The Path of Least Resistance

As a kid, I was fascinated by the section in science class where they showed images of how rivers changed shape over time. As sediment is carried and eventually dropped, the speed and direction of the water flow shifts, carving a different path into the earth. The water constantly follows the path of least resistance.

Human behavior is much the same way. Whenever we have an array of options in front of us, we're likely to select the path of least resistance. We can get out of bed, drive to the gym, and get a workout in......or just stay in bed for another hour. The path of least resistance. We can prepare lunch the night before work.....or we can just grab a sandwich at the deli next to our office. The path of least resistance.

This is one of the many reasons I suggest clients cancel their credit cards. This suggestion is often met with eye-rolling and a staunch defense that includes something like "I'm always responsible with it." These comments are typically combined with defenses revolving around the benefit of points, the fact they pay them off every month, the perception they are safer, and the fact they are building credit.

One problem. Eventually, the path of least resistance will come into play. Two families in my life are living this reality as we speak. I've suggested for years that both these families cancel their credit cards. One family doesn't even use them....hasn't for years. It's "just in case," and that's what I'm afraid of.

As I always say, credit cards seem like our friend.....until they become our worst nightmare. Fast forward a few years, and both families are facing financial challenges. It's a combination of medical, auto, house, and job-related situations. Both of these families handle their money relatively well. They've made good decisions and are going in the right direction. One problem, though. They still have active credit cards. Just like the sediment in rivers, financial challenges will cause us to seek the path of least resistance. After all, pain hurts. Stress sucks. Tension puts a strain on relationships. There's a simple way around all that. It's the path of least resistance. Out comes the credit card.

We're going to use it just this one time, though. Well, maybe just the things we need. Then it shifts to putting everything on there because seeing our savings dwindling is scary. But just this month. Next month we'll get on top of things and back to normal. Except the path of least resistance didn't actually make this better. It just dropped more sediment, causing us to push deeper into the path of least resistance. Fast forward a few months, and our reality looks much different. We went from the family who said, "credit cards are great if we use them responsibly," to another statistic. Tens of thousands of dollars in expensive debt, in the snap of your fingers.

My heart breaks for what these families are now dealing with.

Removing the Option

I'm a broken record on this topic, but credit cards aren't our friend. Every time the words "it's a tool," "just need to be responsible," or "we pay it off every month" are uttered, I know how the story will eventually end. Family, after family, after family, after family is literally being destroyed by these things, and it's getting hard to stomach. Credit cards work really, really well...... until the moment they become our worst nightmare.

Every time I say such slanderous words, I get mocked and ridiculed. To some extent, I get it. My sentiment flies in the face of society, and I look like a complete weirdo. But if you could see the things I see, have the conversations I have, and provide the shoulder to cry on that I provide, I think you'd have a much different perspective.

There's one sentiment that I share over and over again with families. If you allow credit cards to be an option, you WILL use the option. It's the path of least resistance.....until it becomes THE resistance. It's the remedy that immediately solves your problems.....or so it seems. It's the action that takes your stress level from a 90 to a 10.....for a while. Credit cards are a great band-aid, but a lousy tourniquet.

If I could make one general recommendation to every single person who reads this article, it would be to remove credit cards from your life. Perhaps you're the exception who can use them well.....but probably not. That's the problem with exceptions; everyone thinks they are the exception. That's what happens with so many of the people in my life. They believe they are being wise, strategic, and resourceful. Then, it catches up to them. Not immediately. It may take 2 years, or 5 years, or 10 years, or even 20 years. But when it does, watch out! It's a curse I wouldn't wish on my worst enemy.

If credit cards are an option, we WILL use the option. For that very important reason, I couldn't recommend more that we remove the option altogether. I removed the option from my life more than 10 years ago. Had I not, I most assuredly would have used the option at some point. Life is messy, life is hard, and life is unpredictable. But if the option isn't on the table, we must find other, much better options.

