I heeded the message “Don’t carry a balance month-to-month” from my very first card at 18 but just because I was paying off my balance in full and avoiding interest charges doesn’t mean I was being smart when using my plastic. Speaking to a friend I realized my mistake and I’m sharing my new found learning with you with the hopes that you avoid my mistakes.
I was using it for un-budgeted expenses.
“Hey want to go out to Eat?” Not in the budget? There’s a card for that! “Oh, I need to order some cards” Not in the budget? There’s a card for that! As long as my total credit card spend didn’t exceed a certain amount I knew I could “afford it” and pay it off at the end of the month. This approach was really overextending the gap between my income and outflow that could have been detrimental should a job loss occur. Not to mention I had no clue exactly what was going on my primary credit card.
I wasn’t using it for budgeted living expenses.
My primary credit card is a rewards card that means for all purchases I get points. I was missing out on points by not using my card for things like groceries and gas I was missing out on points and points equal dollars. If I’m going to spend the amount anyway might as well put it to good use.
What I’m doing differently:
- My budget now includes spending on my card. I’m allowing a buffer for un-budgeted expenses but no more going out to eat just because I can swipe for it and worry about paying it off later.
- As many budgeted living expenses as possible will be charged on the card. After I charge my credit card I immediately log in to my credit card account on my phone (before I even leave the store) and submit a payment. This is just one extra step for me but worth the cash back I earn.
By: Love, Daring Greatly