Making Cash The New Credit

CBS Evening News: Credit Counselors Divulge Secret To Erasing Debt, Going Cash-Only

(CBS)  These days, when Mary Ellen McGuire shops, she pays with cash. No credit cards for her. The pile of bills on her kitchen table is a constant reminder of her credit crisis.

One of the bills has already gone to a debt collector, CBS News correspondent Randall Pinkston reports. It's a Bank of America card with a balance of $20,011.92.

McGuire says her slide into economic ruin was gradual. What was her biggest mistake?

"Telling myself that I can beat the bank, I can... We'll win and we'll get out of this mess," she said. "After a while, you just know you can't."

Like McGuire, millions of American consumers miscalculated. Now they're turning away from credit cards in droves.

At his Guilford, Conn. office, credit counselor Scott Wilson convinces clients that going green - with cash - makes an immediate difference.

"Having to have the cash will help prevent some of this impulsive purchasing people have grown accustomed to," he said.

The key to reducing the "impulse spending" is knowing where your money goes.

To do that, experts say, create a budget.

One familiar strategy, divide your cash into separate envelopes, according to priorities;

Envelope #1 is for mortgage or rent.

Envelope #2 is for household expenses, including utility bills and food.

Envelope #3 is for unexpected expenses, such as repairs and illness.

Once you've identified your priorities, stick with your plan - don't rob the rent money to go to the movies.

Use the 24 hour rule: wait a day on potential purchases to determine if it's a need or a want.

"I feel my priority is to pay my mortgage, take care of my children," McGuire said.

How's she paying her credit debt?

"When I can, as little as I can," she said.

While it may seem impossible to pay off big credit card bills, experts say it can be done. Using cash is a good first step to getting your financial house in order.

"It was difficult at first;" said Deb Tolliver, another cash-only advocate. "I mean, the mind-set of making yourself, disciplining."

In Greenwood, Ind., it took the Tollivers four years to pay off their $70,000 credit card debt and go all cash. One trick that worked for them was paying off small bills first.

"You start getting excited about it because it is only $200 more until you pay off this next one and so let's see if we can cut something and get it paid off this month as opposed to next month," she said.

Mary Ellen McGuire is just beginning.

"I'll pay my debt off and get on with life," she said.

But she's living within her means, no matter how long it takes.

[jbeckett5]

Somebody forgot to credit Dave Ramsey (with whom I am not connected in any way) for these ideas - Google him. The "snowball" (paying the smallest bill first and using that to build emotional momentum) is fabulous.

Currently we have cash, credit cards, and debit cards. Each has its characteristics, merits, and demerits. I believe that we need a prepaid (precharged) card. From our bank account, we transfer electronically a small amount of money into this card similar to the way we place cash into our wallets or purses. We can then use this card just like cash as we commute and go grocery shopping and buying coffee and lunch. We may transfer larger amount of money when we go holiday shopping. The advantage of this type of card is that it protects our cash, whereas cash carried in the pocket can be lost or stolen. A precharged card will gain popularity if shops give us a rebate for using this card as they get cash instantly just as with a debt card. The banks will also have the advantage that they keep our money between the time we place it in the card and we use it at a shop.

[ctla567]

Dave Ramssey should have lectured Pres. Reagan and Bush on money matters.

[cattiej]

Cut up all but one of your credit cards. We have one and two gasoline credit cards,with small balances (under $500). We are paying off one of the gas cards this month and the other next month. It''s our Christmas present to ourselves. Don''t buy anything with your card you can''t pay for totally when you get your statement. Some of the credit card companies will lower your limit, some will cancel your card..so what...there are plenty of others who will be there. They are like mice, where you see one, there are probably 500 more. The credit card companies gave credit to people who could not afford it. You took credit when you couldn''t afford it..who''s to blame! not me, I don''t want to have to pay more because you didn''t pay your bills. Times are only going to get worse..Don''t buy your family all that Christmas stuff. Buy one present for each person...that''s it..after all the reason we celebrate Christmas is Christ''s birthday anyway...Black Friday is coming, I suggest many of you stay home, we are.

