My awesome, must have, little, grey suit!

*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!