A Friendly Reminder

This is just a friendly reminder that using credit cards in no way makes our life better. In fact, it brings a litany of negatives that range from minor inconveniences to utter destruction. This is an opinion I’ve had for more than a decade, and each week I get more convicted in it.

I have two clients that have made significant financial progress in the last few years. By “significant”, I’m referring to life-changing, trajectory-altering, “holy cow I can’t believe that just happened” significant. It’s worth noting both of these families made this progress after ceasing to use credit cards. It wasn’t a coincidence. Getting rid of credit cards is the gateway to finally gaining full clarity, control, and transparency of our finances. It’s an unpopular opinion, but I’ll die on that hill.

Then, something happened. Both of these families recently decided, for different reasons, to start using credit cards again. Nothing major. Just a few purchases here and a few purchases there. They’ll pay it off in a few weeks after xyz happens. Nothing wrong with getting some cash back. It’s “more secure” than using debit. They won’t pay any interest because they have the money to pay it off. You know, all the common tropes. It seems so innocent. No big deal. But in a matter of just a few months, a few things happened:

• They lost clarity in their monthly budget because using a credit card separates the purchase from the payment. Timing gets altered and it’s hard to keep track.

• They lost touch with what they were spending money on, as the credit card payment includes a myriad of different items all lumped together.

• They felt stressed out, anxious, and frustrated. Our meetings were different. They went from excited and optimistic to stressed out and nervous. You could cut the tension with a knife.

• The strong momentum they had previously experienced had slowed to a crawl as they had to re-focus their energies on getting clarity, control, and a zero balance.

These people aren’t dumb. They aren’t irresponsible. They aren’t negligent. In fact, they are some of the brightest and most successful people I know. They are well-known figures in their respective communities. They simply fell for the trap so many of us do. Their decision to start using credit cards again is like the person who hits the gym hard and eats healthy, gets extremely fit, then decides to stop going to the gym and eating healthy because they’re pretty healthy and don’t need to worry about it.

I know this is a controversial opinion, but they deserve better…..and you deserve better.

Sometimes Surviving is Thriving

We’re in the middle of a tough financial season for many. Between groceries, fuel, vehicles, and housing, inflation has been squeezing people from all sides. I’ve talked at length about this topic on the podcast, but I like to categorize people into three different groups:

• Group A: They have quite a bit of financial margin in their life. Though they see inflation is happening, it’s not making a significant impact on their day-to-day life.

• Group B: They had some margin in their financial life and are really feeling the impact of inflation. Not long ago they were making swift progress, but now most (or all) of their financial margin has been squeezed out. They are making ends meet, but many of their wants and savings have been paused.

• Group C: They had little to no financial margin in their life. They were struggling to keep the train on the track even before inflation struck. Now, they are experiencing profound pain and chaos.

Most of us live in little vacuums. We live our own unique lives and base our perceptions of the world on a sample size of one: ourselves. For the members of Group A, this causes many to lose sight of what’s really happening to people in Groups B and C. They aren’t trying to be insensitive or dismissive……they often don’t know what they don’t know.

Here’s where I’m trying to land the plane. Members of Group B also have a blind spot. While watching their margin melt away and lose momentum, they are looking in the mirror and wondering what they are doing wrong. What they don’t know is so many others are having the very same experience. The walls are slowly closing in, and they think their own failure is the cause of it. I’ve had multiple client conversations around this topic recently. My motto has become, “Sometimes surviving is thriving.” Everything is a season, and for some, this season is about getting out alive.

However, it all comes down to your definition of “surviving.” Based on the looks of this recent article, more and more, people are turning to their credit cards to keep the train on the track. Credit card debt just hit an all-time high, and we’ll soon hit an outstanding balance of 1 TRILLION! Yikes!

In my book, “surviving” looks a little different. It looks like navigating from month to month without incurring debt. It looks like overcoming medical, car, house, and other emergencies without wreaking havoc on your life and marriage. It looks like prioritizing your values and holding onto the things which add the most value to your life (and perhaps letting go of the others). It looks like keeping momentum toward your aspirations (even a forward crawl is better than standing still or heading backward). And it looks like waking up every day with meaning and purpose. It’s not perfect, and it’s often messy, and it’s far from easy, but it’s worth it. If that’s you, I celebrate you and what you’re trying to do. It doesn’t always feel great, but you’re doing far better than you know!

