I was seventeen when I signed up for my first credit card.
Just a few months before I was off to college I received a pre-approval letter in the mail for a $1k credit card. Thinking it was a good idea to have one for “emergencies”, I went ahead and signed up.
I didn’t end up using it much the first few years, I racked up the majority of the debt during my last year of college. It started out with small unnecessary charges that didn’t seem harmful but they added up.
When the monthly bill came around, I paid the minimum payment and slowly the principal started increasing. By the time I graduated I probably owed the full $1k which then turned into $2k once my credit limit increased.
Then I made another stupid mistake…
I opened another credit card with a 0% APR and transferred the balance. The plan was to finally pay off the card and I wanted to save some money on interest while doing so.
You know what happened to that first credit card?… I started using it again. By the time I really got on a plan to pay off my debt I owed over $4,000.00. The worst part was I couldn’t even remember what I had spent that money on.
I finally cut up my last credit card about 4 years ago. Funny how you feel a sense of security having that little plastic card in your wallet. I knew I had to get rid of it and I finally did.
- Read: 5 Sinking Funds I Started This Year
- Read: Debt Avalanche or Debt Snowball? Which Method Should You Use To Pay Off Debt?
I finished paying off my debt in 2017 and will NEVER go back (with the exception of a mortgage when the time is right). There are some people who use credit cards to their advantage and are able to get some free airline miles or cash back but I’ve learned what works for me. I like to simplify my life as much as I can and that means paying cash!
A few other reasons I don’t use credit cards:
1. I tend to spend less when I use cash
2. It’s one less bill payment I have to worry about
3. It simplifies my budget
4. It still hurts when I remember that $4k mess I got myself into
5. It helps me practice delayed gratification
Remember, personal finance is “personal”
What works for some may not works for others. I’ve heard many people say they use credit cards to their advantage and are successful paying them off every month without incurring any charges. Everyone is different and you should do what works for you. I just love the simplicity of only spending money I have.