Being young is great. Being young, dumb and broke is not.
At twenty three, I thought I knew everything. Particularly around money.
I didn’t know that money was an entity to be managed and nurtured like all great relationships.
And since I chose stupidity over learning about and dealing with money, credit card companies swooped in with vulture-like focus to offer me things I neither understood nor needed.
When my mother shared with me the dangers of credit card abuse and paying for today’s desires with tomorrow’s earnings. I responded with typical drama and flair: I need things.
While this made great television movie of the week melodrama, it cost me financial self -confidence.
With eight maxed out credit cards and no savings things had gone from fabulous to disaster in a matter of months.
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When I realized that not only had I screwed things up financially but that no one was coming to fix it, I became angry and cursed the day that I ever agreed to the seduction that was and remains buy now, pay later.
Anger, according to Toni Morrison, is a powerful tool.
I used my anger to show those awful rat bastards (credit card companies) a thing or two about this seduction and subsequent betrayal of my financial life.
Here is a brief three step process that began in 1993 and that I have spent twenty years honing that has provided me with the opportunity to stay out of credit card debt.
First, figure out the exact amount you owe and look for that sneaky two digit number that can keep you in debt for life (APR).
What companies don’t mention when they’re dangling that luscious buy now- pay later bait and switch is that this number is not fixed and it is actually preventing you from being free.
This little number which by the way can range anywhere between 0 and 30 can also be increased or decreased based on a whim.
Get on the phone, ask for a manager and demand that this number be reduced.
I got a second job and put all of the earnings into paying off the credit card with the biggest balance which incidentally had the largest amount charged on it. When this one was at zero, I immediately moved on to the next one and kept this process going until all eight had been eliminated.
Second, only charge what can be paid off before the end of the month. If you can’t write a check for $5,000 before the due date, then don’t charge $5,000. Period.
Third, don’t get seduced by teaser rates and credit limits being raised.
Remember it is their job (credit companies) to seduce us into doing things that no one in their right mind would do.
Many times our fears of inadequacy and isolation cause us to spend money we don’t have on things we don’t need to impress people who are so wrapped up in their own crap that they don’t notice what you’re doing.
Credit cards are not evil.
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Here’s a suggestion: Keep one credit card for serious emergencies : your car breaks down, you have to be hospitalized, someone dies and you need to leave town in a matter of days to attend a funeral. These are all little things that occur on a daily basis that no one plans for and yet it happens all the time.
A quick reminder of what an emergency is not: Christmas, a great sale at your favorite store, a round of drinks or an overpriced dinner at a fancy restaurant that you will still be paying off in six months.
If it keeps you or your loved ones safe and sound it is a necessity and has the probability of qualifying as an emergency; if there is no blood shed or threat of death and dismemberment then no, it is not an emergency.