Your Credit Advantage – Part 1
Bad, Great, Not Enough, and No Credit Part 3
Pamela and I, using our Family Plan are determined to do our part in helping other households and families avoid these common traps in life.
Then Comes the “Common” Problems
One of the biggest problems we face is in having too many credit cards. I want to give you a little something to think about in this post. If having multiple credit cards is normal, that should be reason enough for you to avoid multiple credit cards. Normal isn’t working. Normal gets us in over our head. Normal is having $16k in credit card debt as an American. Now that’s a big number. So for everyone you know that uses credit cards, they average around $16k in credit card debts.
Too Many Credit Cards
(Now we can say) many years ago, we had a number of credit cards. My most memorable is that famous Discover card. That card took me places I never wanted to go, like collections and court. To this day, I vowed that we would never use a Discover card, because when we needed them to work with us the most, they wouldn’t. Creditors are like the devil, they help get you in trouble and then bail on you.
We had regular credit cards (Visa and MasterCard), store cards, and our favorite-gas cards. We both agreed that our Chevron card had to be the absolute best credit card we ever had. It also became the biggest problem at the same time. When gas prices soared and to fill up your tank is $80+, you don’t always have the money in the bank. Then in the fashion of credit, the debt starts to build up until we were unable to pay the entire balance.
The 3 Indicators of Encroaching Credit Trouble
It doesn’t happen all at once. Neither does it happen quickly, but it happens nonetheless. The balance begins to get out of your control. The funny thing is you continue to think that you’re in control. So for those of us who are willing to listen now and those who wished they’d listened then, here are three indicators that the balance is getting out of your control.
- You Make a Payment That’s Less Than The Entire Balance
Listen to me and I know you’ll have some resistance, but if you failed to make the payment for the entire balance, you are in trouble. Even if you’re convinced it’s just once, you’re headed for a problem and don’t even know it. This is one of the biggest indicators that credit card debt is about to take you. I’ve made all these excuses like most normal folk do. I’ll pay it when I get paid again. Then when that didn’t happen, I got smart and said, I’ll pay it with my extra check. You know that one that comes but twice a year when you’re paid bi-weekly. I found out in the long-run that there are no extra paychecks when you’re already in over your head. I also found out what it means to have “a poverty mindset”. It’s this type of thinking that says I’ll pay later. Paying-later-type-thinking should be replaced with get-it-later-type thinking or save-for-it-to-buy-later-type thinking.
- You Make Justifications for the Charges
This indicator, I will admit, is my favorite. It’s the person who makes justifications for why they charge and are not able to pay the entire balance as if this is intentional or a good financial strategy. It’s not. I’ve hear it and have even said it myself…
We need to buy or pay for this. [Note: your needs somehow multiple when you have a credit card.] This is the only way we can get what we need.
It’s better to use the bank’s money than my money.
We’ll pay it off when we get our income tax check.Justifications are you simply lying to yourself. I’ve done it and I don’t want to see you do it. I can’t believe a person would actually lie to themselves, but we’ll do it.
- You Make it Okay for Debt to be your default financial position
When I wrote this, I knew I’d need to do some explaining. “Making debt my default financial position”, this is what ordinary people do. They make purchasing without having the money their default. However there are people who make having the money their default. Before you use the same response I used to make, such as, if I made more money I wouldn’t be in debt, let me give you something to consider. If you’ve been on any job, at least in America, for a number of years, you make more money today than you did a few years ago. Yet for some reason even when we are making more money year over year, we remain in the same financial disposition. Sounds like a different problem to me. This is what I mean by having debt as your default position. It was never about how much you make, but rather how you use what you have. If you use what comes into your hand without getting into debt then you’ve altered your default financial position.
Today is Friday!
“Whoever disregards discipline [even in finances] comes to poverty and shame, but whoever heeds correction is honored.” – Proverbs 13:18 NIV
In the above quote, the emphasis is on having discipline with your money, your income. Without it, you come to poverty and shame. Ordinary people disregard discipline, but the uncommon regard discipline in the area of finance. This is true and as a result it’s those with uncommon practices (disciplines) who avoid poverty and ultimate shame.
Question: Which of the three indicators have you seen and have you or do you plan on dealing with it? Leave a comment below or click here to email me.