I really don't know a ton about the whole concept of Ramadan besides what I have read. However, the part of this ritual which is most interesting to me is the idea of a long term fasting period. Though fasting is generally discussed to be only for adults, children as young as the age of eight willingly participate in this long term tradition. This whole idea of fasting is an interesting concept at it relates to how you look at your financial picture. With Credit Card debts continuing to reach all time highs, I thought it would be interesting to discuss what a 30 day credit card Ramadan might look like and what it could mean to uncovering what is really going on with your money.
What would the concept of a financial credit card Ramadan look like? Well, we have become so accustomed to doing everything we do today through the swipe of card. You go out for a nice dinner and the bill comes to $121.45, just plop down that Visa or American Express card and all the pain goes away that evening. If the tab at the Whole Foods Market comes to $224.90, with a swipe of your trusty debit card you can take care of that entire balance today. Or possibly you have moved some of your cards on to your phone like the Starbuck's card where you just wave the screen over the infrared reader and boom your Mocha Latte is ready to go. In a sense, most of our purchases we make today give us no real emotional connection of losing or spending our hard earned money. It's amazing how many people in the 30's, 40's, and 50's don't have a grasp on where the money goes each month since 'cards' are how they make most of their daily purchases.
Thus, what if you challenged yourself to an outright fast on cards for next 30 days in your life? Could you actually do it? This would mean first and foremost that you simply do not use your bank debit card for any type of purchases over the next 30 days. No swiping for gas, groceries, or anything else that requires you swiping your card. You must use cash for every single purchase. The use of cash instead of the debit card will absolutely shrink your spending over the month because of the psychological effect it has on your brain to 'lose' your money. Did you ever notice that if you have a bunch of $100 bills in your wallet just how long it takes to get rid of them? In addition, you can make no credit card purchases. This will not only help you for smaller items, but can you imagine if you had to hand over $1,700 in cash at a Crate & Barrel store for some new furniture. You might think twice before you spend that money. I wonder at this point if your utility companies will even take cash. I can't remember the last time I heard someone say that they sent in $81.96 in cash in an envelope to their utility provider.
If you spent the time to look at your monthly expenditures, you could figure out just what you need to withdraw from your bank for a month and then when the money is gone . . . it is truly gone! With the way we all use credit and debit cards today it is never really gone. You either extend yourself on the credit cards or some people continue to overdraft on their debit cards. Either way, the only pain you feel is when you look at that ugly bill that comes at the end of the month.
I'm not telling you this would be easy. Heck, it isn't easy to even fast for one single day let alone do it for 30 days. However, if you know that your spending is out of control and you feel numb each month because money is just slipping out of your hands then perhaps a Credit Card Ramadan is exactly what you need. Are you really starving for the next iPhone upgrade? Are you really hungry for that top notch steak house in town? Do you really want to stuff your closet with more new clothes? Or it is simply the problem that the junk food is just on a shelf in your house that is too easy to access? Maybe a plastic fast is just what the Doctor ordered.
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Written by:
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder of oXYGen Financial, Inc - The Leaders in Gen X & Y Financial Advice and Services
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