by Tricia
A while back, a reader asked me what types of things we put on our credit cards. Unfortunately, I can’t seem to locate the specific comment since it was a while ago so the question may have been worded a little differently. But I know that they wanted to know about the things we would buy on credit.
Looking through my old credit card statements, there were charges all over the board but a few showed up a lot:
- Fast food
- Gas
- Clothes
- Furniture
- Toys
- Electronics
The cash we had was used first and foremost to pay bills. After that, we used our credit cards. The embarassing thing about our debt is that I thought I was doing a good job of managing our finances. We were able to pay our bills and collectors were not knocking at our door.
I didn’t fully understand the fact that I was digging a HUGE debt hole that was costing us so much money. At the peak, our finance charges were running over $400/month. I can think of a lot better uses for $400/month than giving it to the credit card companies.
Since starting on this journey, there have been times where I can really feel a difference with how we spend money. Case in point – an LCD TV. I really would still like one, but we’ll wait. Once our debt is paid off perhaps we will start an LCD fund. Back then, I would have bought one without a second thought.
I have learned how to wait.
And that is an accomplishment in and of itself, learning how to wait. I am a new reader, and I just started reading this blog, and am amazed! Congratualations at the slow and steady pace that has almost won you the race. 🙂
We were all pushed the “get now, pay later” idea that we are all stcuk paying for it now. If you look at the mess the global economy is in, it’s the actual money factor catching up with the greed factor. Too much, and we do end up putting the nesscecities of life on plastic. I am learning that lesson the hard way as well.
Great job on learning how to wait!
Gas was always a big thing with me and credit as well. It all adds up so quickly
At the beginning of the year, we had revolving debt on two cards, but soon had one paid off. It was at that point that we started using that card again for the points (it’s for Hawaiian Airlines).
But, no sooner did we start charging that someone in my household (cough, cough, wife, cough, cough) that restraint is rare, and we’re back up to a sizable balance.
Somewhere I read that patience is a virtue.
Congratulations on your accomplishments. Credit card debt can become a never ending cycle of debt if you are not careful. I got an interesting call today from my credit cardholder. They wanted to lower my credit limit until they could confirm some information that I had put on the original application. At first I agreed, but then I thought about it and had to call them right back and say no way.
My reasoning was this… your credit score is impacted by your debt to credit line ratio. By lowering my credit line, I would have ended up with a higher debt ratio and thus a lower credit score. I wasn’t 100% sure if this was true or not… but it seemed like it made sense to me. So, this was the reason I gave the issuing bank for them not to lower my credit line. They agreed, and since my past payment history was “ok” they decided to put it back to where it was previously.
The lesson learned here is that you have to make sure you understand how certain changes impact your credit and try to avoid anything that would affect it in a negative way.
I just started a new journey: http://www.ourstockmarketjourney.blogspot.com/ and I want to make sure I am diligent in this area.
Be well.
That’s awesome that you are thinking about a fund now for something you want in the future instead of just buying it!!
I just ran across your blog, and I am really impressed with how much you have been able to pay off in such a short time. See I got my first card in 1989 in college. And since that time I have paid off my balance every month. That is the kind of willpower I have, but I cannot imagine having that kind of debt and having the willpower to pay it off in such a short time that seems like so much more willpower than what I have. One thing that I do to save for specific items is use quicken. I create virtual accounts for items and then just transfer the “money” from the real savings account to the virtual account. And what I have my cc accounts in quicken too. I just download the transactions and the budget alert will come up when I am near the budget line.
I am to the point where I get completely excited about making my planned sale/coupon/points card purchases at CVS and getting my weekly groceries. Meaning, I don’t need to spend money on jewelry and other luxuries to have fun spending money. To me it is a thrill just to be able to cover all those expenses in cash. That’s also why I love paying bills, as I mentioned in another comment. I just love having money in the bank to pay things on time and not worry. I am in a variable cash-flow line of work and right now is my low cash-flow time period. But I have all the bills for July paid except for one, which is about $25 and hasn’t arrived yet. And it’s only July 7! I have income coming in for the remainder of the month and it is thrilling to know that will roll into August expenses. I have had summers in the past where I was paying utility bills with a credit card, then catching up in the fall when my income rose again. So my idea of a treat is to go pick up some needed items using coupons and earning points at my chain drugstore. Forget the manicures and new earrings. I’m happy to just be able to cover the necessities with cash. But enough about me…. Congratulations, Tricia. And Angela – you go girl!
My wife and I are in the exact same situation you used to be in. We would charge everything from gas to groceries to Christmas presents. I kept getting raises at work. Instead of putting the extra money I made towards the credit cards, we just spent more. We created a lifestyle for us that we could not afford. Before we knew it, we had $75,000 in credit cards alone. I think we ran up over $25,000 in one year. I just barely started bringing the balance down.
It comes down to “need” and “want”. I too want an LCD TV, I think it would look cool. But guess what? I don’t NEED it. The one I have works fine, is only 5 years old, and nothing is wrong with it. So, thank you very much Mr & Mrs Jones, but I will not be keeping up with you. However when this one dies, I will get a nice flatty at a really good price and be happy then.
Teach me how to wait. Please.
Teach me to learn how to wait, that is.. sorry! 😉
Knowledge is power as they say, once we realize just how much is going toward finace charges then we (or I was) motivated to do someting about it. Credit cards are way to easy to use. Good work.
I remember paying those high financing fees… which only add to the balance. The highest I remember paying was 236 dollars, that hurts. Around this time I decided something had to be done.
HS
Wow – this really sounds familiar. I was in the same place w/ the credit cards – just using them whenever for whatever. My finances were a total mess and I never knew exactly where my bank account stood. I was probably just a few months away from serious trouble. I finally decided to put an end to it this past December. I used Quicken to get myself organized and setup a plan of attack. Since January, I have managed to pay off over $7,000.00 dollars worth of cc debt and should be credit card free by the end of the year.
Anyways – I enjoy reading your blog and will be starting my own here soon.
Kev
We don’t have cable so tv isn’t a big deal (it gets turned on for the news and the odd program when I remember and to watch tv series on dvd from our Netflix equivalent or the library.)
An LCD tv wouldn’t have a strong enough tuner to draw in a decent picture with rabbit ears so it would be a step back for us. When the switch over to digital tv comes, I’ll be buying the converter boxes and not buying new tvs. Old tube tv’s last over a decade, we know that; the life span of an LCD is unproven. I still have two tv’s in storage in the basement (one is 14 years old, the other over 25 and is b&w) so when the three I have fail, I have lots of backups.
I’m still on my “don’t buy anything new” year and but the first item I’ll be buying when it is up is a step stool like we bought my dd. A chair works fine most times but I used hers a few weeks ago to clean her ceiling fan and realized it gives me more height, more stability and is easier to carry to the job at hand.
After a year of not buying stuff, I’m amused that the item I want is a step stool. I’m thrilled I’ve got my priorities back in place.
i know the feeling…we’re paying $275/month in interest charges and i’m pretty sure i’d rather have that money be going elsewhere! that’s motivation enough to start chipping away at our debt 🙂
This is so true! Patience is probably the single greatest help to getting out of and staying out of debt!
I’m just starting my journey, and I have a 5 year old laptop that I desperately need to replace. Rather than just buy one on credit I’m going to wait and save up over the next few months. My boyfriend pays me his (small) portion of the rent in cash and I’ve decided to use that to build up an emergency savings fund and keep it for large discretionary spending, like a new laptop. I think I’ll have saved enough by February to order one.
Keep up the good work, and keep up that willpower!