Mention the term credit card and depending on who you’re around, you could get quite the range of responses. You have one side that’ll be on the extreme of churning credit cards all the time to earn rewards to those on the other side who swear them off with the belief that they’re a blight on society. Certainly, if you’re struggling with credit card debt now, or in the recent past, then credit cards probably are not the best for you, but if used as a balanced approach to managing one’s finances I believe there are a number of benefits to be found in using credit cards. The key is knowing what those benefits are and using them if appropriate.[Read more…] about 3 Great Reasons to Use Credit Cards
Credit Card Debt
I would imagine that many of us have either dealt with credit card debt, or at least know someone who has. The fact that the average household has more than $15,000 of credit card debt (of those that have credit card debt) tells me that many are intimately acquainted with such debt.
If you have dealt with it, then you can relate to how unbearable the feeling might be, but the good thing to remember is that it is possible to slay the beast of credit card debt. While I am disciplined with my credit cards now, and use them to leverage free money for vacations I was not always that way. I discovered the lure of the credit card in college and graduated with almost $25,000 in consumer debt. The tips I’ll share are not so much action-oriented, rather, they’re ways to wrap your mind around the debt so you can start to work on paying it off.
I have always loved to travel. Growing up, vacationing was a regular part of our family life. I consider myself blessed that I was able to see quite a bit of the world before I started high school. Now that I have a growing family, I see firsthand the increasing cost of indulging in that desire. As a family we’ve made it a habit to look for ways we can live more simply throughout the year so we can enjoy an annual vacation. However, I recently discovered a missing piece that I wish I had known decades ago…having someone else pay for our vacation! I know that credit cards might be a taboo topic for some, but we have found that we can quite easily use them to have someone else pay for our vacation off of points we’ve earned from budgeted purchases. Next year, I’m excited to say that we will nearly fully fund (airfare and hotel costs) a trip in January to Las Vegas for my birthday thanks to credit card rewards points.
Being someone who likes to be frugal it can be uncomfortable to waste money. You want to streamline your budget and keep it lean and mean. The problem, though, is that if you do not live life and try to enjoy it then you will get bored with it awfully quickly. We all waste money at some level, and if watched is of no issue. How much money is it ok to waste each month? The answer to that question is relative to your specific situation and one that my wife and I found ourselves in a few months ago.
I remember the day like it was yesterday, I was looking at my four credit card statements and saw that I was just north of $20,000 in credit card debt. I asked myself, how did I get there? It did not help that I had just come back from the music store having purchased four or five CD’s that I had no business buying, yet I still did not see the issue. My problem was that I was using credit cards to fund a lifestyle that I wanted, and felt that I deserved but was doing it at the expense of my future. It would be one thing if the credit card debt was due to me losing a job or something like that, but sadly it was largely spent on junk that I did not need. One question kept running through my mind – was all that stuff worth the cost?