Wednesday, October 30, 2013
Defeating Credit Card Debt With Self Control
Credit card debt is a major social problem in some Western countries. To rid yourself of credit card debt, it is best to recognize the problem as both a social and individual problem.If you are overburdened with credit card debt, or are in danger of becoming so, it is very easy to see it purely as an individual problem, one from which you may be suffering both physically and mentally. Worry and stress can be silent marauders into your physical and mental well being. Debt can undoubtedly cause both worry and stress, not just to the debtor, but their immediate families too.Why Should You Care About The Social Causes of Credit Card Debt?If you wish to overcome your credit card debt problem, you will benefit from removing some of the social influences. They are a major influence on the way you react, think and behave. Remove the social influences, and you take a big stride in your journey to eliminate your debt.I do not, of course, mean remove the root causes of credit card debt. You cannot do that. What I am referring to is to prevent the social influences from penetrating you and taking over your life. As an individual, you have the right to resist social influences where they are harmful. The liberal, unfettered use of credit cards is an influence you will benefit from resisting.Just by being fully aware of the social influences, you have made an important step. You will more likely be on your guard, and by asserting your individuality, you are more likely to overcome or prevent the credit card debt problem.What Are The Social Causes Of Credit Card Debt?You could spend years analyzing the credit card debt problem. Here are just a few of the influences at work in the society around you:1. Credit card interest rates are high, therefore the profits can be high. Banks and other credit card issuers are after their slice of that big money, including from you. They can therefore justify big marketing budgets to get your money. I deliberately do not say "get your business". You will resist better if you think "they are after my money."2. It is very easy to get credit cards, multiple credit cards in fact. Issuers of credit cards make it easy for you, if you have had no debt problems in the past. If they seem to take it lightly, it is understandable that their customers do too. But remember, they take the risk factors into account when setting interest rates. That's why they are so high.3. Your friends, neighbours and work colleagues will probably all have multiple credit cards, talk about them and flash them around from time to time. That can all influence your own attitude to credit card debt. 4. Depending on what country you are in, yours may be a "have now, pay later" society. Immediate gratification can take precedence over common sense. If everyone else is doing it, it surely must be right? Wrong. Especially if the interest rates are too high.5. You see other people buy new furniture, go on exotic vacations, or go out to expensive restaurants all the time. Even if you never know if they are doing so on credit card, you may want the same. But you do not have the immediate cash, so what do you do? Jump on the credit card train? That is what your society may be pushing you towards.How To Resist the Social Pressures To Succumb To Credit Card DebtDue to the overwhelming pressures of the credit card society, it can be quite a difficult task, initially, to change your own attitudes. But by asserting your individuality, you can steadily eliminate the social conditioning. It is really a matter of how you think in certain situations. You are in charge of the way you think, so all you need to do is what is natural. Not what everyone else seems to be doing around you, but what is natural to you as an individual. Think to protect yourself, assert yourself, and to look after your financial well being.Here are a few ideas to help you:1. Whatever type of loan you may apply for, you are after just one product, money. Different types of loans are marketed as separate products, in different packages, but to you, they should all be one: money. The money, once you have it, is all the same quality. A dollar is a dollar, a pound is a pound, a euro is a euro. Having engrained that upon yourself, knowing you are just after this single product, you need only look at price. Credit card debt is very, very expensive. The interest takes money from you, and reduces your assets. If you need a loan, you want the lowest possible interest rate, one that does not unnecessarily leech your assets.2. A credit card should only be used as a convenience to pay if you have no cash on you, knowing that you can pay off the balance before interest charges kick in. Many cards have an interest free period. Never use credit cards as a loan beyond that free period. Others do, but you have no need to. You can eliminate that idea altogether. You are creating a new habit that will enhance your financial situation, and resisting an old common habit that would ultimately damage your finances.3. Plan all your borrowing. Sit down and write down what you absolutely must buy over the next year, and add what you would like to buy. Total the cost. Write down a budget for each month, making sure you have listed all your regular expenses that are fixed and unavoidable, and those over which there is some flexibility. Compare that total with your income. If you have a surplus, then you can think about those extra purchases you had in mind. If not, don't think any more about them. You cannot afford them, and cannot afford to borrow.If you have a planned surplus, then maybe you can get those things you wanted. If you can afford all of them, and there are quite a few items on your list, then forget about getting a loan. Be patient, resist the have now pay later syndrome. You can save interest and buy a bonus item with that later if you really must. You are in a great position to pay cash. Prioritize the things you want to buy, and note their cost, and then work out a plan by which you buy one item at a time spread throughout the year. Why pay the banks credit, when you can pay cash? You will save not just the interest but maybe get cash discounts. Cash gives you control. With credit you are subservient.If, on the other hand, there are just one or two more expensive items you want to buy, it is time to compare options and test your resolve. If you save your surplus each month, consider how long it will take to have enough for item 1 and maybe item 2. Are they really urgent? Probably not. Maybe you can save for one after 4 months and 2 after 9 months. That way you are getting into the habit of saving, and living off cash. Cash is king. Your finances will start to look good over time, and you'll start to feel proud of yourself. You will feel in control.Remember too that by saving, if an emergency comes up, you may have the cash at hand instead of reaching for that expensive credit card.You really cannot wait and save? That is a pity, but now check out all the loan sources suitable for your intended purchases. Get the best plan, the best interest rates, and apply, with the intention of using that loan just for what it is intended, and to pay it off within the time scale of the spending plan. In the example one year. Stick to that discipline, and your credit is still under your control. And, you have avoided reliance on expensive credit cards.4. Remind yourself every day that you are only going to use your credit card when you have no cash on you, as a convenience, and you will repay it before interest starts to accrue.5. Also remind yourself every day that sometimes it is good, or even necessary, to be that bit different, and to resist social pressures. Imagine all the credit card lemmings heading towards the precipice, while you relax in your counting house, counting out your money. Real money; your assets. Anyway, it's great sometimes to be different, it really does make you feel good about yourself.6. Never, ever feel you have to buy something just because a neighbour or friend has been boasting about theirs. Envy and jealousy are viruses that minimize your individuality, and can, in this case, damage your finances.Resisting the pressures of the credit card society will be a lot easier once you have set your mind to it, and started to feel the benefits. Enjoy the process, and you will be a cash convert for the rest of your affluent life.