Bad, Great, Not Enough, and No Credit Part 2
If you thought our post from last week was good, you’re in for a treat this week. We’re going into more detail on how we use the business and travel card. The first thing you must keep in mind is that the card didn’t and shouldn’t come before “the need”. If you will recall our story, we didn’t have “a real need” for the $350 credit card and because we didn’t have a need which equates to a plan, we abused it. We couldn’t pay for it. Think about what size payments you have to make monthly on a $350 limit credit card, not much. Yet, we couldn’t make the payments and ended up in collections. It was only when we finally had “a need” for a credit card that we created a plan. That need was travel expenses for my career. The plan was to use the card for business travel only and only spend what we knew would be reimbursed. I can’t stress this point enough, whatever has no purpose will be abused. Fortunately for those who are where we were, we know how to get out of that terrible situation.
The Credit Card Is Not
Today, we use our business card for a couple things: business and family travel. Again, there is no other use for these credit cards. Generally when people make a plan, they leave out 1 critical piece. What the plan is not. In this case, the credit card is not used for…
- household purchases
- any meals, which is the worst thing you can use credit for
- shopping sprees
- an emergency fund
Defining “what it is not used for” is just as important as defining what it is used for. Knowing this takes the questions away, like can we use the credit card to pay for the tires we need on the car? The answer is no. You see the credit card is the easy way out. There is no easy way out. You either pay now or you pay later, but you will certainly pay.
The Easy Way Out
Without a credit card, you exhaust options that have nothing to do with a credit card. This thinking changes if you have a plan. Without a plan, you will see the credit card as an option to solve a money challenge and it is not. If anything, it makes it worse but only with a delay. The credit card makes you think you have more money than you actually have. You begin thinking things like I can spend a little extra in that store. Besides I will get paid and then be able to pay the card off. Stop right there. As soon as you make that move you’ve just started living beyond your means which is debt. If you can’t pay the credit until you get paid, that means you don’t have the money to spend in the 1st place.
The credit card isn’t the easy way out, it’s the easy way in.
It’s the easiest way to get in financial trouble.
It’s the easiest way to get in debt.
It’s the easiest way to make your life and your family experience some really nasty hardships.
Your life is a business…your business. Say it with me, my life is my business! So you’ll need to treat these expenses like a business does. How does your company handle its credit cards? Do they just give them out to anyone? Do they not have requirements you have to read and agree to? Let me give you some examples. When I travel on the company, they set limits on how much I can spend for breakfast, lunch and dinner. They have limits on the type of lodging I can use for my accommodations. They have limits on rentals and they have time limits on submitting receipts. Oh and I almost forgot, you need receipts for all purchases or you can’t be reimbursed. I dare to say this is an idea to consider for your home. Isn’t your home more important to you than a company you work for? Set rules and be just this specific and intentional about your family’s credit cards. Write the rules down for your family’s plan. You know you have $200 for groceries, who ever spends $201 make sure they pay or you deduct the $1. Pamela knows that no one in our household receives their allowances until all bills have been settled. If there is no extra after the bills get paid that means we spent our allowances in the wrong areas and it will be another month until we get our allowances. [I know you can’t wait for me to explain the allowances.] Continue to follow us.
Today is Friday!
I feel for those who don’t have a plan when it comes to their finances (i.e credit cards). Afraid to answer the phone because of bill collectors. Family members calling you, because the bill collectors are calling them. You’re constantly trying to figure out how to make it all work. You’re chasing the wind. Because we lacked a plan when it came to our credit cards, we found ourselves in a difficult situation; one that we vowed to not experience again. After going through that situation, we memorized and added this scripture to our collection of our life/family scriptures, “Better one handful with tranquillity than two handfuls with toil and chasing after the wind.” – Ecclesiastes 4:6 NIV.
Better is having just one hand full with peace than to have both hands full with toil and chasing after the wind. In other words, it’s better to have margin and a handle on the situation than to have it out of control taking all of what you have to deal with it.
I’m interested; what are you using your credit for? Leave us a comment.