A Simple Formula That Reveals Debt is Really Just a Bad Habit

Debt is Really Just a Bad Habit sounds like such a simple answer to such a difficult problem. Prove it to yourself in three shopping days by following this approach.

Step One: 

On the next three shopping trips, make a note recording if you paid the purchase with a credit card, a debit card, or cash. As soon as practical record the items you bought, the price paid, and how the payment method. Keep recording this information for the three shopping day proof period then summarize the results.

Your summary should have four columns: Item, Price, Payment Method, and Real Price (Cost of Debt). Once the summary is complete, do a tabulation of your shopping activity summarizing the amount purchased by using credit card, debit card, or cash.

Step Two:

When you have the totaled numbers, go to your checking account balance. In today’s world recording of purchases or cash withdrawals from out accounts is real time. Compare the debit card purchases to the amount spent in shopping. Do the same for any money withdrawn from an ATM to use in shopping. If adjusted for the amount that remain in your hands the amounts for cash and debit card purchases should balance to the prior balance and current balance of your account.

There will be no bank balance change for a credit card purchase as this is a Debt incurred purchases not a paid purchase. Somewhere, at some organization you owe money. Compare that debt with available cash in the bank. Is it less then, more than, or the same as the balance in the bank? If the balance is, the same or more you could write a check and eliminate the debt.

Step Three:

We do not take that last step, the step that would keep us out of debt, we say we will wait for the bill from the credit card company to arrive and pay it off then. We do not. We see what the minimum payment is, pay only that as we have a trip planned for the weekend, and need our cash.

A Simple Approach

The simple approach addressing the habit of creating debt-using credit to buy products, is shopping without credit cards for the next three shopping trips of any kind. Grocery shopping, clothes shopping, beauty treatments shopping and do it all with cash or debit cards.

It you cannot shop in cash, debit card approach you have a credit card habit to address. This habit ranks up to the top in a list of hard habits to break, it is in the same category as Stop Smoking; it is as hard for people to do. Both are habits, both are harmful; both can ruin both your health and life in many ways.