To Be Debt-Free in 2020 and Beyond, Surrender the Credit Cards

Remember when I told you about how the app and book You Need a Budget has transformed our relationship with budgeting? Well, it’s still helping us and I hope it will help you go debt-free in 2020 if you haven’t already done so.

You Need a Budget’s founder Jesse Meecham did a great year-end podcast series about debt that I hope you’ll check out. I’ve posted the shows below. But first, here’s a little awakening I had last Christmas, when I finally understood the true definition of debt.

We Jumped off the Credit Card Float, and Survived

Rose Parade float

It wasn’t this kind of fun float, like at the Rose Parade.

Before we found You Need a Budget (aka YNAB), and even for a long time afterward, I used our one credit card to pay for large routine expenses in our personal life, like dental work, truck repairs and Christmas. Sure, we paid off the bill in full the next month, but I was trying to trick myself into thinking we didn’t have debt.

The problem with using the credit card like this was two-fold. One, I wasn’t saving for those routine expenses in my monthly YNAB budget. When they occurred, I just reached for the credit card. Each time, I rationalized that we had the money in savings so why not just use the card and get the Reward points? 

Second, and most importantly, each time I did that, I was jumping on “The Credit Card Float.” It’s a risky ride. Here’s how YNAB’s Meecham describes it:

Here’s the test to determine if you are trapped in the float: If you can’t pay the credit card in full right now AND meet your current obligations, you’ve got debt.

Once I read that I thought: “Duh! That makes so much sense!” I’m sure has Dave Ramsey explained it in his show a million times, but I always missed the memo.

This time, however, I looked at those credit card statements and realized that we couldn’t pay them off at any moment with what we had in our checking account. Why? Because I had never created YNAB budget categories for them to stash money specifically for those expenses.

credit card float

And we weren’t having this kind of fun float either.

It finally sank in. So last Christmas I committed to only using cash on hand for buying presents. Our spending was more constrained, but the act of buying them was more thoughtful, and giving was way more fun.

Best of all, I’m not waiting for that Christmas spending credit card bill to arrive! What a relief.

The goal this year is to stay off the float for good. We are sticking to our YNAB budget. And we’re building our cash reserves to pay cash on-the-spot for those ugly expenses that crop up every year, like truck maintenance and taxes, and those that we don’t anticipate. 

How to Start Being Debt-Free in 2020 

Here’s the heart of what I’m getting at. If you haven’t checked out YNAB yet, I encourage you to finally do so. It doesn’t matter where you’re at in life, YNAB works wonders on your financial health.

Jesse has a great podcast of really short bits of advice, and at the end of 2019 he did these four segments about why debt is so harmful to our financial health. Give them a listen and I think you’ll be convinced to finally go debt-free in 2020, without a credit card. 

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