I was at a get together recently and I had this conversation with someone, that if I’m being 100% honest, I think I have had mentally about a thousand times before I actually had it out loud.
“I need your help with my money.” my friend asked.
Me, eager to help, “Sure what can I do?”
“Well, I’m good with money, but it’s my damn credit card spending. I always pay it off in full every month, never had a late payment, or an interest penalty. But every month it feels like this card wipes out all of our funds. What should I do?”
“Umm….” I said, “Have you tried not using the card?”
“Well yeah but,” he continued, “I get cash back for everything I do. If I’m spending $2000 a month, I want to get back my $20 to $80 depending on what I have bought. It seems like a waste otherwise.”
“I totally get that. I’m the same way. If I’m spending money then I want to get something in return, whether it’s cash or points.”
“Right?!!” he said, I could see that he was surprised that I was on his side with all of this. I was sure at this point he thought I would go into a rant about credit cards being evil, but he was delighted that it never happened.
“So what do I do???” he asked.
“I’ll get back to you” I said.
A few weeks went by and I thought about that question.
I think we have all been there. It seems like every month your credit card bill is larger than you want it to be.
For years now, I look at how much we spend as a family and it drives me mental thinking about our credit card statement. I obsessed over this question. How do I control credit card spending, without cutting them up?
Every month it’s the same cycle.
Credit card bill comes in. Andrew (I don’t normally refer to myself in the third person, swear to god I’m mostly sane… mostly), looks at it in a puzzled sense wondering how has this happened.
Andrew decides something needs to be done about it.
Andrew has no clue what to do besides say, “I’ll just pay closer attention to what goes on the card.”
Fast forward a month.
Credit card bill comes…
Andrew is confused again… or still, it’s hard to say since I’m confused.
Here’s the dilemma
I have given this a ton of thought lately. Here’s how I see it:
needwant to have a big enough credit card limit, in case there is a need for a large purchase (car repair, or something sudden).
- I view myself as an adult, (largely because I’m older than 18 and have kids, and that’s the lowest definition I can come up with) and therefore somewhat good with my money
- I deserve things and stuff (two very technical words there, but you get the point).
- I haven’t had a problem paying off my credit card every month, so there really isn’t a problem.
That last line is the important one.
“I haven’t had a problem paying off my card every month, so there really isn’t a problem.”
That’s like saying, “I haven’t had a heart attack yet, so I must be healthy.”
It’s just one of those little lies I tell myself (c’mon we all do it). 😉
I think because I meet my monthly bill obligations I think I’m doing good adulting. When really I’m not.
This needs to change.
I need to get better with my money, if I want to break free and move on to bigger and better things.
And to get free I need to make changes. They don’t have to be huge changes, but I do have to change.
Remember it’s the little changes that add up.
Simplest Way To Control Your Credit Card Spending
The simplest way would be to cut up your credit cards and go to cash, or debit with no overdraft protection. That will sober up your spending pretty quickly.
But I don’t really like that idea.
Mostly because it feels like I’m leaving money on the table, and that’s a pet peeve of mine.
I have a cash back card (actually two), and I like to use it for my everyday purchases. Because around November I get a nice check for the spending I have done through the year. If I don’t use a card, then I don’t get that cash back.
(I’m just going to avoid the whole issue of when you use credit instead of cash you actually end up spending more, but you will see why in a second).
Here’s what I’m doing.
I’m calling the bank and lowering my limit.
I don’t ever, EVER want to spend more than $3000 a month on my card. That’s the new limit, that’s the amount I can stand to get in the mail every month and say: “Oh, it’s in line with our plan.“
Here’s what this is going to do, it’s going to put me on guard. Big time!
If you have ever had a card declined at a store, you know how embarrassing it is. You have the clerk giving you that look like: “Looks like someone didn’t pay their bills”, while you embarrassingly search for another way to pay.
That’s a look I’m going to avoid.
What about emergency purchases?
Great questions! You’re so smart. Part of having a credit card is for emergencies.
Here’s my 3 ways of getting around the “emergency” purchase. I use brackets because my emergency would end up being a TV on sale. Feel free to pick one.
1- If I need to make an emergency purchase, most likely it’s not that big of a deal. I will call the company and get my limit raised temporarily, or I will put down money on my card so that I can clear up the limit.
2- I will have a second credit card, in a block of ice in the freezer that I never use, because it’s in a freezer, and from there I will thaw it out and use it if need be.
3- I will pay cash, which is probably the best out of all of them, if you ask me. Because that means I already have the funds.
4- Everytime I spend money on my card, I can put more down to zero out the balance still leaving $3000 free in the account.
Is this a fool proof system?
No, it’s been thought up by a fool (Hi! I’m Andrew) but that doesn’t make it fool proof. What it does do is guarantee that I can’t go over my limit, and that below that limit is where I want it to be.
If this idea doesn’t fit you here are 3 other ways to cut your credit card spending
1- Put the card in the earlier mentioned block of ice.
2- Cut up your card and go to debit cards, better yet, go cash. It’s by far the best way to be.
3- Put them in an envelope and give them to a trusted person only to be used when needed
4- Leave them at work over the weekend.
What do you think about this idea? Is it a formula for success or disaster? Let me know in the comments.
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