, you should upgrade your Discover More card to the Discover IT card. The new card has all the same features as the More card but it starts at 1% cash back while the More card starts at just 0.25% cash back. I was able to upgrade mine in about 5 minutes with online chat.

I can’t argue with making more cash back, so I checked this new card out.  It really does look identical to Discover More except it does simply start at 1% cash back each year without having to hit a certain spending mark.  It even has the 5% cash back rotating categories that my card has now.  So I logged in to use the online chat yesterday, but all of the chat agents were busy and I was too lazy to call.  I’ll get my butt into gear tomorrow.  ;-)

Why I Use Credit Cards

I know most financial blogs dislike and even hate credit cards, but I look at them as a bonus if you can keep your spending in check.  If having a card tends to make you spend more freely, than credit cards are not for you.

Mr. BFS and I actually have a problem with spending cash – it just seems to disappear.  So credit cards work well for us since the charges just stare at us in the face all month.  Plus, I use our credit card statements to keep up with our budget.  I just print them out and input our spending into the correct categories on our Excel budget for the month.  Plus, I like getting 1-5% cash back on bills and purchases that we would make anyway.

Cash Back 2012

Just to give you an idea, here is what we got back in 2012 for using our credit cards.

Discover Cash Back (we use this for everything but gasoline)

  •  $580 cash back (redeemed about $300 worth throughout the year in gift cards to get extra cash back, for example, $20 at Bath and Body Works for a $25 gift card)

PenFed Visa Cash Back (we use this for 5% back on gasoline and for anywhere that doesn’t take Discover)

  • $85 cash back

For us, getting $665 for simply charging our normal expenses instead of using cash is considered a win.  :-)  I wish I could make our mortgage payment on Discover, lol.

Do you use credit cards for their rewards?  Or do you prefer cash?

Why I Use a Credit Card (And How To Leverage Yours)

The following is a guest post from Mike, the author behind Personal Finance Beat, a blog that covers and links to a host of personal finance and money management topics. You can follow him on Twitter at @PFBeat.

I Use a Credit Card

I use a credit card to pay for almost everything I buy. If my landlord would allow it, I would even pay my rent with a credit card. I take out $200 a month in cash just in case I need it, but everything else goes on my American Express Blue Cash card.  Using a credit card helps to keep me organized, it’s safer than using cash or a debit card, and it offers cash back rewards that is essentially free money in your pocket.

These benefits, of course, are contingent upon one crucial thing: you must pay off your balance — in full — every month. If you can’t be disciplined enough to pay off your balance in full every month, then you probably shouldn’t have a credit card. But this is a system that works for me. Obviously, not everyone agrees with this approach.

Dave Ramsey’s View

Take Dave Ramsey, for example. Dave offers a lot of great personal finance advice, but I could not possibly disagree with him more when it comes to using credit cards:

Myth: Aren’t there positive uses of a credit card? Like rebates and airline miles?

Truth: Responsible use of a credit card does not exist. Credit card debt is a major problem in America.

There is no positive side to credit card use. You will spend more if you use credit cards. Even by paying the bills on time, you are not beating the system! […] Personal finance is 80% behavior. You need to cut out habits that make you spend more. You do not build wealth with credit cards. Use common sense. When you play with a multi-billion dollar industry and you think you’re going to win at their game, you are naive. You cannot beat the credit card companies.

Where We Differ

Let’s take a look at some of Dave’s argument and see where we differ: Responsible use of a credit card does not exist.

This is ridiculous and only true of people that are irresponsible with their money and spending. If you cannot control your spending, then of course having a credit card is a bad idea, because it makes it a lot easier to go into debt. No argument there.

But the problem in those instances lies with their overspending, not the credit card itself. For people that are responsible with their money, a credit card simply acts as an effective tool for managing their money. You can be responsible using a credit card if you know what you’re spending your money on and why you’re spending it. I do it every day.

There is no positive side to credit card use.

More nonsense. As I explained above, the benefits I see for using a credit card are threefold:

Staying Organized

I keep a budget and track my spending every month using Mint.  There, my transactions are automatically uploaded and categorized for me every time I make a purchase using my card.  I know, for example, that I spent exactly $212 on groceries last month.  That’s because when I go grocery shopping, I pay for my items with my credit card, and by the time I get home, that transaction has already populated for me in Mint, automatically.

