With the latest Reserve Bank figures revealing that Australians owe almost $49 billion in credit card debt, Diana Mathew, from The Money Tree, reminds us to eliminate this debt in order to budget and save for the future.
“I have yet to see a system that allows you to budget properly and use credit cards,” she said. “Travelling overseas is the only valid argument for credit cards.” But, she stresses, you will need to deposit your holiday savings into this account before embarking on your holiday and cut up your credit card immediately upon your return to avoid negative spending habits.
“My personal experience is that it is almost impossible to get out of debt forever if you do not get rid of the temptations NOW,” said Mathew.
Her argument is that there is no emotion attached to credit-card spending. It feels as though you are not spending your hard-earned cash.
Also, a credit card enables you to talk yourself into a purchase you may not be able to afford, simply because you have the option of paying later. Therefore, you are not concerned about the expense until it is too late.
“It feels good to carry cash,” she said. “Spending your cash-on-hand budget is an emotive action.” She said that you are more likely to consider your purchase; whether or not your need is valid and whether or not your budget can allow for it.
“The next time you go to purchase an expensive item which you’d normally use a card for, hand over the cash instead and feel the difference,” said Mathew.
“If you are a credit card addict and can’t cut them up, make them very difficult to get at. Put them in a plastic container with water and put the container in the freezer,” she advises. This will enable you a few hours to decide if your desired purchase is truly necessary.
Recent research by Euromonitor, reveals that credit card usage in Australia has risen since 2009 due to increased consumer confidence. A projected increase of 3% is expected for numbers of Australian credit cards in circulation, while credit card transactions are also expected to increase by 3%.
Reserve Bank statistics also reveal that credit card and personal loan debt in Australia, is now at $1.2 trillion, a rise of 71% on figures from just 7 years ago. This equates to $56000 of debt for every man, woman and child in our population.
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For more information on The Money Tree System or to purchase, follow this link: http://www.mymoneytree.com.au/
