Credit Card Blues

(CBS)  A few months ago, my wife and I decided that we had been spending too much money lately. We hadn't gone crazy. We're not particularly extravagant. We don't own a jet, we don't rush off to a private island when things get too hectic here, and I don't own a pair of "nice jeans" for the weekend. But we had noticed that gradually, over the past few years, we were inexplicably spending more money. I suggested that we try to go for a couple of months without using our credit cards, and just pay cash for everything. I felt this would make us more reluctant to buy things that we really didn't need. I was right. The experiment worked. We definitely spent less money. And I hated it.

Before deciding to put our credit cards aside, we went over our financial records. I pretended to be interested in all the details, and the conclusion was that there weren't any glaring areas where we could cut back. It wasn't as if all we had to do was lay off our upstairs maid and the butler and everything would be fine. Instead, it was all those little things that we buy and don't really think about that had been adding up.

So, we took a certain amount of money out of the bank and put the cash in a secret place in our house.

(CBS)

(Note to burglars: Since we no longer are doing the cash-only system, we don't keep cash in our house anymore. See map for directions.) We would each take some cash out of our stash whenever we felt we needed to replenish the money in our wallets. However, we'd be very careful about those "withdrawals" because the money in our hiding place would have to last the entire month.

I had never been in the habit of carrying much cash on me. I would usually just have a few dollars stuffed in one of my pockets. I had my credit cards, and I thought — incorrectly, as it turned out — that I rarely spent money, anyway. When I started to carry cash, I actually felt a difference in me. I'm sure I walked with a swagger. I had become a "Big Time, Charlie Potatoes" with money in my wallet. I was living large, and for me, it was all about the "Jacksons" I was carrying.

I didn't part too easily with any of those "Jacksons" or "Hamiltons" or even my "Washingtons." I learned very quickly what the owner of every casino in the world knows — people are much more likely to spend money if it's not really money, but plastic. If you were actually putting cash on the table and losing at blackjack, you'd stop playing a lot sooner than when you're just losing those plastic chips.

Similarly, when we pay for something with a plastic credit card, it doesn't "hurt" as much as actually reaching into our wallets and handing over our cash to a stranger.

As I said, the cash-only system worked. I was much more likely to ask myself the question, "Do I really need this?" before I bought something.

Since it worked so well, why did I hate our "no credit card" system? For one thing, I felt like I was a kid on an allowance. I resented that I couldn't buy whatever I wanted. And there was guilt attached to every purchase — "Should I really be buying this?" "If I do, will that mean I'll have to take more money out of our hiding place?" "If I buy it, does this mean I'm an irresponsible person with no self-control who is a poor role model for my children and a bad citizen of the world?" (Sometimes, I'm a little rough on myself.)

After two months, we decided, thankfully, that we had learned how to spend money more wisely, and we could go back to a more normal, relaxed "sometimes credit card, sometimes cash" system.

But the damage had already been done. Even though I am now "allowed" to make an impulse purchase with my credit card, the leftover guilt from the two-month experiment stops that purchase from being a joyous one. It's no fun to be responsible.

I think the only thing that would get me out of this mood is if we would go out and have a ridiculously expensive evening, throwing our money around extravagantly, celebrating the fact that we have learned how to be responsible with our money.

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Lloyd Garver has written for many television shows, ranging from "Sesame Street" to "Family Ties" to "Frasier." He has also read many books, and paid cash for some of them.

By Lloyd Garver

[namellac]

www.daveramsey.com

Dave discovered this concept a long time ago. It is a system that works. You should still get rid of your credit cards and use only debit cards when needed. I'll be completely debt free this year because of the paradigm shift I've learned from DR. Listen to his podcasts!

[r9119111]

Agreed. The best benefit is when Religion and Polits come together for the common good. Perhaps we could take a look at what is happening in California.

[clarkalex]

"Religion and politics should never be combined."
Hmm. Seem to recall a guy by the initials of MLK who was very good at having the Bible in one hand and the Constitution in the other.
The problem isn't combining the two. Problems arise when someone tries to bend one to the other. You can have both and not give up your beliefs on either.