And the same goes for nearly every single thing I buy.  Swipe my card, and the transaction magically uploads to Mint, where I can sort and review what I’m spending my money on.  Now, theoretically, you can manually enter transactions into Mint for cash purchases.  And I do this myself when I have to pay for something in cash, but it’s only a handful of times per month.  Can you imagine having to manually input the data for every single purchase you make if you’re paying in all cash?  Chances are, you’d never do it.  And if you’re not tracking spending, how can you know where your money is going and what areas you could cut back on?


This is more of a credit card vs. debit card discussion, but it applies to cash as well. Debit cards offer less protection than credit cards (and cash essentially offers zero protection if you were to lose your money). If someone steals my debit card and withdraws money from my checking I account, I may get all of that back (depending on my protection limit), but in the meantime, that is actual, real money that I no longer have access to. My checking account will have less money in it.

On the other hand, if someone steals my credit card and charges a bunch of things to it, not only is my protection limit higher, but no actual money has been withdrawn from any of my accounts. They haven’t stolen my money; they’ve stolen the credit card company’s money. And if your wallet is stolen and you have $200 cash in it, what protection do you have for recovering that money?  You have none, because you are paying for everything in cash.


I know some people who are pretty fanatical about their rewards and the benefits they offer, but this is more of a secondary feature for me in the sense that it’s nice to have, but not something that would make me choose one credit card over another. (I understand that some people would disagree.)  I have the “cash back” rewards for my Amex card, and last year this netted me about $525 total – that’s real, American greenbacks — definitely a nice perk to cash in at the end of the year.

Now, getting back to Dave’s argument:

Personal finance is 80% behavior. You need to cut out habits that make you spend more.

This I actually agree with.  And like I said, if your spending behavior is destructive, then you shouldn’t have a credit card. But people can change their behavior. People are capable of growing and getting better and learning how to spend their money responsibly.  And when you get to that point, when you’re responsible and when you’re an adult, there’s really no reason you shouldn’t use a credit card.

You cannot beat the credit card companies.

Well, I am living proof that you can.  Not only did I not pay a dime toward interest or fees last year to American Express, but they paid me $525 for the privilege of using their card, while also offering me the benefit of keeping my budget organized, and providing fraud protection that simply does not exist by paying for everything in cash.

Bottom line: Whether or not you think a credit card is right for you is only a decision that you can make. My personal belief, however, is that if you’re responsible with your money, then the benefits of having a card far outweigh the risks.


Crystal’s Comments:  Mr. BFS and I are fans of our credit cards too.  We use a PenFed Visa for gasoline and a Discover More card for everything else that we can possibly charge.  I’ve been doing this since 2001, carry my balance off in full every month, and earn 1-5% cash back on nearly everything.  As long as you don’t spend more than you would any other way, I don’t see credit cards as a problem at all.  They should be avoided like the plague if you feel more spendy with them than without them though.

How to Pay Off Your Credit Card Debt in 10 Simple Steps

The following is a guest post from My Honest Answer, an advice site solving your dilemmas daily. Less of an agony aunt, and more of an agony sister, my honest answer gives good honest advice: minus the sugar-coating, plus a bit of sass.

Step One: Get Real

When you owe money on credit cards it’s easy to bury your head in the sand, and ignore those mounting bills. With various debts spread across providers, it’s hard to stay on top of how much you actually owe in total.

I’m going to show you how to pay off those debts, starting today. But, none of these steps will work unless you realize that enough is enough, and it’s time to stop accumulating debt, and start paying it back. You need to be committed.

Step Two: Get Organized

Sit down, and list every single debt: amounts owed to friends or family, credit cards, car loans and store cards.

Pull out all the paperwork, and create a ring binder with all your statement and bills. Use dividers to keep each creditor’s information separate. If you do everything online, consider printing your current balances. Make this binder your Debt Control centre, where all the information you need is in one place.

Once you’ve listed every debt, order them from the highest interest rate, to the lowest interest rate. Then, check your terms and conditions for non-credit card debt to see if you can make early repayments without penalty. This is crucial, because, if possible, you want to pay off the most expensive debt (the ones with the highest interest rates) first. You should now have a hit list showing which bills are your top priority.

