Five Minute Finances is a series of tips on how you can save significant money or reorganize your financial life in just five minutes. These tips appear Monday, Wednesday, and Friday on The Simple Dollar.
If the one thing keeping you from cutting up your credit cards is fear that you might someday desperately need them in an emergency, this tip is for you. When I was younger, my aunt once filled an ice cream container half full with water, put it in the freezer, waited twenty four hours, pulled it out, put her credit cards in there, then filled it up with water to the top and stuck it back in the freezer. The end result was a giant ice cube with her credit cards stuck in the middle.
What? Why? She realized that she was spending far too much money with the plastic and if she kept the cards around, she would keep using them on stupid things. She also realized that there may be a big emergency some day when she would need them. So instead of cutting up her cards, she froze them.
By freezing her cards, she didn’t destroy them, but she rendered them very difficult to use. To have access to the card, she would have to unthaw a rather large ice cube – it filled up a gallon plastic bucket and thus would take some significant time to unthaw, even if you used heating methods to help. This served two purposes: one, it got the cards out of sight and out of mind, and two, it made her take some very serious pause if she ever thought about getting them out to use them.
Using this strategy and about two years of steady payments, my aunt got herself completely out of credit card debt, and this technique was a big help in the process. The best part is that it’s quite simple and a very effective psychological trick to get yourself out of the plastic mentality.