May 5th, 2010 - Money Thought
Greetings readers!
Our goal of being debt free (or significantly debt reduced) by 2011 is going somewhat well for me, however, I’ve hit somewhat of a hindrance. It’s bogged down my ability to keep debt paid off. Fortunately, I think I’ve found what I hope to be a solution that we can all share in.
I’ve realized that I have one arch-nemesis. Cash. Cold, Hard, though easily-torn, money. Those 1′s, 2′s, 5′s, 10′s, etc that can paper a thousand homes a thousand times over again. What’s my problem? I use it. I pay off a little of a credit card and then I use that when I’m out of cash.
Here’s my theory. I’m only going to pay with a credit card. That’s it. And only one of my credit cards too. The other CC is to be used exclusively for my Cell Phone bill, and emergencies. That’s it. So, I pay with my credit card. What’s the difference you ask? When I get home, I pay off everything that I bought, rounded up to the nearest $20. For example, if I bought $54 worth of stuff, I pay off $60. If I bought $22, I pay $40. This way, I’m always paying off what I just purchased PLUS a little extra. This keeps the credit card balance as always getting paid off, and prevents me from using paper money (AND the credit card). It also forces me to look at stuff differently. Rather than a movie being $19.99, I know after tax that’s going to be over $20, which means, when I get home, I’m going to be losing $40 out of my account to pay for my credit card.
This theory works until the card itself is paid off. Then it’s as simple as paying it off every month rather than racking up huge debt on it and forcing to do this again. Also, I will still be making somewhat large payments to this credit card, but I won’t need the mentality of thinking I have to devote large portions of my paycheck to paying off the credit card.
I’m hoping this approach will psychologically keep me from buying so much and force me into getting everything I need in one sitting, rather than spreading it out across the month. If that makes any sense.