Should you cut up your credit card? Probably…here’s why
Fuelled by insecurity, I spent thousands buying materialistic crap with a credit card. Did this make me any happier? Quite the opposite! The mountain of debt just added to my stress and anxiety!
Spending money we don’t have with a credit card leaves only one winner, the credit card companies! Did you know that shoppers spend up to a 100% more when using a credit card to pay instead of cash? This is why we’re constantly being offered credit cards by retailers.
Here’s my story…
I was consuming materialistic crap
As someone who had their self-confidence destroyed as a teenager, I relied on expensive clothes to give me an extra lift. Being insecure and image conscious, I believed that women would find me more attractive if I wore expensive clothes.
I’d spend £500 on a new Hugo Boss coat, £350 on an All Saints leather jack and £200 on Jeffery West shoes. I repeated this kind of behaviour throughout the year on other clothes, as well as going out each weekend with friends. We’d go to the expensive bars (where £10 cocktails are normal – they did taste amazing though) to match our expensive clothes. I was so image conscious that I wouldn’t want to be seen anywhere else!
It didn’t take long for me to build up a credit card debt of over £2,000. That’s the thing about credit cards, because it’s not our money that we’re spending, it doesn’t feel like you’re spending money!
Do we actually spend more money with a credit card?
Studies have indicated that people spend more money when they use a credit card, as opposed to when they use cash. In a Forbes article, it states, “A number of studies have indicated that people do spend more when paying with a credit card. In 2001, Drazen Prelec and Duncan Simester of MIT published the results of their research in Marketing Letters. They found shoppers spend up to 100% more when using their credit card to pay instead of cash.”
The cost of debt is more than just financial, it was mental too
This habitual spending on materialistic crap wasn’t solving the real problem. The real problem was that I was insecure and image conscious. To help, I was buying expensive clothing that I couldn’t afford, to impress people I didn’t even care about. Sounds ridiculous, but that’s what I was doing.
I recall looking at my bank account every month and seeing these payments go off to the credit card company to pay down the debt. This made me feel annoyed and frustrated, as the money couldn’t be used for more valuable purposes like travelling or investing. It was essentially dead money! What did I have to show for it? A wardrobe full of crap that didn’t bring me any joy, fulfilment or experiences.
On top of, at the time I hated my job. This job was sucking the life out of me, and made me feel like I was wasting my twenties. Because I had all this debt that had to be paid down every month, I felt like I couldn’t take the risk of leaving my job.
This debt was stressing me out and keeping me handcuffed to a job I hated! The cost of buying all that materialistic crap wasn’t just financial, it was mental too!
I reached breaking point
Eventually, I reached breaking point where the stress and anxiety related to the credit card got too much! I came to the realisation that I was buying all this crap because I was insecure. Rather than make my life harder, I decided to cut up my credit card and focus on solving the root cause of the problem.
Buying materialistic crap to ‘show off’ sometimes cured the symptom, but it sure as hell didn’t solve the root cause. We’ve only go one life, and I refused to spend it digging myself into debt to impress people I didn’t care about.
I made a change, in many ways influenced by The Minimalists (great documentary on Netflix), and decided that I’d now focus on doing two things with my money. I’d now invest to grow my wealth and spend money on experiences that create lasting memories.
Over the course of a couple of years, I paid down the debt and have never looked back. Am I now a secure and confident young man? Not entirely, but I’m working on it. What I am though, is aware that buying materialistic crap does not make us feel any happier …. quite the opposite.
Take the credit card and put it here…
Take your credit card, cut it up, and throw it in the bin. Think about the things you purchase with your credit card…. do you really need them? If you do need them, can they wait until you’ve saved enough money to buy them without using debt? Do you need it NOW?
Think about the money you’re spending each and every month to pay down your debt, what else could that money have been used for? Travelling the world? Starting the business you’ve been dreaming about?
Have you got a great credit card comeback story? How did it change your life? How have credit cards been holding you back? Please share your stories below to help others in a similar position.
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