Credit Cards And Life Lessons
Money - makes me sick just thinking of the word. Getting it? Sure, I like that part, but the managing part of it, I'm breaking out in cold sweats just thinking about it.
When Will and I first met, we had just moved to Boulder, making such little money it was a joke. And while not living a luxurious life by any means, we lived comfortably. How? Because we were idiots and got credit cards.
My parents got themselves into major debt when we were growing up and I vowed to never put myself in that situation, But as you get older, things change and you don't want to depend on the generosity of others to get by, so you make decisions that are not so great.
I remember sitting outside of our house and applying for my first card and crying with guilt, feeling like a failure.
The conversation went a little like this.. Rewards? Sure! High interest rate? I'll pay it off before it hits! Do I really need this card? Got to build credit some way! Five thousand dollar limit? I'll never spend that much in my whole life! Sign me up!
HA! The whole process is laughable. I dried my tears of guilt with new clothes, vacations, treating others, a gym membership, snow tires -- all the things that I wanted that I wasn't able to do before. And GASP! Next thing I knew, I had hit my limit. FIVE THOUSAND DOLLARS.
I made the minimum payment for about 3 months when, without telling me they extended my limit to $7K, then $9k.
You guys, I looked at my bill one day and looked around me trying to find what I had bought to owe this much?! That's the thing about being an adult, it hits you in the face with the force of a thousand suns.
Will and I talked with my parents and we both made the decision to do whatever it took to get rid of the cards.
First, we set the limit on the cards to not work after $9k. They don't tell you this when you first open the card. This makes you realize where you are before it gets too far. Set it crazy low! $500 tops! You can always change it if you manage your money correctly or need to make a single large purchase.
Next, we decided to consolidate our credit. We found a low interest loan with a local West Palm Beach credit union. These credit unions will do anything for your business, and are incredibly transparent with how they can help you. Our cc's interest was 26% and our loan was 7%.
After we consolidated the cards, we waited about 4 months to actually close out most of our cards. This helps your credit believe it or not. Paying off a card and closing out seems like a GREAT thing but for your credit, it hurts it a good couple points.
We make a big monthly payments but it is still SOO much less than what we were paying for our credit cards before, and on those months where we have extra cash, we immediately throw it at our loan.
As we close in on getting rid of our loan for good, we have learned a painful life lesson. Credit cards are a major life decision and unless you are managing your money properly, know your means, and honestly, trust your impulses, they are not for everyone.
What are your credit card experiences? Any tips for making the cc work for YOU instead of getting worked by THEM?
Top, Skirt and the coziest poncho ever at Norcross!