How To Balance Your Credit Card Purchases, Cash Purchases, And Your Debt.

The other day I was asked a great question. How do I find a balance between my credit card purchases, my cash purchases, and my debt?

I remember about 15 years ago when I was just getting started using credit cards, applying for an American Express card.

When it showed up in the mailbox, I opened the envelope with much excitement.

I was so proud of myself.

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My Old Beliefs About Credit Cards

I believed that having an American Express meant that I belonged to an exclusive club of some kind.

Maybe the kind that allows you to access fancy waiting rooms in airports where you can get soda and peanuts for free.

I was now part of a group of selected people that had the privilege of belonging to American Express.

That first card came with a $4000 balance, and later on, I requested it to be increased to $8000.

I really had no interest in using this credit card.

I have no interest in carrying a balance or getting $8000 in debt.

However, I believed that my credit limit was tied up with my personal worth.

If they decided to increase my balance, it must have been was because I was a more worthy person.

I believed that my status was tied up to the total available on my credit cards.

Honestly, I was a fool!

How To Balance Your Credit Card Purchases?

And, what does all of this has to do with balancing credit card purchases, cash purchases, and debt?

Well, I think many of us have the belief that a high credit limit is tied up with our self-worth.

And so, we on we go on and get the American Express, the Visa, the MasterCard, the Discover.

We carry them in our wallets like they are precious badges.

I didn’t realize until 10 years later how wrong I was to tie my self-worth to my credit limit.

I believed then that I needed to have a lot of credit cards to keep my purchases on different cards because this practice would help me build a better credit score.

I had learned that making purchases on many cards and paying them off at the end of the billing cycle would show the banks that I was someone trustworthy with money.

I would put all my purchases on credit cards, everything from groceries to utilities, and gas.

I thought I was doing great by building up points and rewards and miles.

I could use those perks to travel to Mexico to see my family, and that way, we could save a lot of money!.

So, I did all of this thinking that that was the right thing to do until our financial situation changed.

We had a drastic decrease in income, and we had built up a lifestyle that relied on two.

We had also built up credit card debt because, just like most people do, we were not careful tracking expenses.

We would also use the credit cards knowing couldn’t afford, for instance, to take trips with friends and pay cash for them.

Before you know it, $100 in groceries, $30 on gas, $75 on the cellphone bill, there turn into thousands of dollars in debt.

So, how do you keep a balance between using credit cards, cash, and paying off your debt?

The Truth About Using Credit Cards

I realized that if I needed to use a credit card, that meant that my finances were already out of balance.

If you are relying on credit cards to make any purchase, that means that you are overextending yourself.

Some people manage to pay the balance in full every single month.

But studies and statistics show that the majority of credit card users carry thousands of dollars in balance from month to month.

They also pay thousands of dollars in interest through the life of those credit cards.

That’s how, after getting rid of my credit cards and my debt, I realized that the only way to find a balance is by cash-flowing.

Whether you make your purchases with cash, check, or debit card, I believe that the only way to keep a balance is by making sure that you have the money to pay it off right away.

The moment that you pull a credit card to purchase something, you cannot pay off right away means that you might not be able to afford that purchase.

So I realized that to find balance in my finances, I need to stop using the credit cards.

Also, I needed to start budgeting and saving for those purchases that were more expensive.

I wouldn’t be able to afford them on a given month, but I could save up for them and pay cash later.

Balancing Credit Cards And Cash Purchases

Another reason why I stopped using credit cards it’s because it messed up with my budgeting.

You see, when you use a credit card, they don’t charge you for the purchase until the next billing cycle, usually a month later.

So you spend the money today, and if you are not very careful budgeting, it’s easy to lose track of your expenses.

In time this leads to overspending and results in a lot of credit card debt.

That’s why I decided to stop using the credit cards and stick to my debit card instead.

Even using the debit card in some instances is not the best way to go, because you can still overspend.

Conclusion: How To Balance Your Credit Card Purchases, Cash Purchases, And Your Debt.

If you have an issue balancing your purchases, your debt, and your expenses, my advice for you is to stop using cards and go cash only.

Make a budget every single month and figure out exactly what your expenses are.

Set the money aside in cash envelopes for every category of purchases, this way there’s no overspending.

When the money is out in the envelope, you can’t spend any more!

This will also help you manage the anxiety that comes with not knowing how to balance your purchases with your debt.

Eliminating the use of credit cards, budgeting, and going cash-only is the most effective way to control your spending and start making more progress paying off your debt.

By the way, if you want to go deeper into the most effective strategies to win with money and jump-start your financial freedom journey, you should totally join my Smart Dollar Challenge!

Related Articles To Balancing Your Credit Card Debt

• How To Pay Off Credit Card Debt For Good
• The Budget Pad: Organize your Income, Track Expenses & Save Money
• $5,000 Paid Off in Credit Card Debt by Going Cash-Only 
• The Debt Snowball Method

How To Balance Your Credit Card Purchases, Cash Purchases, And Your Debt.