Dealing With Debt – Part 5
Are credit cards for everyone?
Let me start by answering this question right off the bat. Credit cards are not for everyone, at least not for everyone right now. In the same way college is not for everyone, neither are credit cards. However, just like people who failed badly at college in their late teens-early twenties, but decided to return in their later years, you too can make a comeback with credit cards.
In previous web-posts, we’ve discussed credit cards in various topics: ways credit cards can work for you, using them responsibly, encroaching trouble with credit cards, how they can make us better, having discipline with credit cards and more. In this web-post, we’re going to discuss the 3 biggest mistakes we’ve made with credit cards.
If you find yourself wrestling with any one of these three, you’re in the right place and ready to turn it all around. Let’s get started.
Getting a credit card before we’re ready.
Mistake #1: We got a credit card before we were ready for one.
Everyone else was getting credit cards and the offers poured in, while we were students. Because everyone else was getting them, we thought of reasons why we should as well. You’ve heard people justify it in ways such as these.
- “We need a credit card for emergencies.”
- “We need a credit card for business travels.” Here’s my favorite…
- “We use our credit card to tie up someone else’s money and not our own.”
Whatever the justification, if you’re not ready, this type of debt will eat you alive and you’ll end up paying for it later.
What I mean by “ready” is simply this. Learn how they work. Do some research. Do your homework. Don’t take this lightly. Find some mentors who handle credit cards well and not those who handle them poorly. This won’t be easy to do because 8 times out of 10, those around you handle them poorly.
Saying we will pay it later.
Mistake #2: After each purchase, we told ourselves we’d just pay it later.
My grandmother used a phrase that works perfectly here. “Your eyes are bigger than your stomach.” Your desires and appetite for more is bigger than your income. Saying you’ll pay it later is a mistake. The debt becomes so large you’re unable to pay it later. And later will end up causing you to have years, even decades of payments to make. That mindset is the first thing that needs to go and is a revealer of your lack of discipline. I know because we’ve been there and done that.
Treating it like a credit card and not a debit card.
Mistake #3: We treated our credit card like a loan and not like a debit card.
This one sounds unconventional. You should treat you credit card like a debit card. When you treat it like a credit card, it won’t be long before the balance is more than you can payoff in a given month. However, if you treat it like a debit card, you’re ready.
Did you know you can make multiple payments? You can make payments everyday if you like. For us, I like to settle up each week or at a minimum on payday. Using a credit card requires more discipline than using a debit card. Don’t attempt it until you’re ready.
Today is Friday!
In this message we’ve shared a big three; our 3 biggest mistakes with credit cards that is. The mistakes include: 1) we got one before we were ready, 2) we said we’d pay it later and 3) we treated it like a credit card, not a debit card. Don’t allow my big 3 to be yours.
Additional Web-Posts on Credit Cards:
- Three Ways Credit Cards Can Work for You
- Key Indicators for Using Credit Responsibly
- 3 Indicators of Encroaching Credit Trouble
- How A $350 Credit Card Made Us Financially Better
- The Discipline of Using Credit