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Whether you are drowning in credit card debt or you are debt-free and struggling with life without a credit card – this is the post for you. Today I’m sharing MY experiences and thoughts on credit cards and credit card debt – hopefully, it helps you to clarify your own situation and inspires you to pay them off and build better habits!
First, a little time traveling…
I remember when I turned 18 and signed up for my first credit card. It was on the campus of my University, and I did it to a, impress my boyfriend at the time, and b, get a three-pack of Tupperware bowls. Well, the boyfriend is LONG gone, but I do still have at least two out of three of those bowls, and until recently, I carried a balance on that credit card nearly every month. Since 2001. My goodness, my head spins, thinking about how much those damn bowls cost me!
Getting a credit card was the ‘cool’ thing to do. It felt fancy to use it, and I was 18, and an ‘adult’ so I should be doing adult things, like racking up debt!
I can only hope that we raise our kiddo with a better understanding of money and debt.
Another tale of irresponsible Katie & the dreaded Visa.
Fast forward a few years… It was maybe 2003. I was nearly finished my final paper in my second to last year of my degree when all of a sudden, my computer froze. And I lost EVERYTHING. I lost everything I had done for every other course in the past four years, plus the paper that was due in a few days.
This could be a cautionary tale of backing up your computer. Seriously – do that too. But the moral of this story comes next.
I sat there, on a rainy morning, staring at my computer in disbelief. And all I wanted was to head to the mall to do some retail therapy to help me feel better. But alas, I already knew that sweet Visa was at max capacity.
However – a quick phone call later, and I was in business. You see, all I had to do was phone the card company, and ask for an increase in my credit limit, and just like that, I had plenty of room for all the shopping salve I could muster! I even remember telling the guy on the phone that I had just lost my final paper, and I required a new pair of shoes to make myself feel better!
YOU GUYS! I didn’t pay that stinking Visa off until nine months ago!
When I think about my early experiences with credit cards, these two stories paint the clearest picture. If I could make the minimum payments, I felt like I could afford anything. If I wanted something but didn’t have the cash for it, I bought it anyway. And when I’d done THAT so much that the card was maxed out, I’d simply give them a quick phone call and get that credit limit bumped.
Do these stories ring true for you?
Have you turned to your credit cards to pay for something you don’t have the money for, with a promise to pay it back at the end of the month?
Or maybe you have used those sleek plastic cards to feel better when you’re having a rough day?
How about to cover necessary expenses that you don’t have the money to cover? Buying groceries when you spent the last of your paycheque to pay rent?
Yah. Me too, friend.
At first, it feels like the greatest, most-adult thing you’ve ever done. And then it turns into a slippery race track where you can’t keep up, or catch up, and you just keep falling farther and farther behind the race.
Okay, so you probably don’t come here to read all about my financial failings from my youth. Or maybe you do, in which case high five! Let’s be buds!
My goal with Reach is to give you actual tools that you can use to change your financial life, and boy oh boy, do I have great news for you today!
You do not have to stay in the cycle of credit card debt.
You can pay off your credit cards.
You can choose not to owe money to anyone, ever again ever.
And, you can even use credit cards, later on, responsibly, and collect all those points that are so incredibly enticing.
I will say it again.
You DO NOT have to stay in the cycle of credit card debt.
Let’s break the cycle, starting NOW!
Step One – STOP using the cards.
You can’t get OUT of debt while you are busy using your MasterCard to pay for your life. So the first step is to quit the habit and stop using the cards.
Make a commitment to yourself – I will only buy the things I can afford.
And then, do not break that promise.
Tuck the cards into the back of your underwear drawer, put them into a container of water and stick them in the freezer, or get REALLY real with this and cut them up!
Dave Ramsey calls this a plasectomy.
Cut up the cards so you cannot swipe them.
And I’ll go one above that because I know how lots of us shop these days – delete them from your computer and phone. Tell google to forget those numbers, because you don’t need them anymore!
Yes, you can still online shop. Nearly everywhere that I’ve ever paid for things online accept my Visa Debit card as a straight-up credit card. The money is MY money, coming directly out of my chequing account.
Whatever you have to do, stop using the cards.
Step Two – Manage your Money
Now you are going to manage the money that you HAVE to pay for the things you NEED, without going any further into debt.
