*Side note* My goal was for this blog to be weekly. As you
can see from the posting dates, I am a little off… If you also have a problem
being motivated or making time for things you want to do, I suggest a short,
but great read: Stephen Pressfield’s The War of Art. (More on that in a later
post.)
When I graduated college, I got an advertisement from my
bank for a credit card. I was so thrilled!
It only had a few hundred dollar limit, but I felt rich and went on a
little shopping spree! As the small limit approached, I got a magic letter in
the mail saying that my “good spending” earned me a limit increase. I almost
immediately ran out and bought a fancy, new, beautiful heather-grey suit from a
very expensive store – one that I typically would not have shopped in but my
new credit card allowed me to do so. I did need some new clothing pieces for my
new job, and I used that as my excuse – my justification for going to the
expensive store. I felt that I needed it, and believed that I could afford it
because of my credit limit increase. I
thought “They (the bank) wouldn’t give me the money if they didn’t think I
could afford it!” I didn’t understand how credit cards really worked – that the
bank is really a business. They were
making money from me! So, I played the
limit-raising dance with the bank for several years! I thought – “wow – they
trust me a lot!” DON’T FALL FOR THIS and DON’T TRUST THEM!!!!
In what seems like
the blink of an eye, I went from a few hundred dollars in debt to a few
thousand. Along the line, I also had gotten signed up for “credit protection”
which offered payment relief if the card holder was laid off or hospitalized.
The cost for these services is based on your balance – the higher the balance, the
higher the cost. As I got older, I started to really pay attention to my bill
and noticed that, even though I was paying well-over the minimum, my balance
hardly went down! This was a combination
of the ridiculously high interest rate, which I apparently always had because I
got the card so young, and the credit protection fees. Then, I got a notice
that they were going to add an annual fee.
Enough is enough! I “opted out” –
closed the account and ended credit protection. For the next year, I just made
payments on it. This past February, they changed the format of the bill to
include a time-table of when the account will be paid off, and there it was –
the number that caused my heart to stop – 27 years!! At the age of 56, I would still be paying for
stuff that I probably won’t even own anymore, like my awesome, must-have, little,
grey suit which was donated a long time ago to the thrift store.
Finally, 8 years after receiving that card, and collecting
TEN others, I understood the game and understood that I had lost it a long time
ago. The other cards never had balances like that first card but are still
unnecessary – Do I really need a sears, orchard, Citibank rewards, victoria’s
secret, bon-ton, gateway, paypal, lowes, discover, or Ashley furniture credit
cards? NO!
So, I did my homework and researched options. Through my discover
card (which had the best customer service), I consolidated them and got rid of
them!! Due to a much lower interest rate
than that infamous first card, they will all be paid off in 4 years, including
the “27 year monster.” For the first
time, I not only feel in control of my finances but I really AM in control of
them! For years, I felt like I was in
control because I didn’t know any better. Credit card ignorance helped me live
in a care-free world filled with unnecessary stuff, blind to the debt mounting
around me. It is still unsettling to think that I probably haven’t even paid
for that awesome, must-have, little, grey suit.
I admire my 30 year old cousin who doesn’t have any credit
cards. After high school, she got retail job with a company and slowly worked
her way up. She now has a good job with benefits
and a flexible schedule, a nice new apartment, good car, and takes a great
vacation every year. When she applies
for a credit card, she gets denied! She doesn’t really have any debt – which they
(credit card companies and banks) view as a weakness. They can’t make money from her!
I now use only one credit card – a Upromise card which links
to my student loans. If I have to use a
credit card, I might as well get something worthwhile for it. Most cards have
some sort of rewards program but this one allows me to put the rewards right to
student loans – which will be a target of a future post. Credit cards can be helpful – if you know how
to use them properly. Good Luck!
