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How to avoid credit-card blues this holiday season

Air Force Master Sgt. Tony Fisher

Managing credit is a discipline many find challenging. Most people don't shop with cash anymore. It's far too convenient to carry "the card," or so we have convinced ourselves. 

The truth is, we spend far more money when we don't see those hard-earned dollars leave our hands. We have the convenience of revolving credit and payment options versus paying 100 percent up front. 

Yet the aftershock comes when the debt has risen beyond our control and the payments are making us feel captive to the creditors. This can lead to depression and hopelessness, as some people fight to keep their bills current and meet life's basic needs as they live paycheck to paycheck.

How does one avoid falling victim to the pit of debt? It's simple; stop using the credit cards. That is the one sure way to be financially free. However, if you choose to use credit, there are a number of ways to protect yourself from making poor choices. 

First, be responsible by being realistic when you compare the cost of an item with your ability to pay it off in full. If this is not a real option, delay the purchase. You're not going to suffer emotional damage if you don't get to watch the Super Bowl on a new 80-inch flat-screen with surround sound. Save for the purchase. You can also put the item on layaway, so you don't have to pay it off right away. 

Second, if you choose not to save, put yourself on a limited credit plan. Contact your credit card company and request that they put a cap on your credit limit. This requires some specific wording; otherwise, they will allow purchases that exceed your established cap and charge fees for those purchases. Ask them to set your credit at a limit that is manageable for you and to not increase this value unless you make a written request by mail. 

Additionally, remember to request they do not automatically increase your limit based on your good credit management. Many companies will do this after you have shown you can use your credit card responsibly. 

Before you know it, your limit will be hovering in the thousands and your card balance rises near its new maximum limit. This is counterproductive to your goal. 

Third, minimize your spending on luxuries. Ask yourself: is this a need or a want? Then resolve not to misspend the little money you have on those luxuries. Instead, devote it to paying down debt. Use a credit card calculator to explore how long it will take you to pay down each card, and set optimistic but achievable goals.

Finally, if you can't manage credit cards responsibly, you need to cut the cards up, contact the card company and close your accounts and pay them off. 

Many people, even in today's credit card economy, function very successfully with just cash and a debit card. If you choose to keep a major credit card, use it for bona fides emergencies only. Better yet, after you pay off those high interest balances you can start building an emergency fund. You can argue this statement by saying, "I need to build my credit score." 

This would be a true statement for those who manage credit well, but mismanagement is very counterproductive to your credit score. A negative credit history is more difficult to repair than one that was started a few years later in life. 

This commentary was originally published in the Arctic Warrior, the military newspaper of Joint Base Elmendorf Richardson. Alaska Dispatch encourages a diversity of opinion and community perspectives. The opinions expressed herein are those of the contributor and are not necessarily endorsed or condoned by Alaska Dispatch.To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com.