Even just mentioning a credit card is enough to make some people go into a cold sweat. Others will happily tell people about how much their cards cost them in interest each month. Then there are those who pay a credit card off by direct debit every month without a thought. If you are in the cold sweat or interest paying categories, read on.

Having a credit card that’s out of control is one of the biggest hurdles to attaining financial freedom. You pay stupidly high rates of interest on many cards especially when you use them for cash advances, and missing payments or going over your credit card limit means that you pay unnecessary fees as well. It could be hundreds of dollars, or it might be only a small-ish amount you’re paying each month, but if you are paying interest or fees, then that’s money which is better in your pocket than that of your bank’s.

So, what to do. Firstly, stop using it. Leave it at home when you shop, put it in a bowl of water and freeze it, cut it up, give it to a friend for safekeeping or lock it in the medicine cabinet. Just don’t have it readily accessible. This is so you start paying cash for your purchases and get a better sense of the physical money leaving your hand and passing to someone else’s. If it’s just a simple swipe of a piece of plastic and a PIN punched into an EFTPOS terminal, then it will not feel as costly as cash changing hands. (And it’s a great lesson for the kids to see the notes and coins in a transaction so that they don’t start thinking that buying stuff doesn’t actually involve spending money.)

Secondly, concentrate your efforts on paying the debt off. This might involve increasing your current monthly repayments by $50 until it’s gone. Or you could put every spare penny onto the card to pay it off faster. I’d be aiming for the latter if you want to stop paying interest and start putting the money that was going on the interest towards a holiday, a night out without the kids or whatever it is that you are wanting in life. Once it is paid down (or off) contact your credit provider to reduce the credit limit if you fear you might not be able to restrain yourself when you see those fantastic shoes on sale.

Third, set yourself a goal to save up a certain amount of money: $2,000 – $5,000 or even more. Only when you have reached your savings goal should you start to think about using a credit card again. In the meantime, internet purchases and the like can be bought with a debit card.

If you are sitting at your computer thinking that it is not possible for you to live without putting items like groceries and petrol onto your credit card, and not possible to get the card paid down to zero, I’d like you to think back to your pre-credit card days. It might’ve been a while ago, but somewhere in your past you survived without one.

You can do it again. And you and your family will be much better off for it.