The following is another post from Lyle, a self-employed guitar instructor, performer, web-designer and blogger. For the past twenty years, he has adopted the tenets of voluntary simplicity to live a thrift shop life and has recently began blogging with these concepts in mind at The Joy of Simple.
If you read my previous guest post, How Being A Credit Card Delinquent Saved Me Thousands of Dollars, you might recall that for more than twenty years I had been happily credit card free…well…at least that’s the way it was until about six months ago when I received a MasterCard in the mail.
How They Got Me
Normally I don’t fill out credit card applications, but I felt sorry for the woman who was being constantly passed by and ignored by this particular stores’ customers. So when she sheepishly asked if I wouldn’t mind filling out the application for some free doo-hicky, I nodded and signed on the dotted line!
To be honest, I never thought I would even receive the card because while I didn’t have bad credit, I actually have no credit. I found out that little fun fact as I was searching for an apartment to rent four years ago.
How I Mis-Handled It
To make a long story short, I did receive the card and was grateful that the credit limit was only $200.00. I figured this would be a great way to start rebuilding my credit, and really, how bad could I screw up with a limit of only 200 bucks!? Well…I’ll tell you how…by maxing out the card, which didn’t take a lot of effort or time, believe me!
A few dinners out with friends, a couple of trips to the grocery store and voila, a maxed out credit card! And even though the plan was to use the card for emergencies only – yeah right!! – and then pay it off immediately afterwards, that concept really did not go according to plan!
Funny thing happened though, as I eventually paid off the balance in full, I received a notice not long after that I was entitled to increase my credit limit. All I had to do was call a certain phone number and that would be that!
My first instinct was to decline their offer and run for the hills. Yet, I was curious as to how much they were willing to increase my limit…so I made the call.
Less than a minute later I was now the proud “owner” of a $700.00 credit limit. This was now a little more dangerous – relative to my cash flow – but I figured “Hey, I’m much more in tune with my simple living/frugal side – now more than ever – and I shouldn’t have any problem using the card responsibly and only when needed!”
Less than four months later, my card was nearly maxed out and really, what did I spend it on. A bunch of meals out with friends, a few Blu-Ray DVD’s that were on sale, some groceries when cash was a little tight, and that’s basically it.
Surprisingly, I realized that because of the card, and the fact that I wasn’t taking cash out of my pocket, I was buying more expensive brand name items at the grocery store, along with food items I never really bought before (tub of Ben and Jerry’s anyone!!). And when out at a restaurant, I was spending more than I normally would have if I was paying solely in cash! I mean after all, the surf and turf is only a few bucks more than what I was thinking of ordering in the first place so why not!
What was happening to me!!!???
I’ll tell you what, I was falling into the trap that many, many credit card holders fall into…the trap of convenience and forgetfulness. You obviously don’t forget that your spending money you may or may not have, but when all you have to do is input a PIN and your bill is taken care of, you may forget to parcel some cash away to pay that expense the day after! Do that more than a few times and it begins to add up…fast!
Well, thanks to a decent paying web design gig, I was able to pay off the full amount, and wouldn’t ya know it, when my next statement arrived in the mail, there was yet again another notice stating that I could increase my limit if I wanted to! AND I DID!!! Was I crazy!? Possibly! But I was once again curious as to how much they would increase my limit to. A few minutes later I had my answer, $1000.00! And that’s where it is going to stay! No more limit increases for me!
I realize that this is almost second nature for some folk who have one, two, three or more credit cards taking up space in their wallets or purses. But I had been credit card free for so long that it was kind of exciting for me to see how far I could go. It was also a little scary! My previous history with credit cards was not good to say the least, and if they hadn’t taken them away from me, I would have probably had to deal with massive CC debt back in the day.
Well, sad to say, this pattern appears to still reside within me even though I have become a very different person since the 20-ish year old me. It’s kind of like being a chronic gambler where the call of the game is stronger than the will to resist. I actually surprised myself a few times on the amount of money I was adding up on the card and while I wasn’t pleased with my behavior, I kept on doing it. I guess some old habits are really hard to break!
Thankfully, things are a little different now as I leave my credit card home when I go out so I won’t be tempted to use it. This way, I’ll only spend as much as I am comfortable with spending in actual cash.
Once again, I have adopted a cash only lifestyle and will continue to do so. However, I will use the card every now and then to keep it active. I’ll make sure though that I have the cash on hand to quickly pay off the expenditure the next day so that my balance doesn’t creep up.
To be honest, having a credit card is not all bad if handled responsibly, and the silver lining, at least for me, is that my credit rating seems to be on a positive up-swing. And even though I won’t be looking for a loan, or wanting to apply for a mortgage in my lifetime – yes I know, never say never – at least I’ll have a decent credit rating…which was my intention all along.
So, are you as responsible as you would like to be when it comes to credit cards? Or are they just a dang too convenient when cash flow is kinda tight? Take care and all the best!