[edward1975-2009]

Americans have forgot what it was to save for something, they want it now, and this has led to people living well beyond their means. If the government truly wish to help, they would abolish credit cards all together. I know people who make well over 80K and are so far in plastic debt, that they have no savings , can''t or have a hard time making ends meet, and can''t figure out why. It is sad.

[decotoguy]

what has happened? is this another 9/11? what is this financial meltdown? did the NSA,CIA or FBI could not see this coming?I assume my father was right,when he told me"the american''s have mush for brains".
"Fuzzy Math",comes home to rouse.Thank you Bush and the American''s that vote for him.

[andor3]

all you have to do to see credit cards are a scam is compare the interest rate the card companies charge uisers to what they pay--the prime rate. Then look at the fees--where they charge for the same thing twice and have bought regulators who allow them to get away with it.

[perk235]

Charles Dickens quote from his David Copperfield book:

"Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness.

Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

[tmittelstaed]

Cash only is great for those people who lack self-discipline. But, to say just abandon them for everyone is stupid. Carrying a lot of cash or storing it at home is riskier than plastic. You might have a fire and lose it, you might get mugged and lose it. And it is easy to log in online to the bank and see exactly what you spent money on over the last month. We both have credit cards and I can count the number of times we carried a balance on any of them during the last 8 years on the fingers of one hand, every other time they were paid in full during the grace period.
Fundamentally what it boils down to is making sure the money coming in is greater than or equal to the money going out. It is not 100% spending like is being implied in the article. It''s income, too, and people should not shy away from looking for a better-paying job if they find themselves having money problems.

[clancy49]

Here we go again. It''s all your fault bad consumer. You couldn''t buy gas and groceries because the prices are so inflated you put them on credit cards.
It''s you the consumer with your greed to survive and give food and shelter to the kids or even survive yourself.
Let''s not blame the bailout that offers 2.4% interest to Financial Corporations that turn around and charge the consumer 29.99% interest. This two hundredths of a percent below usury.
Let''s not blame the Coporations that get tax breaks to send our jobs overseas for cheaper labor and even higher prices in America. It''s not for us to blame them that they want 2,000% profit instead of 50% profit with American made product. Did anyone notice the foreign made cheaper labor products haven''t brought down prices, but it is the only products we have to buy?
New President? There is no CHANGE! Whether it is the Republican Corporate Tax Cuts or the Democratic Corporate Welfare, we the American get squeezed. We the American are told to tighten up and cut back to live. Democratic Corporate Welfare replaces Republican Corporate Tax Breaks. What is the difference. We Americans get told to hold and bear it and tighten up. We are told to stop our spending while our government spends our money like crazy.

[rlenham-2009]

Credit cards are a trap for the undisciplined but a boon and a convenience to those who pay their balances off each month and therefore accrue no interest charges. Beware using them when traveling to get cash advances or local currency. The interest charges for these types of transactions are exhorbitant.

It is not credit cards themselves that are bad. What makes them bad is how the consumer uses them.

"Cash The New Credit"

DUH! About time.

I was raised in a home where if you didn''t have the money, well, you couldn''t afford it and didn''t get it, with two exceptions, the home and perhaps (notice I said perhaps)the car.

I''ve started 5 businesses over the years with my own cash, my home is paid for as well as my vehicles. I keep 2 low limit credit cards for things like car rental, hotels, those types of business things. My business has a small line of credit so I can advance for inventory if required. Otherwise, it''s a cash world, has been, will remain so.

There is no problem with credit per se, it''s how it''s used.

Using cash I think makes you stop and think for a moment about how and what you will purchase. That instant "I have to have that" goes away.

As individuals and a country, we''ve loaned ourselves into a debt morass.

[formrusmcsgt]

I haven''t used credit for 10 years, aside from vehicle purchases.

Best move I ever made.

[formrusmcsgt]

amen corey amen libs will never get it tho

Posted by jamesm12341 at 08:36 AM : Nov 11, 2008

With the Repubs failing to "get it" so badly this go around, I don''t think you''re in any position to lecture about who "gets it" and who doesn''t....

[gop_will_win]

Unlike liberals, conservatives like myself have certificates of deposit at Bank of America, not credit cards in default. Pay your bills liberals!

