The Mind Trick I Used to Cure My Credit Card Debt

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For me, credit cards didn't feel like 'real' money. Weird, I know. So I used this strategy to cure my bad habits. It hurt but within 4 years I was free of credit card debt and my money mindset was changed forever.
I’m smiling on the outside but secretly bricking it at the thought of my credit card bill.

If credit card debt is causing you great stress, please read the story of how I got out of credit card debt and more importantly, broke my addiction to spending on the plastic.

How I accrued massive credit card debt

I used to think I’d be in credit card debt my entire life. I started young in my debt journey. I was 18 years old when my bank sent a pre-approved credit card in the post.

The limit was $2500 – a heck of a lot more than I had ever had in my life. At the time, I was working in a cardboard box factory and earning between $350-500 a week depending on overtime.

To a spendaholic 18-year-old with a new-found love for bars and nightclubs, it could only end badly. If you’ve ever been in credit card debt you know that it’s not really about the money.

Credit cards allow you to inflate your lifestyle to a level you can’t sustain. I took full advantage of my card and purchased lots of vodka & diet cokes and taxis home.

As you can imagine I quickly maxed it out. My parents offered to bail me out, by allowing me early access to the funds they had saved for me since I was born.

I paid that card off and tried to be better.

But I’d learned nothing. I’d spent money I couldn’t see and then eliminated my debt with money I didn’t have to work for. Not to mention being so wasteful with the money my parents had eked together while I grew up.

As my earnings increased and I moved to a new country, my bad habits crept back.

It got to the stage where I had maxed out credit cards to the value of about $10,000 and no idea how I spent the money.

Each weekend I’d go shopping and come home with a new handbag or a new pair of shoes. It never occurred to me to pay with my own cash.

I always got out the plastic, swiped and was on my merry way with my new purchase.

After a few years of running up balances on multiple credit cards and transferring between cards in order to access more cash, I finally came to my senses when I had to fill in a loan application to pay my tax bill.

It had never really occurred to me that banks wouldn’t look favourably upon credit card debt. I figured since I could manage the monthly payment I was doing OK.

The truth is my credit card debt was stopping me from making important moves towards my financial future – my credit cards were managing me.

How I Tamed My Credit Card Debt for Good


I knew it was going to take something drastic to change my credit card habit.

I realise that for me (and a lot of people) using credit cards doesn’t feel like you are using real money. There’s only one thing that feels like real money: cash.

The feel of notes and coins in your hand really brings to life the amount you’re spending. There’s a very good reason many personal finance gurus advocate using cash.

So I had to find a way to translate in my mind that the cute little piece of plastic which let me buy cool things I couldn’t afford was actually a bunch of cash that I was literally burning each weekend.

The idea came to me when I was late in making my minimum monthly payment by internet banking and had to pay in cash at the branch.

First I had to leave my office at lunchtime and head to the ATM of my bank to withdraw enough cash to make the payment.

I then crossed the street to the bank that issued my credit card, took my place in the line and waited. I stood in line, clutching my minimum payment in notes, waiting for the bank teller to call.

As I handed her the card and the cash I had a strong realisation that I was giving this woman (technically, the bank she worked for) money. For nothing. The penny dropped.

After that time I vowed to always make my credit card payment in cash. Every week on payday I would deposit whatever I could afford.

Sometimes it was $20, $30, $150. 

It depended on my earnings from my job and side gigs. The amount wasn’t important.

It was the repetitive act of paying my debt in cash.

That constant reiteration finally started to make an impact, and within a few months I’d cut up my credit card.

I still had a balance to pay so I’d bring the paper statement with me each week to make my payment.

It took me a year, but I finally paid that card off and then applied the same principles to a personal loan I had.

I learned to cash budget (and got a cute wallet to manage my cash envelope style budget).

Within 4 years I was completely free of all consumer debt, had learned to live frugally and cured my addiction to spending on the plastic.

If you’re struggling with credit card debt, I urge you to hold that cash in your hand. Really feel it and think how lovely it is to physically hold the money you’ve earned. Then hand it over.

It stings, but you’ll feel it. Which is the main thing!

Note: It took a few years but I now use credit cards as a life tool. I appreciate some people need to cut up the plastic permanently to get their life back on track, but I couldn’t forgo all the rewards that credit card users benefit from.

I needed to train myself to be a smart user of cards and I’ve finally got there. I’m constantly aware of my history, so I track each purchase then I’m not in for a shock when the statement arrives each month.

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Tips for getting out of credit card debt.

Emma

Emma

Hi, I'm Emma. I set about gaining financial freedom back in 2012 when my son was born. I've been hustling to pay down debt, save money and build online and passive income streams ever since. You can find out more here.

23 thoughts on “The Mind Trick I Used to Cure My Credit Card Debt”

  1. I went through a similar experience when I was younger – racking up almost $50K in debt across credit cards, personal loan & student loans. It took 2 years of living back with the folks (I still paid board though) and spending a pittance, working in a job I absolutely loathed to get myself out of that mess. But I honestly think it was one of the best learning experiences of my life. I’m now pretty frugal and minimalist and use debt as a tool to create wealth, not to fund a frivolous lifestyle. It’s good to learn these lessons early in life, so you don’t keep making the same mistakes into your 30s and 40s.

