Breaking The Credit Habit In Five Steps

Buying with plastic is easy;  paying off the debt created by credit card consumption isn’t. The average US household has $15,788 in credit card debt. Yet, the consumer economy around us eggs us on to satisfy our wants now, and minimizes the true cost of accumulating revolving debt.

Easy spending and a “pay for it tomorrow” attitude aren’t consistent with financial health.   Whether you tag it a bad habit, self indulgence, or simple thoughtlessness,  the casual use of credit can quickly land you in a situation where today’s income is paying for yesterday’s purchases.

Consider what buying something on a credit card really costs:  a $1000 computer, charged to your card carrying “only” an 18% rate, will cost you $1531 if you pay it off in 60 months.  So which is the smarter purchase:  get the same computer at $1000, or at $1531?

Yes, shunning credit cards makes impulse purchases that much more difficult.  ‘Nuff said.  If you want control of your finances, “going shopping” as a recreational or social activity has to stop.

Habits, good or bad, make our lives simpler.  Habits are the mindless reaction to a given stimulus.  With a habit in place, we don’t have to evaluate each situation;  the habit tells us what to do.

To break a habit, you have to reprogram how you think about the incoming stimulus.  What to do when the world around you says “buy, buy, buy”?  After all, we’re told by marketeers that we “deserve” whatever they’re selling.  So, let’s rethink the “charge it” habit.  I adapted  these ideas about breaking bad habits from Scott Young at

  • Commit to living without credit cards for 30 days. Even if a habit is ingrained, 30 days is a short enough period to seem doable and long enough to change your pre programming.
  • Use a trigger to reinforce the change. Write your current credit card balance on a piece of tape on each card, or the interest rate on that card.  If you reactively pull it out of your wallet for a latte (poor latte, the butt of everyone’s money stories), you must confront what you owe on the card before adding to that balance.
  • Replace lost needs. If shopping is recreation, find new activities or interests.  And, create a mechanism for affordable self indulgence.  The point of breaking the credit habit is to stop paying interest on your purchases, not necessarily to stop having some fun with your money.  Create a Frivolity Fund that you permit yourself to spend on whatever tickles your fancy, when you can pay cash for it.
  • Write it down Putting something in writing is reinforcing.  It moves the idea of getting off the credit card treadmill from thought to visible commitment.
  • Provide yourself feedback Revisit the reasons you are breaking the credit habit.  You’ll have no trouble recognizing the inconveniences of not using credit cards.  Track the positives such as the decrease in your card balances.  Put some part of what you spent last year on credit card interest in your Frivolity Fund or your IRA.  Create reinforcement for the new habit.

Today’s the first day of the rest of your financial life.  Break the credit habit before it breaks you.

Image courtesy of roogi.

Category: Life After Debt


  1. Being broke is expensive. Every time you pay for something on credit you end up paying more. Every time you do not pay on time you end up paying late fees. It is kind of ironic that people with less always end up paying more.

Leave a Reply

Your email address will not be published. Required fields are marked *

Article by: Cathy Moran

Cathy is a lawyer in Northern California, where she's run her own small firm for over 30 years. A certified consumer bankruptcy specialist, Cathy pioneered the use of the Internet as a means of educating people about their debt relief options. Her clients have educated her about money.