Categories: debt, credit

“Banks introduced the installment plan. The disappearance of cash and the coming of the credit card changed the shape of life in the United States.” Jerzy Kosinski

It’s amazing to consider that 50 years ago, credit cards where rare. Most people paid cash for their purchases. And what happened if they lacked the cash? You guessed it, they didn’t buy!

MAIN TOPIC: A Story of Esmerelda’s First Credit Card

Without mentioning any names, let me just say, someone very close to me got her first credit card. Well, on second thought, let’s give her a fictitious name, Esmerelda.

Upon receipt of her card, Esmerelda asked, “What do I need to know about the card?”

 I said, “First of all, you have a spending limit on this card; do not spend any more than your limit. Second of all,” I continued, “Pay off the total balance due on your card every month.”

She then asked, “Is there anything else?”

I replied, “If you do those 2 things, you’ll be fine!”

As far as I knew, that was the end of the conversation. … until Esmerelda asked if I could “help” her with the card.

I said, “What’s wrong?”

And she responded, “It’s not working right.”

Now, I’m not sure what happened because we never finished the conversation. She mentioned subsequently that the card was not accepted when she tried to buy a train ticket with it. But, that’s all I know. Esmerelda did not bring up the topic again.

PRACTICAL APPLICATION: How to Stay Out of Trouble with a Credit Card

There is an incredible amount written about the evils of credit cards and some thoughts on the other side about the benefits and rewards.

In today’s society, credit cards can be helpful when used responsibly and occasionally.

You can’t rent a car without one. You need one to make airline and hotel reservations too. When you get ready to buy a home, lenders like to see that you have used a credit card responsibly.

 They can also cause a mountain of trouble if you charge more than you are able to pay off completely at the end of the month.

Credit cards are kind of like guns. People are responsible for the deaths associated with gun violence. And people are responsible for the debt accrued with improper use of credit cards. Learn to use credit wisely and no one will get hurt.

These tips, if followed RELIGIOUSLY will keep you out of credit card trouble and get you started using credit responsibly.

Get a credit card with NO ANNUAL FEE

Get a MasterCard or Visa, because they are accepted everywhere.

Sign up to have the FULL BALANCE of the card deducted from your bank account every month. Double check and make sure it happens EVERY MONTH!

When you make a purchase on your card, save the receipt and keep a running total of EVERY purchase made with your card.

NEVER go over your spending limit.

Hold no more than 2 cards. You do not need any more credit cards.

That’s it, you’re done. No exceptions, no more.

 If you want something and don’t have the money to pay for it this month, DO NOT BUY IT.

I promise, you’ll live without buying things you can’t afford and your life will be lots happier without credit card debt.

ACTION STEPS:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

1. Cut up any cards you have over 2; if you owe on these extra cards, make sure you pay off the balance.
2. If you cannot afford to pay for something, do not buy it! Get in this habit and your life will be much happier!

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