Thursday, April 9, 2009

A Return to Using Credit

After 5 years without having a credit card (that worked – I was paying off a bunch of old ones), I have bitten the bullet and gotten a new one. Am I scared that I’ll return to my old ways and run up a huge balance? Hell, no. I’m not the same person I was back when I was wracking it up. Rest assured that since then, I’ve learned through the bitter pill of experience what NOT to do with a credit card.

So, if I was going along so well for the past 5 years without a card, why start now? Well, it’s really about convenience. I am super proud of the emergency fund I’m building but it’s not that helpful at the side of the road when your car breaks down. ING takes several days to send the money back to my checking account. Having access to a credit card would allow me to use it in emergency situations and then continue to pay off the balance at the end of the billing cycle using my savings. It just adds a buffer.

Another reason I chose to get a new card is the rewards. I got an Amazon card because I seem to be using their site a lot lately. And with my Kindle habit, rewards in the form of Amazon gift cards will be great. I will always be able to use them. I’ll use the card instead of my debit card to get rewards points but pay the balance each month. This will also allow me to smooth out my spending instead of focusing on what’s available with each new paycheck. I’m going to try to release the kung fu grip I have on each penny. By this I don’t mean I’m going to start spending like a madwoman, but rather, I’ll take the focus off tracking every single transaction every single day. I’m pretty obsessive, really. I will still reconcile my receipts, etc. but maybe not as often.

We’ll see if this turns out to work or if I really just need to track everything meticulously like I’ve learned I need to (at least for now) with my food. Like I’ve mentioned before, the two issues are very similar for me but I’m much further along in my relationship with money than in the one I have with food. I think I’m ready to trust myself a little more to make good choices with my money without artificially imposing stop points (I’ve run out of spending money for this pay period so I can’t get ___). Of course, I’m not really out of money – it’s just someplace else. This tactic has worked well for me but I’m hoping that I’m ready to take the training wheels off. If I start careening downhill and find the brakes are shot, I can put them back on. I’ve gone back to tracking my intake carefully and I’ll do it for however long it takes for me to gain control over it (if ever). I’m fine with that. But I feel in my gut that I’ve grown financially and can handle it.


MrsSmith said...

Since you like FitDay so much you should consider Quicken or something like it. It's like FitDay for your wallet!
If you log everything you charge on your card, and keep a line item in the checking account ledger that always equals what you owe, you will never ever be unaware of what you truly have! Works Great!


Great point, Mrs. Smith. I’ve never used Quicken or other money management program but I’m obsessive with my spreadsheets! I will still track what’s going where. I probably won’t change much about the way I do things, really. I’ll just be using the credit card instead of the debit card then paying off the balance at the end of the month. The only difference will be that without the threat of overdraft, I can start reconciling receipts, etc. once a week as opposed to almost daily now.

Megan said...

I've had an Amazon Visa Rewards card for years and I love it. Love it, love it, love it. I pay it off every month and use it for just about everything (I'm a "cash disappears" sort of person.) The rewards can add up pretty quickly.


I’m glad to know you’ve had a good experience using that card, Megan! I know Trent from The Simple Dollar uses it (which gave me the idea). It’s going to be great to get the rewards to use for Kindle books!!!