Suze Says I Should Clip My Credit Cards to Get out of Debt. Does That Really Work?

Popular financial advisors like Suze Orman and Clark Howard often advise listeners to cut-up credit cards and switch to cash. They suggest that credit cards are the reason why so many people are in debt. To illustrate, during one recent episode Suze actually suggested that a financially responsible couple switch to using cash only in an effort to teach their youngster about money. Suze’s reasoning is on the right track, however, it is partially flawed.

In my mind this whole “credit cards are bad” mentality is wrong. If you are bad with credit cards, chances are you’ll be bad with checks (overdraft fees), debit cards, and cash. Some people aren’t good with money – period. Telling people to stop using credit cards is not the magical answer, and often times can be down right risky. Carrying cash carries other risks – robbery, lost cash, no insurance or backing for your purchases, etc. In a lot of ways, credit cards make society a safer and easier place to live.

We Are Our Own Worst Enemies, Not the Credit Card

The credit card is only indirectly related to America’s money problems. The direct culprit is our own behavior. In my last post I briefly introduced the concept of Shopping Momentum. Shopping Momentum can easily be described as follows: shopping leads to more shopping. Or rather, once you decide to buy one thing, you create a “shopping momentum” which increases the likelihood that you’ll buy additional items that you didn’t originally plan on buying. In simple terms, the credit card is not the core problem; rather, the core problem is the number of times you purchase something during the week. This can include gas, coffee, groceries, lunch, etc.

Shopping Momentum and Frequency

Sure, credit cards facilitate this purchasing behavior; however, if you look deeper it’s all about shopping frequency. If you switch to all cash you have to plan out your purchases, in other words, it won’t be as easy to pop in for latte or get that extra car wash after you fill up your tank of gas. This being said, telling people to stop using credit cards is not the solution. The solution is to limit the number of times you make purchases during the month. For instance, the more you go grocery shopping – the more you’ll spend on food. The problem with shopping on a weekly basis (grocery and gas) is that you develop a “purchasing mindset” where you need to buy more and more food and other do-dads. Evidence of this purchasing mindset is evidenced by walking into any random house. How many households have you been in where there are pantries stock full of enough food to feed the family for a year? Is your house like this? Why is this necessary? Are you stocking up for the end of the world?

How Often Should I shop?

The most you need to go grocery shopping is 2x/month. Push it further, and don’t spend any money on gas for a month. The facts are that frequently getting groceries and gas can spur other spending behavior; for example, coffee, lunch, happy hour, dinner, clothing, etc. In each instance, the “goal” of purchasing is repeatedly activated in your mind – this will drive other purchasing goals. This purchasing behavior results in a huge snowball effect leading to more, and more spending – it doesn’t end.

To illustrate further, pretty soon you need to buy a house/condo with a massive master bedroom, with a huge walk-in closet. Subsequently, you’ll fill all of this space with needless crap and unnecessary clothing. Pretty soon, you’ll need more space, and again you’ll be on the hunt for a bigger space. This purchasing mindset won’t magically stop simply because you stop using credit cards – you need a bigger behavioral intervention.

You can designate 2 – 4 days per month as “purchasing days” (the only days were you can spend money – gas, clothing, food, going out, anything you want). You’ll be shocked at how much $$$ you’ll save versus if you spread the purchases out little by little during the entire month (you’ll also save a lot of time). Also, I’d suggest that the 2 – 4 days per month do not include major clothing purchases. Rather, I suggest that you go on two clothing shopping sprees per year (preferably late January and late July for best prices). Yes, I said sprees! The mall is the biggest Shopping Momentum trap of all – you need to limit your exposure while simultaneously adhering to your needs and desires.

The Bottom Line

The bottom line is this: The more you drive, the more you get gas, the more you get groceries, the more likely you’ll get take out, the more likely you’ll buy unnecessary clothing, the more likely you’ll spend, spend, spend. It’s shopping momentum. My advice to you is to reverse this momentum and see how much money you can save... The less you drive, the less you get gas, the less you get groceries, the less likely you’ll get take out, and the less likely you’ll buy unnecessary clothing.

Don’t cut up the credit card, rather, learn to curb your behavior. It’s easier than it sounds and you could save tens of thousands of dollars over your lifetime. -- J.B.


Reference for further reading:


Dhar, R., Huber, J. & Khan, U. (2007). The shopping momentum effect. Journal of Marketing Research, 44, 370-378.


Eddie Patel