Instead of using our credit cards as a crutch during the economic downturn, my husband and I cut them up. Our plastic dependency was preventing us from making real progress with our financial goals.
According to a recent article by Forbes, Americas are still dependent on their credit cards, but not as dependent as they were four years ago.
The article cited a Consumer Credit Report by the Federal Reserve that indicated revolving credit decreased by $4.82 billion in July. Revolving credit is down by 6.8 percent for the year.
I know finally breaking free from the credit card debt trap helped us build up our net worth. We have a different attitude about money.
We feel more financially secure
We used to pull out our credit cards for emergencies, but that always left us with even more worries. Once we paid off our credit card debt, we had more money to funnel into savings. Now when our car breaks down, we don't go into a panic. We are more prepared financially for anything life throws us.
We feel more confident with less
Even though I received a pay cut during the Great Recession, we cut back on our spending instead of charging things we didn't need. Living within our means with less money coming in gave us even greater confidence in our ability to budget. My husband and I felt like we had the control instead of our debt controlling us.
We feel more generous
When we had credit card debt, we had a difficult time justifying anniversary gifts and trips. It seemed weird to charge donations we wanted to give to charities. Since we got out of debt, we began feeling more generous. Since we have the money to spend, we don't guilty anymore about our buying gifts. I think we both feel more gratitude for what we have.
We feel wiser
I know a lot of smart people who have a lot of credit card debt. Getting out of debt didn't boost my IQ, but it did make me feel wiser. I am no longer paying the credit card company hundreds of dollars in interest. I am able to focus on longer-term goals such as saving for retirement. We are wise enough to know that social security won't be enough to cover our expenses during retirement. Since we cut up our credit cards before the recession, we have watched our retirement savings substantially grow.
Most people I know have tried to decrease their credit card and other consumer debt during the economic downturn because they can't afford to waste money on interest charges. Even when the economy bounces back in another 10 years or so, I don't plan to go back to using credit cards. My financial life seems a lot more real without the plastic. And I'm good with that.
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More from this contributor:
- credit cards
- credit card debt
- revolving credit