According to Bloomberg, that’s where we closed out the year 2018 as a nation – with a collective $870 billion in credit card debt! There are 480 million credit cards are now in circulation according to the same article.

That’s a lot. In fact, it’s a record!

Credit card debt actually decreased after the end of the recession a decade ago, but it’s crept back up and is now climbing at an alarming rate.

I don’t believe credit cards are evil. I use them. In fact, I actually make money using the rewards points and cash back bonuses that various credit cards offer. But there’s one big rule in the credit card game that you can’t ever, ever break… Don’t carry a balance! Ever.

If you pay a dime of interest, you’ve already lost the game.

While credit cards aren’t the problem, they do feed the problem, and the problem is the way that we see debt.

Debt has its place. It’s not all bad. Managed well, debt can be a tool to leverage for increased cash flow.

But most of us don’t use debt that way.

Instead, we use debt as a means of acquiring things we don’t really need and can’t yet afford to meet emotional needs we should be meeting in other, more sensible ways.

The saddest thing about all of that credit card debt we’re in as a nation is that we have so little to show for it. Most Americans have used revolving debt to consume things that don’t carry any long term value. Then we pay interest on that debt which ultimately raises the price we’re paying back for the things that we can’t even account for anymore.

If you put a new $600 flat screen on a credit card and then take six months to pay it off, you’ll wind up paying $750 for a television that, by the time you’ve paid for it, is worth only $300 because newer technology is now available.

The same is true for vacations, eating out, shoes, clothes, furniture, and all the other things we purchase to consume. Their value decreases rapidly while our debt increases just slowly enough to deceive us into thinking we have it under control.

One of the reasons credit card debt is such a problem for people is that we’ve learned to live with it. It’s just part of life. We look at our minimum payments right alongside the mortgage and utility bills as monthly, recurring expenses.

It’s definitely time for a mindset shift about credit cards. 

If (and this is a big IF) you can easily use credit cards to manage your monthly expenses, collect rewards, and easily pay the balance (doing so automatically is best) each month, then by all means, use them.

But if you pay interest – at all – then you must shift your mindset to start seeing credit card bills as a different kind of bill.

Your top priority, financially, must be to eliminate that balance and reduce it to zero. STOP using them until they’re completely paid off and then wait at least six months to even think about using one again.

If you can’t afford your monthly expenses without using a credit card, you’ll have to find ways to create another income stream, commit to living under a budget, and at least pay more each month on the balance than you’ve added to it.

You can use a better kind of loan, such as a HELOC, to consolidate the balances, but that’s a nuclear option since you’ll be tying up your home equity in debt for which the assets have already been consumed and have no value. You can also talk to a debt relief specialist, but remember, you may lower your credit scores with some options.

If you’re deep in credit card debt, you must realize that working overtime, consolidating debt, or even declaring bankruptcy will not actually solve your biggest issue – the way you think about consumption and debt.

The longer term solution is to rewire your mind, believe and think differently about debt, and begin to behave differently with credit.

Instead of believing you need items that may actually be luxuries, remind yourself, I CAN wait for this, and I’ll feel better when I do.

Remind yourself, everytime you swipe your card, you’re really applying for a micro-loan and agreeing to work for the lender.

Fight the cultural norm of instant gratification and choose the long term reward of financial peace and living an unstrapped life over the short term reward of an over-priced meal.

Above all, reject the lies that being in credit card debt is the way life has to be, that it’s just another bill, that the future is predictable and you’ll never let it get out of control.

Start today to get unstrapped! It’s going to be SO worth it!

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