The following is a guest 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.
My First Credit Card
I received my first credit card back in the summer of 1979 at the ripe young age of 18. I had just started working at a new job and figured it was time to start building up a solid credit history. At least that was the plan. Secretly though, I think I just wanted to be able to buy stuff regardless if I had the money for it or not.
You see, prior to that fateful day, I was only able to make purchases if I had enough cash on me or was willing to save my money to buy those big ticket items I seemed to crave back then. With a credit card however, I no longer had to worry about such mundane measures as saving money for an item or two, or three. I could simply hand over my precious piece of plastic and my consuming needs and desires would instantly be taken care of. Chargex anyone!?
Over the years to follow I became a spending machine. I could easily buy nearly anything I wanted and I was the life of the party. Dinners with friends, drinks at clubs with women whose names I hardly knew, trendy-ish clothes, even hair styles! If you could name it chances are I was charging it, even when those silly Credit Card company letters were arriving at my door asking me to stop. I mean, “yeah ok…I’m way past my credit limit, but hey, I’m paying the minimum every month so what’s the problem!?”
Turns out that the problem was that I was out of control and soon, so were my credit cards as the CC companies and associated banking institutions froze my cards, ordering me to bring them back to my bank branch for “disposal”. It was a most embarrassing endeavor to have a bank teller take scissors to my valued plastic money as she gave me a look of both sympathetic understanding and cold disdain!
Wash, Rinse, Repeat
Now I wish I could say that this only happened once and that I had learned a very valuable lesson, but sadly, I cannot.
Over the years – my supposedly adult and mature years – I fell into the same spending habits and scissor cutting results, no matter how good my intentions were at the beginning to do what was required of me. I was truly a credit card delinquent!
This was also compounded by the fact that my credit balances found their way to numerous collection agencies as I ended up not paying back the credit card companies. After all, if I couldn’t use their cards anymore, why bother paying them back. This was, and of course is the wrong attitude to have, but that’s how a credit card delinquent rolls!
In my defense, I did end up paying back what I owed, but let me tell you, I took my sweet time doing so.
How I Turned Things Around
So, by now you may be wondering, “ok, so how did you manage to save yourself thousands upon thousands of dollars?” I did it the old fashioned way, the way my mother did it and her mother before her, with good old cash!
I now pay for everything in cash, and if I need something that is more than I have to spend on that item, I simply save up my money until I have the amount needed. Anybody remember lay-away? I was the KING of lay-away
In all seriousness though, you would be surprised at how little you buy when faced with having to shell out hard earned cash money from your pocket or bank account. All of a sudden, the value of a dollar means so much more. The extra amount you might not have even thought twice about when putting something on credit all of a sudden becomes a mind-full concern, and rightly so!
The convenience and ease of credit card spending made me NOT question my spending habits until it was too late. If I had kept this up, I would literally have spent thousands of dollars easily over the years through unnecessary purchases and more importantly, high credit card interest rates, since I was in no financial position to pay the card’s balance off each month.
Me at 52
It has been over twenty years – I am now 52 – since I had a credit card and believe me, I do not miss it. I would hope that today’s me, would be more responsible, but really, do I want to take that chance? I have been able to do all that I want to do without the plastic. Surprisingly, my credit rating is fine, as I found out while looking for an apartment to rent a few years ago. And while I might have an issue applying for a bank loan or mortgage, these are financial activities that I do not ever see myself doing, so I have no worries in that department.
And when I do need a credit card, like if I need to purchase something online for my The Joy of Simple blog or an Amazon gift item, I have a friend who graciously does it for me and I pay him back immediately…in cash!
So…can you live your life without incurring massive and ongoing credit card debt? Do you worry about becoming a credit card delinquent?
If so, then the obvious solution would be to ditch the credit cards and pay off your debt. Sounds simple, but as you probably already know, it is anything but simple.
If You Use Cards
Now I can hear what a lot of you are thinking: “But Lyle…what if I wanna keep them cards…you know…for emergencies and such? “
I hear ya!
One recommendation I would suggest is to hand over your credit card(s) to your spouse or a close and trusted friend for a week. Then take enough money from the bank that will cover your essentials like food, gas, and Friday’s Family Pizza and Video night.
As you go through the week, if there are any knee-jerk reactions to what could have been an impulse buy, make a note of it. If you ran out of cash and had to get more at the bank, make a note of it.
At the end of the week, you should have a decent idea of how life without a credit card feels. Add up the amount of money you would have spent on credit were you able to make those impulse buys and unnecessary purchases. Once you see those potential lost dollar amounts, how do you feel?
If it makes you feel good for not having used your credit card, try another week. If it makes you feel less in control of your finances, or really antsy because you weren’t able to “buy that thing you just had to have!” then maybe a visit to Dave Ramsey’s website is in order.
Seriously though, the idea here is to see if you can get through a few weeks just using the cash you have on hand. If you find that are seriously dependent on your credit card(s) and that you cannot really live life as you’re accustomed to on just your weekly or bi-monthly pay-check, then maybe it’s time to reevaluate the role of your credit card(s) vis-a-vis your overall pecuniary satisfaction and life happiness. Or not!
I realize that not everybody will turn out to be a credit card delinquent like I was, and that some of you, maybe even the majority of you are fiscally responsible in all areas of your financial life. But, if this post hits a little too close to home, you might want to rethink your credit card spending and work on cutting that card out of your life, before some bank teller does it for you.
Understanding the intricacies that go into credit cards and the ensuing interest and payments, can take a more skilled and educated person. Getting a business degree like a global MBA is a great start!
Crystal’s Comments: I use credit cards and pay them off every month (we only spend what we already have). I like the cash back rewards. Do you have a history with credit cards?