You got this, guys! Sometimes surviving is thriving!

Just Use Meth Responsibly

Heroin is absolutely terrible! It’s addictive and quickly leads to negative consequences in all areas of our life. It impacts our health, marriage, work, and overall well-being. It’s responsible for many bad choices, ruined marriages, and broken families. Using it seems fine for a while, sometimes even fun, but then an unexpected moment happens where it quickly becomes a nightmare. Our life can go from relatively normal to absolute devastation in a matter of months. Its destructive qualities are profound.

None of this would be a problem if you would just use it responsibly, dummy! Yeah, I know it’s killing millions of people and marriages, but that’s not my responsibility. People just need to use it the right way. They get what they deserve if they decide to abuse it. Yeah, there are risks in using it, but the positives far outweigh the negatives. Everyone uses it, so of course I’m going to use it. It’s normal. We just need to do a better job teaching people how to use it properly. Just don’t be stupid with it! You’re an idiot if you don’t use it.

That sounds absolutely absurd, doesn’t it? Now, replace “meth” with “credit cards” and re-read the two paragraphs above. It still sounds absurd to me. We need to end the madness. Will you help me end the madness? Together, we can help shift this insane culture for the next generation.

Credit Card Myths: Travel Edition

If you know me at any level, whether that be personally or someone who consumes some of our content, you’ll know that I’m anti-credit card. I have several reasons for despising credit cards, spanning the spectrum of principles, ethics, psychology, control, and simplicity, to name a few. I won’t rehash all the reasons in this post. Every time I discuss the topic of credit cards, I know all the arguments people will use against me. The most popular defense of credit cards is the benefit of points, cash back, and miles. If you’re interested, I did a podcast episode about why most people (yes, probably even you) are actually losing money with their points.

Another common pushback I receive about my position on credit cards is the necessity of having one to travel. Flights, hotels, rental cars, and retailers…..all of these require a credit card, right? What kind of idiot travels without a credit card? Well, me. My wife and I just got back from a 10-day trip that included Qatar and multiple cities in Thailand. No credit card. As always, we had cash, our primary debit card, and our travel debit card. That’s it! To be honest, there’s not a lot to argue about. It works great. It worked as well on this trip as the other 30+ countries I’ve been to. It’s a myth. We don’t NEED a credit card to travel.

There are a few nuances. Take hotels, for example. Most hotels require a damage deposit to protect themselves in the event you decide to throw a raver or rip the TV off the wall. Each hotel is different, as evidenced by the three we stayed at. One put a temporary $200 hold on our travel debit card, one required a refundable $100 cash deposit, and the third didn’t require anything. All of our flights go on a debit card. That’s an absolute non-issue. As for rental cars, it’s hit and miss. Any time I need to rent a car, I’ll check with the company beforehand to ensure they don’t require a debit card. Some do, but most don’t. I just choose one that doesn’t.

Life is always simpler without a credit card, and travel life is no different. We have a sum of money in our travel fund to spend on travel. When we use an ATM to take out local currency, it comes out of our account. When we swipe our debit card at retailers, it comes out of our account. When we grab an Uber, it comes out of our account. At any point on the trip, we can see exactly how much we have left to spend. It’s easy, it’s simple, and it’s freeing. We have zero financial stress coming back to America, as we only spent the money we had in our travel checking account. Nothing will haunt us, we won’t be paying for this trip for the next few months (or years), and we don’t have to worry about anything other than trying to catch up with life when we return. I’ve worked with hundreds of families over the years and I can confirm the post-trip stress caused by credit card use can be brutal.

There are so many myths surrounding the topic of credit cards. Hopefully today’s thoughts about one of them will at least give you something to think about. Happy travels!