How, you ask?
With the all mighty budget!
Check out these two resources:
How to start a budget that will CHANGE your life. (I swear, this is the best thing I have ever done for my family!)
B is for Budgets – a quick look at different budgeting styles to help you find the one that works for you!
Bottom line, you have to use the actual money you have to pay for your life, so you don’t charge anything to your credit cards again.
Step Three – PAY OFF YOUR CARDS
Yes, it is that simple.
Take every single extra penny you can find in your budget and pay off those cards. Starting with the smallest and working your way down the list of debts until the last one is gone.
If you have other, non-credit card debts, you can add them in here too, or you can strictly focus on your plastic debts. Either way, this is called a debt snowball, and you can read more about it HERE.
List all of the balances, from smallest to largest.
Pay the minimums on all of them.
Put as much extra on the smallest one as you possibly can.
Repeat, down the list, until they are all paid off!
Some resources to help you make and find extra money to use:
Step Four – Return of the …MasterCard
This is where my advice veers off the Total Money Makeover path, and why if Dave Ramsey was reading this post, I’d get kicked out of the cool-kids club.
(Man, if, for whatever reason Dave reads this post tho – for real – thank you for changing my life, and I have SO MUCH RESPECT for the work you do!!!)
Okay, fan-girl moment over.
I believe that, with CONTROL and intentionality, you CAN use credit cards again.
Wait, credit card. You do not need more than one.
You don’t need a huge credit limit.
And you are FOR REAL going to pay that sucker off AS SOON AS YOU USE IT.
So there are rules in place, and you have at this point (I hope!) developed healthy money habits to make this next step possible.
There are situations where you need a credit card, and I understand that.
- Paying for parking.
- Renting a car (at MOST Canadian car rental places).
- Booking a campsite with Alberta Parks.
Those are three places that I can think of that we have not been able to use our Visa Debit and have needed a credit card. And yes, you can shop around and find a car rental place that doesn’t require it, or you can find parking that takes cash. But there was not an option to pay cash when I was booking camping 90 days out, to get a campsite on the long weekend.
However, this comes with a HUGE but…
YOU HAVE TO HAVE THE CASH TO PAY FOR IT!
I pre-pay my MasterCard when we use it. I’m not EVER spending outside of my budget. And I don’t wait until the end of the month when the statement (and the interest) comes. I pay it off IMMEDIATELY.
I can’t stress this enough, because I don’t want you to do all the hard work of paying off your cards and then digging yourself right back into that same hole.
Which Card though?
Now that you’ve gone through the credit card detox and you are ready to use a card again with caution and intention, you’re left wondering which card is right for you.
I’ve learned since starting this work with Reach for More that personal finance blogs often have lists of credit cards, which have the best perks and benefits, with reviews and advice to help you make that decision.
If you are wondering which card is right for you, click on over to Maple Money for all your needs. They have a ton of information for you to choose a card that meets your needs!
I didn’t make my own list. First, why recreate the wheel? Maple Money for real has you covered. But also: I don’t LIKE credit cards. I know that these companies prey on people at their toughest moments and that their business model, albeit incredibly profitable, is based on making money off of my stupidity. And I’m not here for that.
C is for Credit Card could have been all about the benefits and drawbacks of different cards. But that’s not my jam. I want to teach you to use credit cards with intentionality, and NEVER pay them another dime in interest ever again. Forever.
Which card do I use?
I will say that I use a WestJet Mastercard because of the benefits it gives me work for my life. We get 1% cashback and annual companion passes that allow us to fly for cheap. And you wouldn’t think 1% would add up that fast, but I’m pleasantly surprised to see that growing balance in my travel bank!
At the end of the day, you have to do what works for you. Earning cashback might be your priority, or having no annual fees. Do some research and figure out what is best for your life and money needs!
I was stuck in the cycle of credit card debt for well over a decade. Eighteen years, to be exact. I have been there, and I know how scary it can feel. But you do not have to stay in that awful place. You can change your habits, pay off your debt, and even use a credit card responsibly. It’s time to get intentional with your money and Reach for More with your life!
If you have questions or need help getting started please reach out any time. We love helping people just like you change their lives!
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