How to Stop Relying on Your Credit Cards to Make Ends Meet Credit cards come with steep interest rates, will add up to a mountain of debt if not managed carefully, and can set you up for a lot of stress when an unexpected emergency hits. Many people get into the habit of relying on their cards because every month it feels like their income slips through their fingers too quickly. Between rent or mortgage payments, bills and groceries, they\u2019re tapped out and need their cards to make it through until payday. However, instead of being a slave to your credit cards to make ends meet, here\u2019s how to switch over to better money management strategies to get a handle on your money and debt. If you\u2019re turning to your credit card to hold you over but you\u2019re trying to break the cycle, here are key tips to keep the plastic \u2013 and the accumulating debt \u2013 at bay. Create a Budget We know we sound like a broken record when it comes to budgeting and tracking your spending, but these two habits are the cornerstone of getting you out of debt and away from using your credit cards. Take stock of all your sources of monthly income \u2013 this is how much money you\u2019ll have to work with to pay for expenses like mortgage or rent, bills, transportation, groceries, and other costs. You need to put aside a portion of your monthly income to pay off your debts too. When you have a balanced budget, you\u2019ll know precisely how much money you can spend on groceries, eating out, entertainment, and shopping each month. If an expense doesn\u2019t fit into your budget, you can\u2019t buy it \u2013 especially not with credit. If creating a budget seems daunting, try a budget calculator or even enlist our help. We have certified Credit Counsellors who have helped thousands of clients build and maintain budgets that fit life\u2019s demands. We\u2019re happy to help you too, especially if you need an emergency budget to get through the coronavirus crisis. Tips and Resources for the Coronavirus Pandemic Track your Spending Whether you use a free app, keep a notebook in your purse or pocket, or log purchases on an Excel spreadsheet, you\u2019ll need to track your expenses meticulously. If you\u2019re halfway through the month but you\u2019ve already blown through three-quarters of what you\u2019ve earmarked for eating out, you\u2019re going to have to ration the rest to last the rest of the month. Gone are the days of turning to your credit cards to fill the gaps. You\u2019re now carving out a new habit of paying attention to your daily spending \u2013 you may learn that a $40 weekly budget for groceries means you\u2019ll need to pack lunches during the work week and treat yourself to a lunch with co-workers on Fridays only. Don\u2019t think of this as a downside. As you track your spending, you\u2019ll see red flags and how quickly you get to the point where you\u2019re spending more than you earn. When you earmark your money for certain expenses and spending activities, you\u2019re choosing how you want to spend your money so that you can reach your financial goals. It\u2019s the only way you\u2019ll get to where you want to be financially. I Just Got Paid, but Where Did My Money Go? Hide Your Credit Cards From Yourself Creating a budget and tracking your spending are easy \u2013 it\u2019s adhering to these plans and removing the option to tap or swipe away your troubles that\u2019s the tricky part. The best-case scenario is to remove the temptation altogether. Take an \u201cout of sight, out of mind\u201d approach and physically remove your credit cards from your wallet so they\u2019re out of easy reach. Hide them in the back of a sock drawer, between mattresses on your bed, or even freeze them in a block of ice in your freezer if you\u2019re worried you\u2019ll try to uncover them in a stitch. Some people lock their cards away in their safety deposit boxes at the bank. You can also leave them in the care of a loved one, such as a parent or your partner. Ask them to hold onto your card for you \u2013 in safe keeping \u2013 for a few months. Within a few months, you\u2019ll have gotten used to living within your means and sticking to your budget and you\u2019ll see you managed just fine without using a credit card. Tips to Curb Impulse Spending Remove the Tech Traces of Your Cards These days, apps such as Uber, Deliveroo and Just Eat, and online shopping from Amazon Prime to eBay have made it incredibly easy to spend invisible money. With a single tap we can have anything we desire delivered to our doorsteps without actually feeling the cash slip from our fingers. It\u2019s no wonder we all face some sticker shock when our credit card statements arrive. While you\u2019ve kept your credit cards physically stowed away, you need to remove all digital traces of your credit cards too. This means deleting your payment information on all your apps and favourite online stores. If you want to buy something, you\u2019ll have to use your debit card or PayPal, tied directly to your bank account, to make purchases so you aren\u2019t spending money you don\u2019t have. Go on a Cash-Only Diet We talked about how we don\u2019t feel the money slipping from our fingers when we tap away our purchases \u2013 cash-only diets are a great wake-up call to your spending because you physically see the money exchange and feel the drain on your wallet. For anyone experiencing a COVID-19 cash