[r9119111]

"But one thing really puzzles me: why does the government keep relaxing regulations on credit companies (so they can offer more and more people with bad credit higher and higher credit limits), while simultaneously making it harder and harder to declare bankruptcy?" Posted by edjohn66

Study this carefully and notice how corporations have slanted everything toward the rich and powerful since the Republicans have had free reign in Government. This has been a reverse Robin Hood economy --- real Goldie Lo--.

The corporations have been writing all the laws to suit them. Again, I feel really sorry for all of our hard working and unsuspecting American Voters who voted Republican only to have it backfire on them. If you live in poverty like I do, you're voting for the wrong party. I voted Republican all my life because my father did. Since 1970, I've had nothing but contempt for what is happening in the party. I now remain an Independent voter because the Republican Party doesn't represent me. Forget Religion. Religion and Politics should never be combined.

[rhs648]

"But one thing really puzzles me: why does the government keep relaxing regulations on credit companies (so they can offer more and more people with bad credit higher and higher credit limits), while simultaneously making it harder and harder to declare bankruptcy?" Posted by edjohn66

You make some good points. However, people must exercise self-discipline, become better educated about finances, and avoid debt like the plague.

[jebby_one]

Interesting note about those very low-interest credit card loans. They come in the form of blank checks that you can use any way you wish and they have super low interest rates like 8% or 2% or sometimes even ZERO percent for xyz months.

Read the fine print and assume nothing. Be extra careful if you already have an exsting balace. It's a trick!

Once you accept the special low-interest loan, all future payments are applied to the low interest loan first, and whatever existing balance you had prior, plus any additional purchases, plus interest, will grow at the higher rate. The effect can be very dramatic. You may not be able to reduce the higher rate balance, or even stop it from growing at the high rate, until the low interest loan is fully satisfied. This can be especially brutal if your "normal" rate gets boosted to 30% because the credit card company thinks you are a higher risk.

[figuy30]

don't just conduct an experiment. shred every one of your credit cards and never get another one. a lot of people say you cannot live without a credit card, but the truth is you can. by paying cash, every dime you earn is yours. don't be trapped with the credit card lies. they will try to rob you with their fine print rules, "fees", & high interest. if a credit card was such a good deal why do they want YOUR money. don't let anyone try to control YOUR life.

[r9119111]

I have never had the luxury of spending freely, so I don't really know how that feels.

However, in 1987 I made the decision to live debt free for the rest of my life. Living debt free is the best decision of my life. I have to go without easy spending and that can hurt. But, the good feelings and freedom from anxiety I've experienced since have been well worth it. Self-discipline is hard to achieve but rewards are marvelous.

I refuse to sell myself into indentured servitude for the credit card industry ever again. It isn't worth it. I am a free man.

[xenalily]

I did this myself beginning in January. I have paid cash for everything. You spend a lot less and begin to think about whether you really need something before you buy it versus wanting it. Now I feel broke all the time but I am actually helping myself to get out of debt. The sacrifice is worth the reward in the long run.

[sparkplug54]

edjohn66,The governments keeps "relaxing regulations of credit companies" and made it "harder to declare bankruptcy" because the credit card companies spent a lot of money lobbying them to do so. Noone cared to help out we little people, who provide the revenue for the banks and credit card companies.

I'm glad that we were able to declare a much need bankruptcy 10 years ago. With the new rules, we would probably not be able to, but we have been able to buy a house, rebuild our credit, etc. They are all things we could not have done to set ourselves aright, without debt releif. It was painful, embarassing, but we could see no other option.

Check out "How They Rig The Credit Card Game" by Michelle Singletary in This past Sunday's Washington Post, also syndicated to many papers around the country. There are so many fine prints in the card agreements that, if you screw up one time, you can very easily be in over your head, forever. My son recently worked in collections for one of the really big banks, and the stories he told us were nightmarish.