The standard of living for Americans is among the highest in the world. Of course, it can be a little misleading when you consider how much personal debt Americans incur trying to maintain that standard of living. One of the great advantages Americans have when it comes to buying the things they want and need is easy access to credit cards. There are almost 2,000,000,000 active credit cards in the hands of American consumers (Federal Reserve – 2015). With 200,000,000 cardholders carrying an average credit limit of $20,000, there is about $4.0 trillion of artificial purchasing power in this country alone.
The Trouble With Credit Cards
Unfortunately, all of that artificial buying power has turned into over $900 billion in credit card debt. The average American family owes over $17,000 with about 14% of their disposable income being used to service that debt. It’s these numbers that are used to explain why there as so many people suffering from debt problems. The only way to keep these numbers from continuing to grow is to retrain American consumers to adjust their spending habits and cut up those credit cards.
7 Healthy Spending Habits of People Who Don’t Use Credit Cards
Let the retraining begin with the following seven spending habits that responsible consumers use to maintain their standard of living without using credit cards.
- Preparing a Budget – Smart spending starts with a budgeting process. By preparing a monthly budget, you are able to get a clear and precise idea of exactly what you have coming in, what you have going out and whether or not you have anything left over to spend on the extras you may need or want.
- Tracking Expenditures – There is very little value in a budget if you are not willing to track your actual expenditures. By tracking everything you spend, you will know exactly where your money goes and whether or not you are living within your means.
- Cash Only – The best way to avoid credit cards is to not use them. Cash is an accurate barometer of what you can afford to spend on a monthly basis. When the cash is gone, it is time to stop spending until more cash appears in your account.
- Use Shopping Lists – Anytime you get ready to go shopping for anything, you should prepare a shopping list. It is the perfect tool to keep you focused on what you really need, and it helps you avoid impulse buying, which is the number one spending downfall of many consumers.
- Put Something Away Money for Emergencies – Living within your means should include putting money away in savings. When you have adequate savings, you are better able to avoid the temptation to use credit cards when an unexpected situation comes up.
- Discount Shopping – Smart consumers know that almost everything goes on sale sooner or later. When you make a decision to buy something, you should invest the time and effort to find it on sale. If it’s not immediately available at discount prices, you can wait until the product’s time finally arrives.
- Limit Dining Out – Most meals consumed in restaurants and fast food places will run 200%-300% more than the same meal would cost if prepared at home. Smart consumers are willing to invest their time shopping and cooking in order to save money for more important expenditures.
Here at Rescue One Financial, we employ professional debt counselors who know a thing or two about good spending habits. If you would like to learn more about how you can avoid credit card debt and still maintain a decent standard of living, you should consider scheduling an appointment with us at your earliest convenience.