The Cut Off

It occurs to me that I have yet to discuss one of my more useful spending tools. Periodically I’ve noticed our spending starts to go a bit out of control compared to the normal spending. At times like this I reach for one tool that always works like a charm to bring us back under control: the cut off. The cut off refers to cutting off using our credit cards.

In our normal spending pattern (perhaps 80% of the time), we typically use our credit cards to pay for unusual expenses (ie: something breaks), which are then paid off in full at the end of the month. I typically leave some extra cash in the chequing account to cover theses expenses. Some months we don’t use it and I carry it forward and others we use it all up. The point is the cash balances moves up and down, but it works for most of the time.

Yet sometimes things just happen and it pushes us over the edge. It’s typically a slow thing, but once I realize my Visa bill is past what I know exists in my chequing account I will cut us off. From that point forward we will only use cash/debit until the accounts return to a bit more of normal level (which happens usually in one month). So if something breaks we ask can it wait a month and surprisingly most things can wait a month. Deferring expenses is a great way to control your cash flow. If buying something will make the rest of your month a bit too tight, look at pushing it off until next month. Sales come and go. So if your patience you can typically hit another one later in the year.

This is just one method that happens to work for me. What have you tried and what works for you when you spending goes a bit out of control?