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As a financial coach, I teach my clients how to be in charge of their money rather than their money being in charge of them. One of the first things we do is review their income and expenses, including basic living expenses, student loans, and revolving debt, otherwise known as credit cards. In and of themselves, credit cards aren’t bad.

Yes, you read that correctly. Credit cards aren’t bad. It’s how we use them that can get us in financial trouble.

If you’re using your credit cards to pay for groceries and other day-to-day expenses without a plan to pay them back, you need to stop. It means you’re not budgeting your income to cover even the most basic of your needs. If you’re using credit cards to cover expenses every month, you’re actually running a month behind. You’re paying for last month with income from this month. At that rate, you’re never going to get ahead.

If you find yourself with credit card debt and no plan to pay it off, consider the following to get yourself ahead financially:

  1. Stop using credit cards. Don’t tear them up. Just stop using them.
  2. Make an honest review of your financial situation. Look at all expenses and income.
  3. Decide where you can make cuts to your expenses. Maybe it’s a gym membership or cable or magazine subscriptions. You have to create disposable income so you can start to get ahead.
  4. Start saving. You read that correctly. If you’re going to get ahead, you will need to have money saved for expenses such as medical expenses or car repairs. You don’t want to have to use a credit card without a plan to pay it off. Have the money in savings for when the expense happens.
  5. Pay off debt. Now that you’re not adding to the debt, you can create a plan to pay off your credit cards.

Only then, once you are free of the cycle of accumulating credit card debt and you have some money in savings, can you start to use your credit cards again.

The rule for all of my clients and their credit cards is to use credit cards when the money is already budgeted.

Let’s say my client has a budget of $50 per month for clothing. She can use her credit card to buy clothing up to that amount per month. Not $51 or even $52. Just $50. Then she pays off the card with the money she already has.

Never charge on a card if you don’t have the money to pay it off in the same month.

Credit cards aren’t bad. In fact, I fully support the responsible use of credit cards. For example, store credit cards often come with added sales and coupons which can save you money. You can earn credit toward flights and hotels or other products. Using credit cards may actually benefit your credit score if used responsibly. I encourage you to stop the cycle, pay off credit card debt and save for your next purchase.