[gop_will_win]

I haven''''t used credit for 10 years, aside from vehicle purchases.

Best move I ever made.


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Posted by formrusmcsgt
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I use my one credit card all the time. I use it for gas purchases, when I go to the department store, my internet payment and my cell phone. I dont like to walk around with a lot of cash. I pay the bill off entirely every month and have never paid interest in over 20 years. Credit cards are a good thing if used wisely unlike liberals who see it as a free lunch.

[gop_will_win]

didnt Bush come to your door and make you run up credit cards like he did everyone else?


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Posted by jamesm12341
=======================
No thats just some myth perpetuated by liberals in an effort to not having to own up to their mistakes James.

[presjfk]

didnt Bush come to your door and make you run up credit cards like he did everyone else?


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Posted by jamesm12341
=======================
No thats just some myth perpetuated by liberals in an effort to not having to own up to their mistakes James.Posted by gop_will_Win"

Bush did ruin the economy, caused incomes to drop, unemployment and more which has forced people to use credit cards. Bush also oversaw a change in law making bankruptcy hard for most Americans to get out from under their debt. Funny how the banks got a bailout when they got in trouble but individuals in trouble must pull themselves up by their bootstraps. -and corporations have an easy time going bk unlike individuals.

[worstever2]

This has nothing to do with liberals, conservatives, dems or reps .......... it is simply good ole American GREED and adult IMMATURITY.

Its pretty *** simple. Live below your means. Don''t have children that you cannot support and feed. Don''t take government handouts. If your income is not sufficient, get a second job or cut down on expenditures.

Hell its not rocket science.

[gop_will_win]

ahhh, is that why they rely on government to live?


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Posted by jamesm12341
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Ofcourse James, liberals are weak and have no self discipline. Thats what makes them liberals I suppose.

[gop_will_win]

Bush did ruin the economy, caused incomes to drop, unemployment and more which has forced people to use credit cards. Bush also oversaw a change in law making bankruptcy hard for most Americans to get out from under their debt. Funny how the banks got a bailout when they got in trouble but individuals in trouble must pull themselves up by their bootstraps. -and corporations have an easy time going bk unlike individuals.




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Posted by presjfk
======================
It was Reid and Pelosi who bailout the banks, blame them.

[gop_will_win]

This has nothing to do with liberals, conservatives, dems or reps .......... it is simply good ole American GREED and adult IMMATURITY.

Its pretty *** simple. Live below your means. Don''''t have children that you cannot support and feed. Don''''t take government handouts. If your income is not sufficient, get a second job or cut down on expenditures.

Hell its not rocket science.


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Posted by worstever2
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I would not say not to have children, that would just perpetuate more abortions. I would say if you dont have enough money in the bank to support a child, refrain from having ***.

[presjfk]

Posted by formrusmcsgt
==========================
I use my one credit card all the time. I use it for gas purchases, when I go to the department store, my internet payment and my cell phone. I dont like to walk around with a lot of cash. I pay the bill off entirely every month and have never paid interest in over 20 years. Credit cards are a good thing if used wisely unlike liberals who see it as a free lunch.
Posted by gop_will_Win

Nobody see''s credit cards as a free lunch. While I agree that card holders have a responsibility to use credit cards responsibly - so to the banks. How responsible have the banks been in issuing cards, the imposing of fees and other changes in the cardholder agreements over the years? I would say the banks have been terribly irresponsible. The result of this irresponsibility will be as with the mortgage mess. Consumers won''t be able to pay (a fact the banks knew existed when they issued the cards), banks will fail and bailouts for these banks will ensue, and the consumers will get nothing and taxpayers will foot the bill. The GOPwillwin and America loses.

[easeup-2009]

there it is in a nutshell folks....since the banks are not responsible, you dont have to be either. go out there and charge , charge , charge!! Blame it on Bush!!!

Posted by jamesm12341 at 09:29 AM : Nov 11, 2008

It''s much easier to blame Bush than to look in the mirror.

[easeup-2009]

exactly!! charge!! charge!! charge!! its not your fault!!! Blame it on Bush!!! Be a true lib!!! dont take responsibility for yourself!!!

