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How to break addiction to credit cards

Keeping yourself from racking up new charges is a good place to start if you want to get your credit card debt under control. Here's how.

By MSN Money Partner Jan 26, 2012 6:26PM

This post comes from Rob Berger at partner blog The Dough Roller.


The Dough Roller on MSN MoneyWithout a doubt, the hardest part of getting out of credit card debt is avoiding new debt.


Our society has grown so accustomed to using credit cards that we use them without even thinking about it. The charges pile up each month to the point where we can't afford to pay off our cards in full. As our debt rises, we become even more dependent on credit cards just to get to the next paycheck.


To break this cycle, we'll have to change many of our behaviors, attitudes and expectations. And the first step is to understand how we got into credit card debt in the first place.


How did we get here?

Not everyone sinks into credit card debt the same way. For example, some used cards to pay for medical bills, while others used them to take a cruise. Some used plastic to get by after a job loss, while others went into debt eating out and buying jewelry.


The point of looking at your history with credit cards is not to beat yourself up or to blame others. It's so we can make the best plan moving forward. If you can be objective about how you spend and where your areas of weakness are, you can implement focused changes to reverse the damage. Here are some common examples:

  • Big purchases. Some people do a great job controlling day-to-day spending, only to succumb to big purchases they can't afford. Here, the key is creating a savings plan for big purchases and waiting until you have the money to pay for them.
  • Everyday purchases. For some, credit card debt is a result of spending a little bit more each month than they make. It's not one type of expense; it's a little bit of everything. If that describes your situation, better budgeting is going to be critical to getting control of your debt.
  • Medical expenses. Health care costs are the No. 1 cause of personal bankruptcies. Without health insurance, an illness can plunge anybody into substantial credit card debt, because of both medical bills and lost employment. Here, the focus will be securing health insurance (and employment if that's a problem) and then dealing with the debt.
  • Emergencies. Some do well controlling spending but get sidelined with emergencies. The key under these circumstances will be to build a better emergency fund.

No matter what your circumstances are, the key is to objectively evaluate how you got into credit card debt. Understanding that will help you figure out what you need to do to get out of debt. Post continues below.

Now what?

Now, let's cover some ideas to help you break the plastic habit. But keep in mind that not all of these ideas will apply to everyone. That's why it's so important to understand what got you into debt.


Cut up your cards. If the debt you have accumulated is a result of frequent dinners out, clothes shopping, lovely lattes and other impulse purchases, cut up your cards. If you can't swipe it, you can't buy it. Cutting up your cards is an act of determination and commitment much like ridding your cupboards of junk food when you are serious about losing weight. 


I recommend cutting the cards rather than canceling the accounts. Canceling your accounts can have a negative impact on your credit. (Estimate your credit score for free.)


If you can't bring yourself to cut up your cards, there are other options. If you find yourself using plastic to buy lunch at work every day, don't take your credit cards to work. In fact, you can leave your cards home all the time. Whatever it takes.


Build an emergency fund. Your debt may be the result of unexpected or ongoing medical expenses. Unplanned and unexpected repairs can also be devastating to your finances. Rather than relying on credit cards for unexpected expenses, build an emergency fund. This is essential regardless of your financial picture.


For those deep in credit card debt, I believe you should save an amount equal to one month of expenses before applying extra money to your debt. While there is no guarantee this amount of money will cover all emergencies, it should cover the most common types of emergencies, like car repairs. (See: "Guide to building an emergency fund.")


Start tracking expenses. Sorry to keep comparing weight loss plans to your finances, but the similarities are so obvious. Both can be signs of impulsive or compulsive behavior, and both require a great deal of discipline to reverse the mentality. That said, the most successful weight loss programs incorporate a food log.


Visual awareness has a very positive impact on altering habits. There are great ways to track your expenses to see where your money is going. You can set up a Microsoft Excel spreadsheet and enter your income along with each and every expense. Don't forget to put in the expenses that may not show up every month, such as auto insurance, vacations and gifts. Infrequent bills need to be broken down to a monthly amount so they don't take you by surprise. Save your receipts and enter the information on a regular basis.


Another option is to use one of the great online tools. My favorite budgeting tool is You Need a Budget. While it's not free, it is, in my opinion, by far the best budgeting tool available today.


