Debit Cards, Credit cards, gift cards, point cards the list goes on and on. We are a society of plastic cards and it is plunging us deeper and deeper into debt every year. Sure they are convenient and fit nicely in your wallet but that convenience comes at a price.

Here are what I believe to be the 3 best reasons to cut up the plastic and start paying with cash again.

1. Discounts

Retailers are charged fees by various financial institutions for the ability to accept credit and debit cards. Sometimes it is a fee per transaction and other times it is a set monthly fee. You can bet that they are going to find a way to pass those fees on to you. Weather it’s a simple price increase or a 25 cent fee added at the time you swipe your card, they will charge you for the privilege of using your plastic.

Besides the fees retailers are charged there is the time it takes to collect, store, reconcile and process all those little transaction slips. Cash all but eliminates that.

You can save a lot of money by just offer to pay for the item in cash. The key to this is to offer 10% less (at least) than the retail price and pull out the cash right on the spot. You can almost always use the power cash to negotiate a better price.

2. Easier to stick to a budget

When you are on a tight budget managing your spending using debit cards may seem like a good idea but you are actually more likely to overspend and blow the budget.

There is something about handing over the cash that stings a little; it no longer becomes just a number on your monthly statement. You can physically see that you have less and that alone can be enough to spend it a little more wisely, even make you question if you really “need” that item that you can’t live without.

3. Security

Credit card numbers are stolen thousands of times everyday, and if your card numbers are stolen the thieves will withdrawal cash or make unauthorized purchases right up to the limit. Many times you are covered and not required to pay back the stolen money but you do have to have your cards replaced and many times there are forms that need to be filled out in order to prove that you are innocent.

This also happens to debit cards, and a simple everyday transaction can result in your bank account being wiped out.

As long as you aren’t carrying around a briefcase full of money, cash is a much safer and cheaper way to pay for those everyday purchases.

I wish I was making this up but this is a step by step guide on how I got into a ton of debt over the years. My goal here is to help you avoid some of the mistakes that I made and hopefully set you up for a better financial future.

Step 1

Get a student loan and ask for more than you need.

Post secondary education is a very valuable asset and a worthy pursuit; unfortunately this can come with a very large price tag. I wasn’t fortunate enough to qualify for a scholarship and had to foot the bill on my own. Lucky I managed to avoid taking out a student loan and went to a local college where I could afford the tuition (barely). Many of my friends are still paying off their student loans today.

Student loans can burden you for many years after you graduate and if your chosen career doesn’t work out it could take you a very long time to pay the loans back. If you can find a similar program at a local college or university seriously consider attending and save some big money and stress. (if you have kids set up a college fund for them now and ease the burden later)

Step 2

Get a credit card and use it for everyday purchases.

I used to buy groceries, gas and convenience store items on my credit cards with the intention of paying them back right away. While I did manage to collect some big rewards I managed to accumulate a small balance each month that seemed to grow bigger every week until I could only afford the minimum payments.

Many people will tell you to never get a credit card, and for many people that have poor spending and budgeting habits such as I did when I was younger that is sound advice. If you are not an impulsive buyer or use it for everyday purchases though a credit card may in fact be beneficial in helping you build a good credit score. A good credit score is essential if you want to buy a home in the future and not get a terrible interest rate. That is if you are planning on getting a mortgage.

Step 3

Leasing a new car

My first car I ever owned was leased, it looked great and I loved it. After about a year or so the novelty wore off and I was stuck with a 1 year old car that was worth much less than I owed on it. 4 years after that and I decided to buy it out (with borrowed money of course), for about $1000 more than it was worth and then had to pay to have it certified. It took me 8 years to pay for this new car, not to mention the thousands of dollars I paid in interest. Avoid leases and payment plans, if you need a car buy used and save up for a new car.

Step 4

Buy a house with a 25 year mortgage

Did you know that you can buy a home with $0 down? I did and I almost lost it. After a few months I was in over my head.

As a rule you should aim for no more than a 15 year mortgage and put down at least 25% of the purchase price as a down payment. You can get away with 20% in some cases, other than that you should rent and save until you have enough. When it comes to payments if your mortgage payments are more than 40% of your gross monthly income, you can not afford it. (I would go even lower and limit it to 35%

Step 5

Don’t pay a cent for a year - Furnish your new home on store credit

Those deals seem great at the time and you have every intention of paying off the furniture (couches, TVs, kitchen appliances) before the year is over but sometimes life gets in the way and at the end of it you don’t have enough to pay it all off. Then they get you for the whole amount plus interest (28 % for the whole year. ouch).

That happened to me on my first LCD TV I purchased $1400 turned into $1820 after interest and fees. Save up for these big purchases and pay for them in cash. You would be amazed at the deals you can get just by pulling out a wad of cash and making an offer to pay for the item on the spot.

That is basically how you can a mass a huge amount of debt in a relatively short amount of time. I realize I left out the wedding and the kids but those came after I got my financial act together.

The scary thing is that this is the route that millions of people are taking these days and they are in for a major shock when the debt gets so large that the “consumers” will get “consumed” by the payments until they lose it all or make some major lifestyle changes.

As the current economy has placed many Americans into dire financial circumstances, here are some tips that can help you avoid bankruptcy
and stay in a stable financial position in your personal finances:

1. Create a budget - It is very important to know how much money you have coming in every month as well as how much money is going out every month. You can use Microsoft Excel, Quicken, Quick Books or any number of other programs to help you organize your monthly expenses.

2. Organize Your Debts - Whether you are suffering from massive credit card debt, or you are overwhelmed by heavy medical bills, it’s important to remember that you are aware of what your debts are in total. This may seem scary when you see the number, but it will help you know whether or not you need the help of a debt settlement company.

3. Put Away the Plastic - Many Americans have tens of thousands of dollars in credit card debt. If you have a serious credit debt problem, you should put the credit cards away and use cash as often as you can. Eliminating department store credit cards as well as traditional credit cards can help you free yourself from massive debt at the high interest rates that go with it.

4. Invest in Yourself - It may seem difficult, but you have to learn to put money aside for a rainy day (especially since these days, it rains every day). Common wisdom suggests putting aside 10% a month, but if you can’t afford that, put a dollar amount aside. Whether it’s $50 or $5, you need to have something put aside for those months when work is slow or when an unexpected expense occurs.

5. If All Else Fails, Get Professional Help - If your finances are in serious disarray, you may need two types of assistance - personal finance help or debt settlement help. If you aren’t in too much debt, you may be able to just get some help finding ways to cut back. However, if you’re tens of thousands in debt, then you probably need the assistance of some type of debt settlement company who can help you settle your debts for less than you owe.

Most people are afraid to face down their debt because they don’t want to know exactly how bad the situation. However, debt is much like a boogie man, much scarier in your mind than in real life. Organizing your personal finances and getting debt settlement assistance if you need it can help you get debt free
and have long lasting financial certainty in your life.

About The Author

J Chase is a debt settlement professional. He is affiliated with a national debt settlement company which has helped 1000’s of people eliminate their debt effectively. He has extensive knowledge of the internal and national debt settlement programs. For more information visit http://debtsettlerz.com

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