They cut out their credit cards

•  Send feedback to Money Magazine

The Moment: Henry Blaufox and Tabitha Gilmore-Barnes haven't used credit cards since 1998, when they had balances totaling nearly $10,000.

Henry read an article about the true cost of carrying a balance and was shocked. "It was astonishing how long it would take to pay off and how much interest I'd pay, even if I paid more than the minimum balance." Shortly after that, they decided to never carry a balance again.

The Method: They transferred the balances from four cards to one low-rate card, stopped eating out as much and swore off impulse buys with plastic. In less than a year they paid off the $10,000. They keep their accounts open, but they don't have the physical credit cards.

For gas and travel buys, they use an American Express charge card, which must be paid off every month. Otherwise every two weeks they take out the cash they need for groceries and living expenses. They occasionally use a debit card.

The Glitches: Last year, one of Henry's credit card accounts was closed by the issuer because of inactivity.

The New Life: "Ever since we got rid of credit cards, we've been living within our means. It has enabled us to save more for retirement," says Henry. They've saved nearly $400,000 for retirement and their only debt is their mortgage. Tabitha says they now have "peace of mind because we're not worrying about the debt."

NEXT: Chad Ramage