There comes a time in most people’s lives when they grow sick and tired of carrying credit card debt. It usually happens when they have maxed out most of their credit cards—it’s the end of the road.
At this point, they usually ask how they got here. The answer is quite simple: we learn to spend before we learn to budget.
My credit card journey. I didn’t grow up with much money. When I joined the Marines in 1999, I felt great about having a little cash flow to my name.
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I spent lots of money on excessive drinking and video games but carried no debt. In fact, I had about $30,000 in savings when I married in 2006.
The problem is that the world tells you to “play house” at an early age. As soon as we marry, we believe we need everything all at once.
My wife and I aren’t crazy spenders, but in 2019, we had $77,000 in consumer debt, with roughly $50,000 of that as credit cards.
After years of reflection, we concluded that the house we bought in 2008 was too expensive. That’s forced our spending to flow into our credit cards.
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I remember when I became sick and tired of having debt. My balance was $23,000 on a $25,000 credit card. My car was in the shop and I needed to pay $2,000.
My friend took me to the auto shop, and he watched as I swiped my credit card. I honestly didn’t know what was going to happen.
The transaction cleared by like $5, and I swore this was the last time I put myself in a situation like this. That was January 2019.
A new lease on life. Going into January 2024, my wife and I have over $300,000 in savings and investments, plus a deep understanding of cash flow.
Take Control of Your Financial Destiny
How did we get past debt and into investing? In a word, determination. You have to want to change your life and your lifestyle.
The most crucial part of becoming wealthy is controlling your spending. The world convinces us that we must spend at every turn of events.
However, if we can control our spending, we can see the world in all of its beauty. Getting out of debt is akin to converting from a black-and-white CRT television to a color OLED flatscreen.
What’s your motivation? What is your motivation to stop spending and getting out of debt? Your goals must be stronger than your urges, or you will get nowhere.
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How much do your friends spend? Do they talk more about saving or shopping? Your friends will play a significant role in your failure or success; therefore, you may have to find new ones.
Throughout this series, I will discuss four ways to control your spending: cutting up your credit cards, using the envelope system, creating a hardcore budget, and using a daily budget.
Let’s start by cutting up your credit cards. Is cutting up your credit cards a good idea? Most people will point to the concept of using them during an emergency.
I can get behind this idea; however, how much do you need in an emergency? What constitutes an emergency?
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Remember, cutting up your credit cards doesn’t mean closing the accounts. So, if you need access to credit in a pinch, a new card is two days away.
Why is it essential to cut up our credit cards and remove them from online databases like Amazon? This is our first step to discovering our urges.
Removing my credit card information from Amazon. I used to be a hardcore Amazon user. I bought the latest games and Blurays on their release dates.
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Once I got serious about changing my spending habits, I removed all my information from Amazon. Whenever I wanted to purchase something, I had to input the data.
This charade lasted one to two years as I learned to control myself. Much of our debt comes from emotional spending, and you’ll realize this when you can’t access your credit cards.
I also kept a credit card with a small limit ($2,000) in my wallet. I left all the other cards in a tin at home. My cards are still in that tin to this day.
If you don’t want to shred your cards, you can leave them at your parent’s house. If your spouse isn’t a spender or enabler, you can give them the cards.
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The idea is to create a physical barrier between you and your spending. Eventually, you will create a mental barrier that will last a lifetime; however, it takes time.
From credit to debit card. The goal of moving away from credit cards is to move to a cash system via debit cards.
If you don’t have money on your debit card, you don’t purchase anything. Pretty simple, at least in theory.
We have years of bad habits to overcome, so don’t beat yourself up too much. You can become great with money and only use cash for everything.
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I have all my credit and debit cards on Amazon, Google Pay, Samsung Pay, etc. I literally have no urge to spend recklessly.
My most intense urge is to go to Subway and get a veggie sandwich occasionally. I buy a new video game once a month, but it’s in my budget.
Life is better without emotional spending. Do you want to feel in control of your life? Once you get past emotional spending, you’ll have total control of your situation.
You may discover that you don’t need that stressful $100,000 job. A non-managerial job that pays $60,000 may suit you much better.
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Having a budget is tough when you can’t control your spending. It seems that you require much more money than the reality.
My wife and I earned $250,000/year combined before we retired. In retirement, we make $100,000/year and feel like we have much more money than ever.
Conclusion. My wife and I have our budgets, and we stick to them. If we have an urge, it is small. We can spend $200 on a family dinner and not worry about it.
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It took us four years to get to this point. The path was difficult because the world doesn’t want you to be financially free.
Remember, spending recklessly on your credit card makes banks, credit companies, and corporations richer.
We want to make ourselves wealthy before anyone else. I promise that once you curb your spending, true wealth will come to you.
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You’ll learn about dividends and even get a Dividend Debit Card. I have $300 a month directly from my investments to my Cash App card.
This is money that is not in my budget—guilt-free money. It feels good to take my family out and not go home to check my credit card balance that night.
I have been in crushing debt and now live a Happy Cash Flow Retirement. Which do I prefer and why?
If you decide to remove credit cards from your life, do it quickly. Every day, more compound interest accumulates against you. You want it to grow on your side. Good Luck!
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