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Plastic fantastic – Minimising your credit card use

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Hello friends,

I thought i would start my first post on something I am very passionate about which is trying to minimise the use of credit in our lives. We all spend our time chasing the next best thing and sometimes that involves using credit to buy stuff that we don’t really need. To give you all a background on my own story I spent my 20’s racking up the debt on credit cards and while living on a generous salary and still managed to spend above my means. This lead to many new dresses, trips overseas and lots of partying which really at the end of the day left me with not much else than a hangover. I definitely do not regret all the travel I have done around the world but the dresses, maybe i could have bought a few less!

One day I realised with a big rhetorical slap in the face I was up to 30 thousand dollars in consumer high interest debt. When I woke up to myself thanks to some really great financial advice I managed within 6 months to pay this off and start living within my means. I also realised during this time its really not that hard to live within your means its just a matter of not buying a whole load of crap that you don’t really need. I soon replaced the euphoria I used to feel after buying a beautiful dress with then same feeling when I had interest deposited into my account each month. Yes that means i had to actually have savings instead of the dreaded monthly credit card bill.

How did i turn my view on credit cards around you ask? Well not to be blunt but I came to the realisation I was spending someone else money. When your using the banks money to buy something you end up sometimes paying double for it if you were to only pay the minimum balance each month. Do I think you shouldn’t have a credit card? Not necessarily i think they are ok with a very small limit. For example booking travel sometimes you can use it and they will give you free travel insurance and when you stay at a hotel they usually ask for a credit card to be charged as a security.

For everyday spending I don’t think we should use credit cards. Some people spend all their money on their credit card then pay it off each month and you can do this to gain reward points or delay spending your savings but if your doing this you have to be disciplined. Lets just say that doesn’t really work for me. There is nothing more rewarding than saving up for something you need and paying cash for it. So if you have a credit card which your not paying down each month to zero my advice is leave it at home put it in your sock drawer. Draw up a monthly payment plan to pay your balance down over the next 6-12 months. However long it takes pay it down and from now on only spend money you have in your everyday savings account.

Credit cards have only really been around since in the early 80’s prior to this people had to wait if they wanted to buy something until they could afford it. Today we have unlimited access to credit in many forms and all of these institutions are ready to take your details and give you a ridiculous credit card limit. Accepting a high limit and spending more than you earn on credit can lead to becoming a financial disaster not to mention also a lot of stress on top of that. Living within your means is the best way to create wealth and credit cards can delay this happening if you spend more than you earn and you are paying interest on your balance. My advice if your going to keep a credit card just have a very low limit and pay it off each month.

JL

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