You’ll know you’re addicted to your credit card when the convenience of swiping that magic piece of plastic spirals out of control.
You think you can stop anytime, yet you somehow say, “I have to use it this time; I’ll stop after this”.
As with any addiction, it can have devastating effects because of the financial implications of spending too much, as well as the subsequent money woes that can ruin marriages and careers.
Although credit cards are easy to use, they are not always the best way to pay for your purchases.
Recognising the symptoms
An addiction doesn’t become an addiction overnight. It likely begins as a convenient reason to do something, before going on to become a convenient excuse. Then, it becomes a habit before becoming a must-do compulsion.
Here are some common phrases you’ll find yourself using
• ‘Swipe first, later check my budget.’
• ‘Aiyah who cares, let’s just buy it already.’
• ‘I have to get that new credit card. Have you seen the promo on that?
• ‘Haven’t you heard about cashless? Nobody uses cash anymore.’
• ‘But there is a 20% discount! It’ll never be this cheap again.’
• ‘It got rejected? Wait, try this one.’
• ‘Not going to meet the monthly repayment this month, maybe next time.’
• ‘I love my credit card, I can just use it anywhere these days.’
• ‘Maybe I overspend a little for now.’
• ‘Why save money for later, I’m alive today right?’
Causes of credit card addiction
You might have recognised yourself in the signs mentioned above, but are you actually aware of WHY you cannot resist spending with your credit card?
According to a recent MIT study, it might not be entirely your fault. During a social experiment, people were asked to place bids on NBA tickets while using either cash or their credit card.
Those who used credit cards were found bidding twice as high as those who bid with cash.
There seems to be something about credit cards that makes it easier for us to spend money.
This might make sense if you think about it. A credit card is essentially an abstract form of payment; it allows you to postpone paying for something that you want to buy right now.
You avoid the “pain” of losing money but you still get the good feeling associated with the purchase. This is why credit cards are so dangerous, they make you think you are richer than you actually are.
Breaking the addiction
If you have diagnosed yourself as a hopeless credit card addict, congratulate yourself. Awareness is the first step! Most don’t even realise they overspend, much less do anything about it. Now that you know what’s going on, it’s time to proactively improve your situation.
1. Assess your financial situation
The first thing you need to do is get a clear picture of your financial situation. Become aware of all your outstanding debt and monthly credit card spending. A good way to do this is by creating a personal income statement.
2. Stop using your credit cards
Stop using your credit cards completely, at least for now. By paying for everything in cash, you will be confronted with the cost of the purchases you make and automatically start spending less.
Once you have a little more control over your finances, you can then selectively start using credit cards again.
3. Take control of your debt
Depending on how much debt you have, you might want to take a debt consolidation loan or get a balance transfer card. There are a lot of offers out there that can help you restructure your debt and better your situation.
4. Establish an emergency fund
Even if you have insured yourself against everything, you might still be faced with financial challenges once in a while. By creating an emergency fund, you make sure that, whatever happens, you always have something to fall back on.
5. Create shopping lists every time you go out shopping
By committing to a pre-determined list of goods you want to buy, you will less likely be swayed by promotions and less likely buy things you don’t actually need.
6. Leave your wallet at home
If you don’t plan on actually buying anything, why not leave your wallet at home? Much like the previous suggestion, it is sometimes wiser to just deny yourself the possibility of impulse purchases.
7. Face your demons
Compulsive spending may be covering up a bigger issue in your life. Get professional medical help to resolve these issues. Or, talk it out with a trusted friend. Remember that life’s downs are there so you can feel amazing when you climb back up.
Your life ahead is brimming with potential and there are exciting things waiting for you to discover just around the corner.
Credit cards are not fundamentally evil. In fact, they do bring some advantages.
It is our control over our choices that we need a firm hold on. As the old adage goes, “Everything in moderation.”
This article appeared in https://mypf.my
Follow MyPF to simplify and grow your personal finances.