This is hard for me to admit, but I think I may have a credit addiction. I like to shop – in stores, and online – and when I do shop I don’t think twice about putting my purchases on credit. In fact, when I am spending money debt is the last thing on my mind. That is, until I saw my latest set of bills! I have clearly gotten in over my head. While paying down these bills shouldn’t be a problem, I need help kicking my credit habit. Any advice?
Richmond, British Columbia
Just like smoking and binge drinking, addiction to credit can be a serious habit that is difficult to quit. And I want to commend you on recognizing the signs that it is time for you to kick your credit habit for good. Over the last several years, near-zero interest rates have kept the cost of borrowing low and lured many consumers into taking on record levels of debt. But for some, such as yourself, that debt has turned into a crutch that is quickly becoming too expensive to handle.
Like any bad habit, your dependence on credit can only be curbed through a change in your attitude and spending behaviors. These tips should help you take the first steps towards kicking the habit for good:
- Create a budget – The first step towards putting your credit habit behind you is to create a budget that will allow you to see exactly where your money goes each month. Remember, a budget is not necessarily about cutting back, but rather a plan to make your money work for your lifestyle.
- Learn to recognize your needs versus wants – Once you have learned to budget, it’s time to really examine your needs and your wants. With such easy and cheap access to credit, many of us fall into the debt trap because we mistake our wants for needs. Many of the items we see as necessities are really nothing more than “wants” we have become accustomed to having. Learning to eliminate some of these unnecessary wants will help to ease your dependence on credit.
- Cash is king – I understand how easy it can be to simply reach for the credit card to make those discretionary purchases you really don’t need. If you put yourself on a “cash-only” diet, you eliminate the opportunity to charge any unnecessary purchases. Cash is also a great way to stick to your budget and keep your spending in line.
- Avoid impulse shopping – If you are truly trying to kick the credit habit, then you need to be very aware of your impulse shopping. Think twice before making any purchase – with cash or credit. Is this something that you need? And if so, are you getting it at the best possible price. You’ll find that over time, your need to reach for the plastic dwindles as does the desire to make a purchase in the heat of the moment.
- Get your loved ones involved – Like any other habit, you may find it impossible to quit credit on your own. Perhaps you put other family member’s financial needs on credit, or simply just need them to encourage you to stick to your goals. Either way it is important to make sure that those close to you understand your financial reality and are supportive of your desire to kick the credit habit for good.
Good luck in your journey, and please don’t be afraid to ask for help on your path to financial independence.
Jeffrey Schwartz is the Executive Director of Consolidated Credit Counseling Services of Canada and President of the Credit Association of Greater Toronto (CAGT).
If you have a question about a debt management program or just about finance in general, Jeff is here to help. Send us an email with your question to [email protected]. You’ll get the expert advice you need and your question may be featured here on our website.