Put a freeze on your credit

Use cash only this year and dis­cover the sim­plic­ity of only buy­ing what you can af­ford


It’s time. Take all of your credit cards out of your wal­let. Lay them on your kitchen ta­ble.

Now, place each one in a sand­wich bag you can zip up (one card per bag). Grab the bags and tod­dle on over to the kitchen sink. Fill each bag with wa­ter un­til it nearly reaches the top. Seal the bags and toss them in your freezer.

Your credit cards are of­fi­cially frozen, and I prom­ise that you will sur­vive on cash and debit.

The beau­ti­ful thing about us­ing only the money in your bank ac­count is that when it runs out, it’s out.

This forces you to man­age your spend­ing more care­fully than if you have the safety net of credit cards to fall back on. You’ll also note that while your credit cards are frozen, there shouldn’t be any new charges.

Last, the cash sys­tem makes you more con­scious of your spend­ing, which should cause you to think twice about whether you re­ally need to buy that new pair of boots, or if you can get an­other year out of your cur­rent ones.

If you’re like most Cana­di­ans, the hol­i­days hurt your bank ac­count. But you can over­come over­spend­ing be­hav­iours in 2019.

Here’s how to make the most of the cash sys­tem:

Set up pre-au­tho­riza­tions and stop au­to­matic cred­it­card charges for fixed ex­penses: Make a list of fixed ex­penses (ones that don’t typ­i­cally change) that you in­cur through­out the course of a month. This should in­clude rent, util­i­ties, tran­sit passes, child care, gym mem­ber­ships, and more. If these items are cur­rently be­ing charged on your credit card, move the charges over to your bank ac­count through pre-au­tho­rized deb­its (PADs).

Tap or pay with phys­i­cal cash for vari­able ex­penses: Vari­able ex­penses are things such as gro­ceries, books, pre­scrip­tions, hair­cuts, cloth­ing, birth­day gifts, trips, cof­fees, lunches, and more. Tap or pay cash for these. These costs have the po­ten­tial to blow up if you’re not care­ful. Set lim­its on your spend­ing, use coupons, find deals, down­size your latte to a small vs. a large, DIY your nails or make your lunch. You can con­trol this cat­e­gory. I make a list of vari­able ex­penses, and I spread them out so that they don’t all hit at once.

Pay us­ing debit on­line: When I tell peo­ple about the cash sys­tem, they in­evitably present the counter-ar­gu­ment that on­line shop­ping is where the best deals can be found, so there­fore they need to leave one credit card un­frozen. Un­true. There is a work­around. Most ma­jor re­tail­ers will al­low you to pay with Pay­Pal (which will debit your bank ac­count), or they’ll al­low you to pur­chase gift cards us­ing Pay­Pal, and then those gift cards can be used to pay for goods at the on­line store. If you find that an­noy­ing, good. That’s partly the point. On­line shop­ping has made it too easy for us to spend. So, clear those fil­ters on your com­puter where your credit card num­bers are saved. You’ll need to find an­other way to pay.

Car­ry­ing credit card bal­ances? Make your reg­u­lar pay­ments: While you’re on the The beau­ti­ful thing about us­ing only the money in your bank ac­count for daily, weekly and monthly ex­penses is that when it runs out, it’s out.

cash sys­tem, you’ll still be mak­ing reg­u­lar pay­ments to­ward the bal­ance on your credit cards. But, un­like pre­vi­ous months, you’ll ac­tu­ally be mak­ing progress. You may even find that you’re able to pay the bal­ances off faster be­cause you’ve freed up money by cut­ting back on un­nec­es­sary spend­ing.

Should the temp­ta­tion arise to use your credit cards over the next few months, you could grab them from your freezer and thaw them out in your sink ... or, if that’s not fast enough, you could grab an ice pick or try the mi­crowave. But I sug­gest you give the cash sys­tem at least 90 days. In my busi­ness, that’s

about the length of time it takes for our clients to start mak­ing per­ma­nent changes to their spend­ing be­hav­iours, and you can do the same.

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