How to stop living off my credit card??

ErolGirl

Hi,

I've got an MBNA rewards card, which I have after quite an expensive year, have ended up living off. I pay it off in full each month, but I then have zero cash, so all my spending is on my card. I struggle to budget as I don't realise how much I am spending (and I want to start saving!!) so would rather eliminate the card and start using cash.

What is the best way to do this? Would it be to transfer the amount on my MBNA to a 0% card? I have looked into the Virgin Transfer card which says no fees and 0% but just want to make sure this is going to incur me no additional costs, or if there is a better way to get back to cash??

THANK YOU

Ilona

Hi. I take the rather simplistic view, and that is to cut up the card. Spend nothing for one month, then you won't get a bill to pay.

Of course it depends what you use your card for. If you need to buy petrol to get to work, cut your card up when you have a week off.

One month without spending is not a long time. Have you got enough food in the house to last you? Think about what you spend your money on, is it a need or a want? Cut out all wants, be brutal. Only buy what you need, and over a one month period that will be very little.

Keep a spending diary, list all your outgoings, where is your money going? Then look at it and work out if you could actually do without what you bought. Take pack ups to work. Buy no food out. Don't go out for a month, no pubs, no meals out.

People may have other solutions to your problem, but I see it as the balance on the card is not your money, it belongs to someone else, the bank. They want you to use it, they want you to rack up huge amounts of debt, more money for them in interest.

It takes discipline, now test yourself to see if you can beat the system. Good luck.
Ilona

Fosterdog

Firstly you need to keep a spending diary accounting for every single penny, we all spend on things without realising but when it gets to the stage of nothing left at the end of the month then there is a problem.

Next posting an SOA http://www.stoozing.com/calculator/soa.php can help the rest of us to guide you towards ways to cut your outgoings. Credit cards are not always bad things, only if you are living beyond your means and relying on them.

Finally going for a balance transfer wouldn't be worth it in your case if you are clearing the balance in full each month however it may be worth looking into a new 0% on spending card, pay off your current card in full this month then put next months spending on the new card, as long as you pay off the minimum payment each month you have the rest of the 0% term to clear the rest of the balance, chip away at it each month and it shouldn't be too long until you are living within your means.

Do you have any other debts?

Ilona

The OP has already been given a lot of good advice on this thread.

https://forums.moneysavingexpert.com/discussion/comment/71861592#Comment_71861592

Ilona

austonic

ErolGirl wrote: »

I struggle to budget as I don't realise how much I am spending (and I want to start saving!!) so would rather eliminate the card and start using cash.

You have things the wrong way around. A budget isn't about what you spent, but what you plan to spend. A subtle but important mindset difference.

What you have done in the past is useful information, but you need to start from scratch. ("Zero based budgeting" is the catch phrase in business.)

Do you use a computer? If so, use free spreadsheet software (otherwise pen and paper) and list down,

• absolute committed spends (e.g. monthly rent, gas bill, electric bill, council tax, loan repayments, etc.)
• regular necessary spending (e.g. bus fare / fuel for work commute; card payments; etc.)
• variable spending in descending order of importance (e.g. food, entertainment, mobile phone)

You can do something about each of these in the medium to long term.

However, in the short term, you need to focus on the variable spending. Force yourself to ONLY eat food you buy and prepare yourself - it is cheaper (and healthier), and plan ahead. If you have microwave facilities at work to heat up food, simply cook enough for your evening meal and take the extra with you for lunch the following day. Stick with simple meals (large bag of rice, cheap baked beans, cheap veg, simple protein, etc bought from say Aldi of Lidle - meat is expensive, and you don't need it everyday or even at all). Take water or a flask of tea/coffee. Do not buy water/pop/tea/coffee.

Suffer for a month. Spend as little as you possibly can. You don't have to enjoy your food just not hate it (not viable in the long term, but fine for short term, although if you learn to cook properly you can enjoy good food at very low cost - you are trying to press the reset button here). Make it difficult to spend on anything you did not budget for (if you couldn't remember it at the start of the month when you wrote your budget, it could not have been that important). Do not socialise and spend money. Do not go to the cinema. Do not eat a take-away. No smoking. Drive frugally to reduce fuel consumption (you should accelerate gently and rarely have to brake, gamify this and see what you can achieve).

Revise your budget at the end of the month to address things that were really important (having to justify spend you did not budget for will make it clear what is more important).

The point is to learn what the minimum you can live on for the longer term is. Then you can look at what your overall financial position is and start to plan your way to debt freedom.

austonic

Incidentally, cash these days isn't necessarily better than a card. Especially a debit card. (If a credit card, must pay balance off in full each month.) At least with the latter, you have a record you can look at to make sure it ties up with what you budgeted. Cash can be a lot harder to track.

If you have a smartphone, get a receipt with everything and scan it (use the free Evernote Scanner app, it keeps scanning for documents/receipts until you tell it to stop, then lets you save them to Evernote, etc). Review the receipts at the end of the month against your budget. Make sure they tally with the bank card spending record. Getting used to looking at this stuff, thinking about it reviewing the spending makes you much more aware of what you are spending and how. (It also help protect against identify theft.)

enthusiasticsaver

We used to have this issue when money was tight. All spends were put on a credit card and then when it was paid off we had nothing to live off and had to use the card. We started to budget more carefully and reduce what we put on the card. Eventually we stopped using it altogether

natlie

I ask myself the money mantra do I need or or do I want it ? then any difference is saved, I do this for my lunch daily and pay £3 a day off my credit cards, its slow but steady progress but also applies to eating out where I could save £40 so that goes on the card or if I chose to go to supermarket rater than eat out the difference goes off the card - these small regular payments make a huge difference

ErolGirl

Hi Everyone, thank you so much for all your advice. I have decided to not go with a balance transfer and just save my butt off to get off my card ASAP. I think I might be able to be back on cash by end of March so long as I have a super cheap month!! Thanks for all your suggestions. I will start logging every penny from now!!

166million

I have started paying off each transaction as I go.
I only use credit card for cashback and to improve credit

nkkingston

January's a good month to start because every time someone tempts you into something expensive, you can just sigh and say "oh, not so soon after Christmas".