Put away those credit cards

As I watched the House of Representatives pass the $850 billion Bail Out Bill today, I was sad, angry and, at the same time, felt renewed in my efforts to help people live within their means. What we need right now is not more credit, but less credit. We have become a nation that no longer saves for the things we need, but wants instant gratification. It is that instant gratification that has gotten us into this mess in the first place.

While I agree that lenders are at fault for extending all this credit to the American people, it is our fault for accepting it. Instead of opening a Christmas club account and putting money away each week to pay for the holidays, we charge it and spend the next 12 months (if we are lucky) paying it off so we can do it all again. Instead of saving up for that TV or video game system we want, we charge it. Instead of cutting back and saving a  bit, we buy everything we want, save nothing and make ourselves slaves to the credit card companies, mortgage companies and banks.

This needs to stop today. We will never get ahead if we spend out lives digging outselves deeper and deeper into debt. I urge you all to put away your credit cards and focus on digging yourself out of the whole. Pledge to live within your means and stop charging. If you did the budgeting exercise I discussed last month, try to cut your discressionary spending by 10%. Take half of that money and put it into savings. Use the other half to pay down your debt. Start with the debt with the lowest balance, so you’ll see the most reward. By saving half the money, you are starting to build up a fund so that if a major expense comes down the road (home repairs, unexpected car repairs, etc), you’ll be able to turn to your savings instead of your  credit cards.

If you are having trouble controlling your spending because of your debit card, stop using it. If your budget for eating out and entertainment is $100 per month, put the money in an envelope and carry it in your wallet. When the money is gone, you’re done for the month. Paying cash for things makes you think about your purchases more. Do the same thing for gasoline, groceries and other discressionary expenses. Create one envelope for each category you have. You’ll be amazed how much you have left at the end of the month. Have a plan for the money you have left.  Maybe you put a third into savings, a third to pay down debt and a third you save for something nice for yourself. That will give you incentive to live below your means.

Put those credit cards aways, create a budget and lets all get saving.

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