Step Three: Get Automated

The last thing you need is late penalties and charges increasing your debt. Now you have all the information in one place, it should be fairly simple to set up regular payments to cover the minimum amount required for each debt, if these are not already in place.

I would suggest doing this for every single debt, to make sure you are never caught out by being out-of-town, or down with the flu for a few days. You can then make all your extra payments manually.

Work out how to do this for the first debt you plan to pay off – directly through your internet banking, by phone, or by check. If you will be making payment by check, address some envelopes, stamp them, and put them in the file. When you’re ready to mail a check you don’t want anything holding you up!

Step Four: Get a Budget

List out all of the minimum payments on each debt, plus any other ‘must pay’ bills such as taxes, mortgage or rent, and utilities. You need to know exactly how much ‘disposable’ income you have left at the end of every pay period. And you may be surprized by how low the figure is compared to the amount you were spending. I know I was!

You need to divide up the remaining money to pay for everything else. And I don’t just mean food, entertainment, and gas. Everything else. Haircuts, auto insurance, life insurance. Every single expense that you incur in the year.

This is often where people fall down. They set unrealistic budgets, or forget to include small items, such as lunch money for the kids, or parking fees, which, over the course of a year, really add up. Be honest here. It doesn’t matter if there doesn’t seem to be much left over for debt repayments. We’re going to work on that in a moment.

Step Five: Get Thrifty

Look at all those items in your ‘discretionary’ list. Is there anything you can cut? Dance lessons for your child that they don’t really enjoy? Could you have your hair cut less often, or try an ‘at home’ color?

For those working outside the home, an easy area to tackle is lunches. You can make cheaper, healthier, and tastier things to take with you, and save a ton of money, and time.

Look at your grocery spending. If you eat a lot of meat, try to introduce two meatless meals a week. A homemade pizza, or pasta and salad is a good choice.

To save on take-outs, consider batch cooking and freezing some of your favorite meals. It’s really very little extra effort to make double your usual casserole and freeze one for a later date.

Look again at all your insurances. Have you shopped around lately? Do the same for any utilities you might be able to switch. Call your cell phone provider and tell them you may have to close your account as it is too expensive. You will be surprised how hard some companies will work to keep your business.

Step Six: Get Decluttering

Once you start paying close attention to where you are spending your money, and how much things really cost, you will probably start noticing things around your home that you bought, which you now realize you do not need. If you’re anything like me, these expensive impulse purchases will really annoy you as you struggle to pay off the debt they left you with.

The solution? Sell them. You can get really good prices for good quality items on Ebay, Craigslist, or Amazon. You probably won’t recoup what you spent, but that’s no reason to hang onto things that you don’t need, use, or that make you feel bad.

For the best prices, you need to put in some effort. Spend the time to clean up the item. Take good, well lit pictures from lots of angles. Include as much detail as you can – especially measurements. And make sure you check postal prices before you list items to ensure you’re not going to get a nasty shock at the post office.

Step Seven: Get Motivated

A few months of following these tips and being serious about paying down your debt should have seen a few extra payments going to those creditors. Doesn’t it feel great? Using a spreadsheet to monitor your total debt as it falls is a great motivator. Crossing off each debt as it is paid off will really spur you on.

Step Eight: Get Serious

If the debt isn’t falling as fast as you’d like, it might be time for more drastic measures. Can you sell your car for an older, cheaper, or more efficient model? Or can you get away with selling one car altogether? It might even be time to look at cheaper housing options, which, though drastic, will leave you with more disposable income in the future, too.

Step Nine: Get Snowballing

Snowballing is a tactic to pay off debt faster. Once you’ve paid off one debt, you move the total amount you were paying each month to the next debt on your list. Do this each time you pay off a debt and it has the effect of a snowball rolling down a hill, getting bigger, and gathering momentum. By moving the cash allocated to that debt straight to the next one, you can compound the benefits, and gradually you start paying off each debt faster.

Step Ten: Get Debt Free

Finally! You’ve done it. It may take a while. In my case it took a couple of years, and at the time, it seemed never-ending. I’ve been debt free since 2009 now, and boy do I sleep easier. I’m also much more careful about where my money goes, and I enjoy the purchases I do decide to make so much more.

But, one last thing. Don’t forget Step Eleven: Start Saving!

Does anyone else have any great tips for paying off debt? Or other ways to stay motivated when it feels like you’ll never be debt free?