Thursday, June 16, 2011

Day 248 - Getting Rid of My Last Credit Card (Not)

June 16, 2011

Day 248 - Getting Rid of My Last Credit Card (Not)
Image: luigi diamanti /
A few years ago after listening to a rousing edition of The Dave Ramsey Show I decided to cancel all of my credit cards and cut them up. As I happily snipped away and announced to each customer service rep that Dave Ramsey made me do it, I felt like I had finally taken control. Finally! I was on my way to debt freedom.

Only one card to go - my green American Express card, member since 2001. The scissors wouldn't budge.

I hesitated. I rationalized. I convinced myself - since I have to pay off the monthly balance in full maybe I should keep this one for emergencies. What if something happened and I really needed to use it? Plus, not everyone can get an American Express card so I must be REALLY good with my finances (I'll admit it, ignorant bliss).

Fast forward to 2011 - I still have that AmEx and I just put a bunch of travel expenses on it - hardly an emergency. Rather, I have admittedly delayed our $60,000 debt payoff goal - and even though we are ahead of schedule it still stings to know I couldn't delay gratification to see our bigger picture debt payoff goal as more important.

But here is the kicker - I still can't bring myself to get rid of this last credit card. Somehow I associate credit with safety and security which is a bit ironic given that my indebtedness has brought mainly stress and limitation to my life. Plus keeping a credit card for emergencies immediately tells me that I haven't adequately prepared myself financially or psychologically for those little (or big) surprises that life brings along with it.

Am I wrong in keeping this one card? Honestly, I really don't know. I attempt to live by the principles of The Total Money Makeover - which clearly demands you cut up and cancel all credit cards - but obviously I am not fully accomplishing this task. Despite this, I have paid off a considerable amount of debt. Even though I haven't cut up the final credit card, I have snipped away at every possible expense in my life. I have a tangible goal that I have no doubt I am going to exceed. In the long run, though, I think I need to stop using credit cards altogether.

How did you get rid of that final credit card safety net? Did you take the plunge and go cold turkey or did you gradually get rid of your cards? I would love some advice so please post your wonderful comments!

Stay tuned,


Michael said... Best Blogger Tips

No you are not wrong because credit cards do give us some security.
I love Dave, but I don't think you have to cut up EVERY credit card.
There is no cookie cutter approach to finance.
I follow his plan, but modified. In my case, I have tons of credit cards.
And I earn thousands of dollars in rewards.
If you have the discipline to keep the card, keep it!

Sarah said... Best Blogger Tips

@Michael Thanks so much for your perspective. You are absolutely right in that there isn't a one size fits all approach for everyone. Maybe I shouldn't beat myself up so much about this. Thanks!

The $60K Project said... Best Blogger Tips

@Michael Thanks so much for your perspective. You are absolutely right in that there isn't a one size fits all approach for everyone. Maybe I shouldn't beat myself up so much about this. Thanks!

Laura said... Best Blogger Tips

I agree with Michael,  if you have the discipline then keep the card. I kept an amex (for cashback) and a visa (because amex is not accepted everywhere) and if I charge anything, I then pay it off immediatley from my checking account.

My one worry with not having one is the car breaking down and I need a large sum of money to fix it/get towed right now and I don't have a big enough balance in my checking account that day to cover it (because it's in my savings accounts).  Then a cc would be really helpful.

The $60K Project said... Best Blogger Tips

Laura, you and I are definitely on the same page. An unexpected, and expensive, emergency can be difficult to deal with when you don't have cash piled up. But maybe one day I can accumulate a large pile of cash and finally (maybe) give up my last card.

Lindy Mint said... Best Blogger Tips

I too am in agreement with Michael and Laura.  I don't see a problem in keeping one credit card, especially if it gives you peace of mind.  As long as you have the discipline to not use it, or at least to only use it for true emergencies with plans of paying it right off.

LTTS said... Best Blogger Tips

Take the plunge. Being credit card free has helped me put $16,640 in the bank, which is more security than a lousy $2,00 spending limit.

60kproject said... Best Blogger Tips

@lima570 you definitely have a point. Sometimes I wonder the purpose of using a credit card if you can pay it off every month - points, cash back, building "credit", I guess. I have to honestly say that one of these days I would love to say I don't have any credit cards. But I still can't shake that "security" feeling yet with credit cards. Maybe someday soon.

Anna said... Best Blogger Tips

We got rid of all the credit cards except one. We didn't use them for months. Then one day I used that Kohls cc to get 30% off. Wouldn't you know, I forgot to pay it and had to pay a late fee. I was so mad at myself for being stupid that I finally got rid of it. We have no more cc. We use cash and I only use my debit card to pay for gas. Not having cc forces me to figure out how I am going to pay for something. It is amazing how creative you can get when you have no other options.

60kproject said... Best Blogger Tips

+1 for no more credit cards! Anna, I have done the exact same thing!

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