An excerpt from Life After Bankruptcy by Seth Hanson
The risks of getting back into debt after bankruptcy are very real. You will likely be bombarded by credit card solicitations. Please put them where they belong – the trash. I can’t think of a compelling reason to get a bunch of credit cards and flirt with the danger of getting back into unmanageable debt.
Some of my clients say they need a credit card to get a hotel or to get a rental car. However, most hotels and rental companies will accept a debit card as long as the card can be used in a credit card machine (in that situation the transaction should still come directly out of your bank account). If the hotel or rental car company absolutely requires you to use a credit card, just get a prepaid credit card.
There is also much to be said in favor of using CASH. Why? When you pull cash out of your pocket, or wallet, or purse, it is real. You can see it, feel it, and smell it. When you lay down that $20 bill to pay for your groceries or prescriptions, it is real to you.
Studies have shown consistently that when you use cash, versus a credit or debit card, it is a much different psychological experience. For that, and perhaps other reasons, people using cards spend on average between 12-18 percent more than people who use cash. A study by the Journal of Consumer Research indicates that people routinely spend less when they use cash. So, there’s an argument – supported by empirical data – that using cash can help you save even more than using a debit card.
Going back to the previous chapter, if you can afford something, you can afford to pay for it using cash. If the only way you can “afford” something is by using a credit card, you can’t really afford it.
For more information contact your Yuba City bankruptcy attorney.
Categorized in: Credit