Posted by jamesm12341 at 09:36 AM : Nov 11, 2008

Bush did pass the "Big Screen TV Act of 2004," which required every homeowner to buy a 50" or larger hi def TV, regardless of whether or not they can afford it.

CHIMPEACHMENT!!!!

[newo2000]

$70,000 of credit card debt IS alot, but MANY people have that much... I see it every day in my law office.

[pirmin3]

People burdened with credit card debt have only themselves to blame. I have no pity for these idiots. Ever hear of taking responsibility for your actions???

[jenughfer]

Just because the bank says you can borrow 500,000 doesn''t mean you should. Just because the credit card limit says 10,000 doesn''t mean you should max it. While I agree that the government and banks aren''t helping it''s YOUR choice to buy a house you can''t afford. And it''s YOUR choice to buy every electronic gadget known to man. I''m not a fan of Bush either, but he didn''t MAKE you buy anything (except the HDTV) :)

[presjfk]

there it is in a nutshell folks....since the banks are not responsible, you dont have to be either. go out there and charge , charge , charge!! Blame it on Bush!!!
Posted by jamesm12341

I don''t know how you took this from my comments, jamesm12341. But I assume you believe only the cardholders are to blame, George Bush and the banks are blameless in all matters despite his policies ravaging our economy while making corporate America and the rich even richer - if for only a time before GOP-Bush policies blew up in all our faces.

[easeup-2009]

isnt it amazing that libs dont blame mccain for anything anymore

Posted by jamesm12341 at 10:00 AM : Nov 11, 2008

I''ve always wondered how Republicans can be both ''rich greedy CEO''s'' and ''dumb rednecks.''

[jbeckett5]

Credit is a power tool. Power tools cut. Properly used by adults, they are a great help. Used by children, they cut people.

[chotchkies-2009]

People with high credit card debt only have themselves to blame. Even though she is using the cash system, why is she still buying more clothes when she is sitting under $20,000+ of high interest consumer debt?

The entitlement mentality in America is going to be its undoing.

[bobnjersey]

[isnt it amazing that libs dont blame mccain for anything anymore]
[Posted by jamesm12341 at 10:00 AM : Nov 11, 2008]

isn''t it amazing that james is so blinded by his authoritarian follower condition that he sees all the problems in the world sourcing from a political affiliation ... and all the solutions in the world sourcing from the opposing political affiliation. it''s that clean cut for james ... all good comes from this group ... all bad comes from this other group ... no exceptions.

you''d think that even a reasonably intelligent human could go out and discover the truth for themselves ... even recognize it when it''s presented to them by someone else.

history would be a good start ... but not for james ... he''ll have none of that ... what would all those who have gone before for thousands of years know about life ... or anything else for that matter.

[easeup-2009]

isn''''t it amazing that james is so blinded by his authoritarian follower condition that he sees all the problems in the world sourcing from a political affiliation ... and all the solutions in the world sourcing from the opposing political affiliation. it''''s that clean cut for james ... all good comes from this group ... all bad comes from this other group ... no exceptions.

you''''d think that even a reasonably intelligent human could go out and discover the truth for themselves ... even recognize it when it''''s presented to them by someone else.

history would be a good start ... but not for james ... he''''ll have none of that ... what would all those who have gone before for thousands of years know about life ... or anything else for that matter.

Posted by bobnjersey at 10:24 AM : Nov 11, 2008

Isn''t it amazing how people who angrily politicized EVERYTHING for 8 years are suddenly above it now that their guy won?

[bobnjersey]

[Isn''''''''t it amazing how people who angrily politicized EVERYTHING for 8 years are suddenly above it now that their guy won?
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Posted by easeup at 10:43 AM : Nov 11, 2008

yea, amazing isnt it]
[Posted by jamesm12341 at 11:13 AM : Nov 11, 2008]

so james ... do you suppose the ''angrily politicizing thing for eight years'' is only something that left thinkers suffer from ... or do you suppose it cuts across all lines?

[themroaches]

Ummm; anyone else think Ms. Mary Ellen McGuire is a pathetic idiot?

[daniel_yang]

I''d like to learn english from a American native(both guy and girl will do ), I can teach you chinese as in return. please leave YM or Skype account here or or send to my maibox:[e-mail]. :)