Credit Wise
(featured column)
Life
after Plastic Surgery: How to Quickly Recover After You Have Your Credit Cards
Removed
by Jennifer
Wallis
For some people,
credit cards seem to be an extension of their hand. I once worked at a retail
store and had a customer that obviously had an issue with overspending. She
swiped her credit card so often that her magnetic strip was worn out. Finally,
her husband took away her credit cards to curb her spending. She was not going
to let that stop her so the next time she came shopping she just had her account
number written down on a piece of paper. Thankfully, it was against company
policy to let someone charge without a physical credit card so we had to turn
her away. More...
Sometimes, when temptation is just too
great, the only way to stop spending is to have plastic surgery. Cut up the
cards and live on cash. It may seem drastic but sometimes, it is necessary to
regain control of your impulses. In and of itself, credit isn’t a bad thing.
In fact, it can be very helpful when it comes to making a major purchase, such
as a home or car. However, if you just can’t stop yourself from charging,
getting rid of the credit cards can be a huge help.
When some people talk about living on a
cash-only basis, they mean straight cash-no checks or debit cards. Unless you
have a problem with writing hot checks, too, I believe that checks and debit
cards are fine to use. Without a bank account, you will have to pay to cash
checks, carry a lot of cash, and use money orders for bill paying. I would never
want to live without being able to pay my bills online or by check. Therefore,
when I recommend living on a cash basis, I am not suggesting that you close your
bank account. I am talking about ditching the plastic for a while.
Here are the steps you need to move to a
credit-free life style and regain control of your spending:
- Make
a Pile-O-Plastic: Gather all of your credit
cards. Take them out of your wallet, out of your drawers and place them all
in one pile. You can either choose to actually cut them up or give them to a
trusted friend or family member to hold them. The important thing is that
you get rid of ALL of them. No, you can’t keep one for emergences. No, you
don’t need one to rent hotel rooms. If you are going to make the
commitment to stop charging, you have to do it completely. Go all the way
and give up every card.
- Explore
What’s Been Stored: If you frequently shop online and have your
credit card information stored on sites like PayPal and Amazon, change your
stored card to your debit card and delete the old credit card information.
That way, you won’t be able to continue charging on the cards you no
longer possess. Yes, I know all of the tricks. I have been a credit
counselor for a long time.
- Drop
the Department Stores: Some department stores will look up your
credit card information for you if you provide ID and they will let you
charge on your account without a physical card. Close those accounts so that
you are not tempted to shop.
- Preserving
Your Credit Rating for Future Use: If you are interested in
preserving your credit because you plan to use it again, there are some ways
to do that. First, you can cut up the cards but leave the accounts open.
They will only be closed if you call or write the credit card company to
request it. You can always request new cards later after you have regained
control of your credit. If you do close the accounts, be aware that it may
lower your credit score. If you don’t plan to buy a home or car soon, it
may be fine to do that.
- Develop
a Saving Plan: Since you will not be able to charge items “for
emergencies” you will need to have some money in savings. This way, you
don’t have to borrow to cover those emergency expenses. You can just
take it from your savings. You will need a good savings plan because you
will have unexpected expenses at some point. Prepare yourself ahead of time.
It is also a good idea to save for periodic expenses that come up throughout
the year. You may need to set some money aside for things that just come up
every once in a while such as tires, home repairs, car tags, and medical
bills.
- Develop
a Spending Plan: If you have been charging everyday items such a
groceries and gasoline, you may need to get a little more organized. It may
help you to figure out when you get paid and when your bills are due so you
can identify the times of the month when you have extra money. It may help
to move some due dates around by calling your creditors.
- Examine
Spending Trends: Some times of the year are more expensive than
others. Christmas, back to school, birthdays, and summer vacation may all be
especially tough on your budget. It is a good idea to sock away some extra
money to help you pay for these difficult times of the year.
- Major
Purchases Need Major Planning: Even though it would be great if
you could pay cash for a house, most of us will never have that luxury.
Sometimes, credit is necessary. If you know that you will need to
finance something, start developing a plan 6-12 months ahead of time. It may
be a good idea to start establishing a recent credit history if your credit
is completely inactive (you have been living debt-free). You can charge a
small account on one of your credit cards and pay it back over a several
month period of time. This could give your credit a boost by showing a
recent positive credit history.
Even though living without credit cards may
seem like you are working without a net, just tell yourself that you can do it.
Build up savings so that you will have a little cushion to help you when you
need it. It isn’t nearly as scary as it seems. If the credit Merry-Go-Round
has your head spinning, try getting off for a while. You may find that you
really enjoy the view.
* * *
Copyright
© 2007 by Jennifer Wallis. All rights reserved.
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