New Year's Resolution #1

The most important resolution I have made for 2009 is to get rid of that credit card debt once and for all. Credit card debt is the debt that will rob you of any chance of achieving financial independence. Unlike a mortgage or a student loan, the only value credit card debt provides is a high interest rate. It's not like I can sell the Uggs I just brought or the Coach bag. There's no re-sale market for my purchases.

So, this is the year I'm getting rid of my credit card debt. I've made a number of resolutions and they're all important to me. But this is the one, that if all else fails, I'm absolutely committing too.

How am I going to do it? That is, how am I going to get rid of the debt?

Well, obviously there's paying down the debt I already have. And if you read Suze Orman or almost any other resource on getting debt free, you probably already know a number of strategies for attacking debt. One is to pay off the credit card with the highest interest rate first and make the minimum payments on other cards while you attack the high interest rate card.

But I want to focus on a strategy that few talk about. And that's getting rid of your credit cards altogether. That's right: cut them up so that you can't walk into the mall and pull it out when you see a pair of shoes you like.

Seems drastic? It is. I don't even advocate having a card for emergency purposes. (I'll write about emergencies in another post.)

Now, if that's too drastic for you and you're not ready to just get rid of them, then I recommend taking them out of you wallet. All of them! And putting them in a safe place--a sock in your drawer or a box in your closet. If you have a safe in your home, stick them in there. Anything that gets them out of your hands. Try it for a week, or just a day and see how it feels. I think you'll realize that you can survive without them.

Why am I advocating leaving the cards at home or getting rid of them altogether? Because you can't get rid of your debt if you're still accumulating debt. What does it matter if you pay 200% of your monthly credit card bill if you're still spending on that card.

For me, the first step is to stop the madness altogether. I'm achieving my #1 New Year's Resolution by first paying for everything in cash. If I don't have the cash, then I can't buy it. I don't carry any credit cards. The only card I have in my wallet is a debit card which draws the funds immediately out of my checking account.

It was difficult to adopt this new approach. I'd first considered this strategy in October of last year, but wasn't ready to embrace it. And so the holidays came, and I charged away. The New Year has brought a new sobering reality, however. So, I'm taking this on not only as a challenge but it truly feels good to have discipline about my spending. I feel more in control.

I don't care if your credit card debt is $20K, $10K, $1000 or $50. Any credit card debt is bad debt. The only way to truly get rid of it is to cease and desist all credit card use.

It's day 10 of my resolution and I haven't fallen off the wagon yet.