Credit Cards sans Chaosby Valorie B.
One too many times I have found myself rationalizing an expense on a credit card before I had the hard cash to purchase it. The result - Debt. Lots of it. The only escape was a slow and painful one - find ways to earn more money to be able to pay off the balance at some date in the unforeseeable future and dump all extra cash (in other situations termed “fun money”) into the balance. Credit cards can be a nightmare - but through a painful learning process, I’ve come to learn that they don’t have to be. The benefits will outweigh the possible costs once you’ve learned how to manage them.
There are many ideas on how to manage credit cards. Some say the best assurance to avoid debt is not to own them at all - while I understand the real fear, I wouldn’t say I’m in agreeance. There are two main reasons almost everyone gets a credit card, and those are:
- A Credit Score: This will allow a loan officer, employer, or landlord to quickly and painlessly assess your financial integrity. Without a credit score, you’ll be printing pages of bank statements, paying more cash up front, and going through other annoying processes to determine your financial integrity.
- Rewards: Most credit cards offer some form of rewards program - whether it be flight miles or cash back. You are essentially being paid just to use your credit card. The great thing is that these rewards can be taken advantage of without a balance remaining on the card - you can swipe it and pay it off immediately while still accruing your rewards points.
That’s it. Those are the main reasons people want credit cards. Here’s the best ways to see get those benefits without going into debt:
- Only have two credit cards under you name. This will give you the great credit score you need while assuring that you can keep track of your accounts. A forgotten account because of too many credits cards could result in missed payments or closed accounts (yes, those negatively affect your score). It’s also harder to be aware of any identity theft if you have too many accounts open.
- Keep track of every. single. expense. Noticing a trend? Good. This is the only way to stick to a budget and keep you out of debt while using credit cards. How can you easily keep track of all your expenses? Why, WellSpent, of course! After all, making a budget has absolutely no value unless you stick to it!
- Pay off the entire balance every month before the credit card’s due date. The way to achieve this is to only charge to a credit card what you have the hard cash to pay for: i.e., groceries, gas, utilities, etc. This will ensure that your are not accruing any debt, will keep your accounts from closing, and will give you a great credit score because of making your payments on-time every month. Bonus - you won’t have a minimum payment due either!
- Have an Emergency Fund. This last one may seem unrelated but is actually a very important step to staying out of debt with credit cards. If you have $1000 saved up for a blown transmission or for an unexpected ER bill, you won’t have to charge it to a credit card and you won’t start onto the slippery slope that is debt accumulation.
Follow these easy tips for managing credit cards and enjoy the benefits while staying out of debt. As always, may every dollar you spend be a dollar WellSpent!