crunch, sticking with cash is your best strategy as you ask your lenders for help to get by. With your budget in tow, withdraw cash from your bank account and allocate a certain amount to a separate envelope to mirror what you budgeted for each category. For example, you may have allocated $250 for groceries for the month. Place the amount, based on your pay cheque cycle, in an envelope. If you\u2019re paid bi-weekly, this would mean putting $125 in the envelope each pay day. Every time you make a purchase, pay for it with the cash and in its place, add a receipt so you\u2019ll know where the money went. Cash-only diets help with tracking your expenses too because you\u2019ll have a clear paper trail. You\u2019ll pay closer attention to how much money you have left when you can peek into each envelope. If you\u2019ve spent the cash allocated for one envelope, you can use cash from another envelope, but you\u2019ll have to make sacrifices in that category to boost spending in the other. This is what budgeting, spending within your means, and staying away from credit cards is all about. Each of these habits help you gain a better understanding of what you can afford each month. Fix 3 Common Tracking Mistakes to Avoid Electronic Payment Pitfalls Plastic Surgery \u2013 Cut Your Credit Cards Up If you\u2019re seriously tempted to resort to old ways and add to your debts, cut your credit cards up. This may seem like an extreme step, but for some people it\u2019s the only way they\u2019ll stop spending on credit. You can also close your accounts, but you need to do this very strategically. Closing credit card accounts too quickly can hurt your credit score and skew your credit utilization ratio, or how much credit you\u2019re using compared to how much credit is available to you. For example, if you\u2019ve paid off and closed one account for $5,000, but you have another fully maxed out account for $5,000, this doesn\u2019t reflect well on your credit score. You also don\u2019t want to sink your score by closing an account that still has a balance owing. 7 Common Credit Score Myths Consolidate Your Debts and Cancel Credit Cards You Don\u2019t Need If you want to walk away from owning one too many credit cards, consolidate your debts onto a single card or two, or even seek out a debt repayment plan or debt consolidation loan. This way, you\u2019ll have moved all your debts or payments onto a single, easier-to-manage account, and you can close these other accounts, removing the temptation for extra available credit. This is a great debt relief option if you feel overwhelmed with too many accounts to manage. Take a look at your accounts to find the one card with the lowest interest rate and look into shifting your debts onto this card through a balance transfer. Consider the terms carefully though, as once the balance transfer period of low interest expires, credit cards have a high interest rate. Consolidating with credit cards is tricky and can be costly. There are other, less costly ways to consolidate debt and one of our Credit Counsellors would be happy to explain different options to you and give you suggestions based on your specific situation. Create a Financial Cushion to Replace Credit Countless consumers end up in debt because of an emergency that forces them to rely on their credit cards to make ends meet. Maybe it\u2019s a job loss \u2013 like with COVID-19, a medical emergency, or a leaky roof that sends household finances into a tailspin. Brace yourself for life\u2019s ups and downs with an emergency savings fund. If it means auto-transferring $10 a month to a savings fund, this extra cash will come in handy when you need it most. This way, when you\u2019re in a bind, you won\u2019t need your credit card to cover unforeseen expenses, or you\u2019ll at least have some cash to put towards the emergency before you reach into your credit to pay for the rest. Why Save When Borrowing Is Cheap? Consider the Full Consequences of Credit Card Debt The consequences of credit card debt go beyond staying stuck in debt forever. Minimum payments are not designed to pay credit cards off quickly. Study your statements closely and let the sticker shock sink in. If that\u2019s not enough to dissuade you from spending on credit, take a look at the line on your statement that tells you how long it would take to pay the card off if you only made minimum payments \u2013 and that\u2019s only if you don\u2019t use the card until it\u2019s paid off. Credit cards will get you through in a pinch, but long term, they will keep you in debt and stop you from achieving other goals. 4 Credit Card Minimum Payment Myths & How to Avoid the Pitfalls Stop Using Your Credit Card as Your Lifeline \u2013 We\u2019re Here to Help Living without a credit card is unrealistic for many people, but not using it as a lifeline is essential if you don\u2019t want to be stuck in debt forever. If you\u2019ve tried breaking up with your credit card and just can\u2019t do it on your own, or if COVID-19 has hit you hard and you don\u2019t know which way to turn, we\u2019re here to help. Our Credit Counsellors are experts at helping people get control of their debt, even when times are tough. They\u2019ll give you the guidance and information you need to set yourself straight as quickly as possible. Give us a call, send us an email, or chat with us anonymously online. You\u2019ll sleep better knowing you\u2019ve got a plan.