    • I agree Tracey, I’m so glad I got my money sorted in my 20s. I’m 33 now and I feel like I’m on a good path. It sounds like you gained a lot from that time – so I guess that was 50k well spent 🙂

  2. Nice story on how you got enlightened on the debit card card.

    I like the way you paid for it cash. the feeling of the money seems to do something with people

  3. This is a fantastic tip. It’s painful enough to work! Actually paying cash for your debt hurts and that’s a good thing. Like you say, it seems like you’re handing over money for nothing at the bank and once you’ve done that a few times, it will change your outlook on debt.

  4. What a great idea! Credit card debt can be a deep spiral, and I’m so glad you found a way to help you come back from it. I’m sure this tip will help many others put to mind how much they’re really spending and hopefully lead them to better financial moves.

    • Thanks Gary. As you say credit card debt can be a slippery slope, I’m relieved I don’t have to worry about it anymore.

  5. I am the type that won’t be able to own credit cards once we have them paid off. I learned that the hard way. I really need to try paying in cash. I have a lot of trouble adjusting to using cash, but I do think it could help make purchases more “real”.

  6. I never would have thought to do that. I have come to feel like using a credit card is like taking a piece of time away from me. Whenever I spend money (whether in cash or a debit card) that I take notice of and make sure I don’t overspend, but I have come to despise credit cards so much that that actually hurts me more to use than the cash.

  7. Thats really clever.
    For me, the lightbulb moment was having my then-boyfriend offer to help me pay it down and I could then “pay him back” at nominal interest that did it for me. We watched it gradually reduce in value, then shifted the balance to an interest-free card to accelerate the pay-down.
    I owed something in the range of $10k and was going nowhere trying to pay it off.
    He saw it as an investment in our future, never intended to get the money back, but wanted that debt gone or mostly so before we started planning our wedding.
    Since then, we have used the credit card to our advantage – we have airpoints, and haven’t paid for a domestic flight with our own money in over 5 years. Yes, sometimes we are frivolous (and we are working to pull that back), but we always have enough money available to pay back every cent we spent on the card before the due date for the bill.

    • Yay! I love it when couples fight the good fight together, sounds like you have a great man there! Oh yeah, I’m all about the airpoints now too, I love my credit cards now that I know how to use them. Free flights for the win!

  8. I wish I had read this when I was younger. But I totally get what you mean. For me, everytime I was swiping that card, the thought of “oh, I’ll just pay for this later” was all that crossed my mind. Then….when LATER arrives, it’s like a punch in the gut! I still have some credit card debt that we are trying to pay off. I like the idea of just throwing your hard earned cash to it so it’s gone!

  9. It’s fascinating that your parents’ attempt to help backfired on you since it was still so far removed from your own money and consequences. I wonder if they learned a lesson from this as well.

  10. I prefer cash, but mainly because I’m the paranoid sort, and I don’t like the idea of all my purchases becoming part of marketers’ Big Data resource. Somehow I think this info will be used against me.

    But I think you’re right–for those with a tendency to use credit cards unwisely, cash (or a debit card) is the way to go.

  11. It’s funny, I had to do this, too!

    To kick my credit card habit I:

    -Switched to a cash-only envelope system (a la Dave Ramsey). I did do auto-pay online for rent, utilities, etc.
    -I physically locked my credit card in a safe so it wasn’t accessible.
    -I shopped only with a friend (to keep me on track)

    I do have to say that I tend to spend more when I have cash, for some reason. I’m way too lazy to count my money, so it always looks like I have more than I do. I realized I behave better when I can see my account balance online. It’s different for everyone; it’s about finding what works for you.

  12. I could use some advice. I just turned 27 and am saving as I go to get married. We were blessed with a year and a half of time and the wedding expenses down to the plates are roughly at the cost of $8,000. Not bad! We’ve had help with people making things but other than that have paid for the wedding entirely on our own. We make similar incomes, full time, at $15 an hour. We both have car loans ($30,000 and $15,000). I have good credit, my fiancé does not. He has very little debt/history of credit and I have history on top of $22,000 in student loans (paying off for the last 6 years). We very much want a home. We are quite simple and even looked into buying property and buying/ placing a modular home on it to lower costs. With our debt, history, and loans, owning a home sounds impossible. We very much want a family but don’t want to open that door until we are able to supply a stable home of our own…I don’t know where to begin to start and turn things around. We are home bodies so most meals are at home, we live pretty healthy and we commute to work in cars that roughly have 25mpg. I could very much use some advice and wisdom before I feel that I’ve slipped too far down the rabbit hole for my family. Thank you in advance.

    • Hi Allison. Thanks for your comment – and congrats on your upcoming nuptials. You say you can’t see where to turn things around but from the outside is pretty obvious that it’s the car loans. If you could get rid of them and trade down to smaller cars that you either pay cash for or get a small loan for, it sounds like your life could be very different. Is a car really worth your dreams for a family and a home? Maybe it is. I used to be so into cars, and now I drive a 1992 Daihatsu with broken electric windows and no AC. Because it cost $1000 and I finally realised that travelling with my family was more important than the car I drive. I’m sometimes ashamed of how old and ugly it is, but in those times I just try to focus on my goals.
      If you want to email me direct with more details I’d be happy to talk further. My contact details at the top of the website.
      Also – you need to pat yourself on the back. You are 27 and taking steps toward changing your financial future. That is awesome!!!!!!!!!!!!! So many people don’t get their shit together until they are nearing retirement. You are going to be just fine, some hard work ahead, but you’ll get there!

  13. I love the paying cash at the window for your bill weekly idea. You manifested paying the debt in full and the cash to do it with your actions and motivation!

  14. Great tips and financial advice. Years ago I found myself in similar scenarios. What learned was to #1. Pay yourself first and #2. Live within your means.

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