It may sound a bit counterintuitive, but keeping some greenbacks on you can help you stay or get out of debt. Psychological studies have proven that spending on plastic just doesn’t feel "as real" as handing over a crisp new bill – or a wad of them.
Here’s a strategy that may work for some debtors: Draw up a budget and figure how much you can afford to spend each week, after paying debts, bills and rent. Include stuff like groceries and gas in this weekly spending figure.
At the beginning of the week, go to the ATM – or better yet, a real teller – and withdraw your "allowance." Now that cash has to last you for the next week, barring emergencies, for which you should carry an "emergency-only" card.
You’ll find that it’s a lot harder to splurge when you see your stock of bills depleting day by day. Without having to force yourself, you’ll go for cheaper brands at the grocery store and choose to walk to the pharmacy instead of driving and buying gas.
Of course, it’s important to keep plastic on you for emergency expenses and some transactions, and big purchases can be made by putting away extra cash each week and then using a card with good rewards.
But forcing yourself to actually feel the impact of spending money is a good way to stay smart about money.