More on The Dough Roller and MSN Money:

Feb 11, 2012 6:30PM
Cutting up your credit cards does not necessarily work. If the account is still open, you can use the card number for online shopping which is just as tempting.
Feb 11, 2012 6:33PM
Both shonnyloves and old mann 76 are correct about what is going on in this contry.The banks and other people involve in this system are just scaming everbody any way they can.VERY VERY VERY BAD BAD BAD BAD  PEOPLE!!!!!
Feb 11, 2012 9:24PM
pay off credit cards at the end of each month. no interest, no debt, no problems.
Feb 11, 2012 9:27PM
i have one credit card which i use only when i need to and i know i have the money in the bank to pay it off at the end of the month.   Everything else pay cash
Feb 11, 2012 5:25PM
I agree with Old Man 76
I personally DO NOT OWN ANY CREDIT CARDS!!!!! I was once taught that having credit cards were like masters during slavery and the person owning the card are the slaves.  Sounds harsh, but that is what is going on in America today.  I emphasize with the people who have to use them, I totally understand.  And yes, these banks want to ruin the American people after OBAMA has not only bailed you out once, but twice. 

Feb 11, 2012 6:30PM

I love the picture of all the plastic burning creating all of that toxic

Feb 12, 2012 4:05AM
i've been on a cc rollercoaster since the 80's, and have gone from 'poor' to 'good'. i've been on a 'good' stretch for the past 6-7 years, after having climbed out of a veritable credit 'abyss'. for persons in this situation i' recommend paying off the debt in full, even if it takes several years, and then rebuilding it through say an 'Orange Bank' type cc, starting out with a low limit that will increase with time. yeah, it's grueling for awhile, but it will really pay off. once a person goes this route, a tough and resilient lesson is learned and really helps reinforce good credit habits that stay for the long haul.
Feb 12, 2012 1:46AM
Bad grades is no longer the #1 reason kids drop out of college, debt is the new winner!

Credit card companies target children before they're even 12 by inserting their product in children's games and TV shows.  (Malibu Barbie had a Mastercharge.)

These companies issue credit cards to teens with no income and no job and keep piling one after the other while they are in college.  Then, the collectors come calling and add even more stress to already stressed-out students.

My Mom and Dad never had a credit card their entire lives and were very wealthy.  If you study millionaires, the vast majority drive used cars (paid for with cash) and have NO debt. 

Sayings like, "Debt is a tool" and "Everybody has credit cards" and "Everybody deserves to drive a new car" are all lies told by banks and many Americans follow along like sheep.

“We buy things we don't need with money we don't have to impress people we don't like.”
-Dave Ramsey

Feb 11, 2012 10:37PM
Oh yeah I agree, who doesn't want to build up a TEN MILLION dollar emergency fund to cope with emergencies.  I really wish all these financial experts could occasionally come up with some realistic, down to earth suggestion/recommendation so the "Joe Average" can follow. 

Credit cards can sometimes be life savers.  What would happen if your car breaks down in the middle of the Nevada desert  at night when you have no cash and no credit card and not a member of AAA? 
Feb 11, 2012 8:33PM

Keep the friggin banks and card companies away from our colleges and university during registration week. They entice the very people who need to understand the corrupt banking system and manipulation them threw marketing plans. Leave those kids alone. Let them figure it out on their own. Let them study without distraction.

Everyday someone is advertising a plan to get out of debt. Banks you should trust are getting bailed out of some BS. Go figure. Get smart, get cash. Don't forget today kids will need to save 25% for their retirement. 25% on minimum wage! Ya right. Honest companies losing your pensions! ? What retire?

Financial servitude is, has been and will always be a way of life. For most.

Mar 7, 2012 2:36PM
My mother has a serious addition problem to credit cards.  She doesn't need financial help, she needs emotional support to find something in her life to replace the credit cards.  Can anyone recommend a service for this?
Feb 11, 2012 8:17PM

LOL, people just cant figure out if you dont have the money you cant buy.

 Well boneheads, suffer the consequences!  You should know by now.

 "Help me , I cant stay out of debt." ........Blah blah LOL

Feb 11, 2012 8:52PM
hey everyone im a newbie at having a credit card and my bf told me to get good credit and to not spend all of it at one time to just buy gas n food n thats it. that seemed like a pretty good idea to me, so try doing that n dont shop all ya pooh heads the  clothes that u want will be there when u have money to buy it IN CAS. other then that the clothing is kinda ugly to o DONT WASTE UR MONEY n jst dont buy it k just gas n food k? if ya need it lol : ).
Feb 11, 2012 5:54PM
I love my credit cards, so **** off and don't try to tell me what to do.  I manage them just fine on my own.
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