There are lots of reasons to not carry credit card debt. The most obvious is that it's really expensive. Here's another reason that is often overlooked: It's so much harder to work for money you've already spent.
But what if you do not carry any credit card debt at all? There are some who would say it is perfectly reasonable to use credit to pay for everything you possibly can during the month, provided you are able to pay it back down to $0 during the grace period. But it's still a habit that can have a negative effect on your financial situation.
You need to kick your credit card habit for these simple reasons:
YOUR CREDIT SCORE. The more you use your cards, the more likely you are to make a mistake. All of those activities — good and bad — are reported to the credit bureaus and land in your credit file. That information is then compiled into a three-digit number that can change daily — and be used to determine how much interest you will pay on your mortgage, what your insurance premiums will be, and even if you'll get that job you've applied for. Credit scores — like it or not — have become a kind of character reference. Kick the credit card habit and your credit score is likely to improve all on its own. To get a rough idea of your FICO credit score, you can use the FICO Score Estimator at myFICO.com. The calculator is free. Or you can purchase your credit score at the same site. On the FICO score range, anything over 720 is good. Higher than 760 is great.
YOUR HAPPINESS. Nearly half of those people who carry credit card debt experience symptoms of depression. No surprises there. The effects of credit card debt can be debilitating, if not devastating. But the good news is that kicking the habit allows you to retrace your steps and work your way out of debt. It's not impossible. In fact, thousands of people reading this right now have done that using the system that I created and welcome you to use at DebtProofLiving.com. Thousands of people have used my Rapid Debt-Repayment Plan Calculator and Manager and can attest to the fact that each repaid debt returned options to them. And once they were out of debt, their peace of mind returned as well.
YOUR CASH. There are a number of studies that show that people who pay with plastic just spend more — whether it's a soda machine with a credit card slot or a great sale at Target. If you're paying with plastic, you just feel freer at the moment to load up the tab. But if you kick the credit card habit and leave the plastic at home, you will spend less. That means more cash in your pocket.
YOUR SHELTER. It's become the popular thing to tap into one's home equity by way of a home equity loan or refinance to pay off credit card debt. But by doing this, the homeowner puts his or her home at risk should something happen that makes it impossible to keep up with those new, big monthly payments. Even worse, most people who pay off their credit cards turn around and run them back to the max within just two years, getting themselves into double trouble. Kick the credit card habit and you won't be tempted to tap into this appreciating asset to pay for stuff you charged a long time ago ... and possibly don't even remember now.
Mary Hunt is the founder of www.DebtProofLiving.com, a personal finance member website. You can email her at [email protected], or write to Everyday Cheapskate, P.O. Box 2099, Cypress, CA 90630. To find out more about Mary Hunt and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.