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What I Learned From Keeping A Running Credit Card Balance, And How You Can Avoid It

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For the past few months, I’ve been foolish in the way I’ve been (or rather not been) making payments on my credit card. I’ve been doing something I never thought I would be guilty of doing, because I always felt as if I had my spending under control — but I don’t. I’ve let my credit card balance creep up, and up, and up, and haven’t paid off significant chunks each month. I used to religiously pay off my credit card balance in full each month, but I have to admit that it’s been several months since I’ve done so. What feels so insane about this is that I do have the means to pay it off (from my money in savings), and yet I still don’t. It’s simply boils down to this: I’ve had an incredibly difficult time parting with my money in savings when I know I’m not bringing in money the way I used to. The behavioral pattern of charging on a card boils down to a psychological issue — the fact that I’ve been reluctant to watch my little vault of savings decline. This has resulted in me overusing my credit card so that I don’t have to use cash all the time, which somehow dulls the sting of having to open my wallet for each purchase.

You see, ever since I joined TFD full-time, I’ve had to rely on my savings to make ends meet. I’ve needed to tap into that resource to cover my bills each month while our earnings pick up. While it should be noted that I saved diligently for quite a long time to afford myself the opportunity to pursue my dream, and that needing to use savings was entirely expected, it was nonetheless very painful. Never in my life have I felt more reluctant to spend cash, because I can’t stand the sight of my savings balance declining. Instead, I use my credit card for everything, and prefer charging purchases because the delay in payment helps me feel less anxious. And when it comes time to pay the bill, I avoid doing it in full because it temporarily soothes me to not see my checking account take such a big hit.

Of course, the idea that the credit card allows you freedom from payments is absurd. All it does is provide a cushion from the time of purchase and the time of payment, which is precisely the reason why having a credit card can be a dangerous thing for some people. I fully understand that the money at the month’s end has to come from someplace. There is no magic fairy that is going to drop money into my lap and make my payments for me — the chunk of cash I need to pay my credit card bill is removed from my savings account anyway. But I still can’t seem to stop charging purchases because I’ve fallen into the trap of enjoying instant gratification in exchange for deferred payment.  When I had a paycheck coming in every other week, I never charged more than a few hundred dollars on my card, and now that I have very little money coming in, I’m charging even more. A situation that should be flip-flopped.

And yes, charging purchases and then paying them in full each month is good for building up credit, but only if you’re actually doing things intelligently and paying the balance. Leaving a balance every month that is slowly accruing interest is only doing the opposite.

While my desire to preserve cash for emergencies instead of paying off large sums of money wasn’t entirely misguided (as it’s very important to keep a decent amount of cash in the bank in case something unexpected happens) I should have handled the situation differently. I should have been more diligent about not spending money unnecessarily knowing that my income was a lot lower each month than what it used to be. While I did cut back and gave myself a budget, it wasn’t enough, and I simply charged the purchases I knew I shouldn’t be making. It didn’t take me long to realize that what I was doing wasn’t smart, and I could be managing my finances much better. For a couple of months, I was taking a huge unnecessary risk that I’m now kicking myself for doing, but I’m getting better.

As I’ve spoken with financial professionals and have researched online about how to manage credit card payments smarter, I’ve come across a number of helpful articles in the process. Below is a list of the most helpful resources I’ve found on this topic that can benefit anyone trying to take back control over their credit card spending. The articles also explain how you can pay off balances in a way that will be most beneficial to your credit score.

Balances And Credit Card Debt

How To Pay Off Credit Card Debt

In getting myself back on track over the last couple of weeks, through working side jobs and biting the bullet and removing a chunk of money out of savings to pay it off, I’ve been able to get my balance back down to zero. I feel like I can finally breathe easier knowing that I’ve rectified a dumb decision. Neglecting my credit card and mishandling how I charge and pay back the money I’ve spent causes me unnecessary stress, which I can easily avoid if I’m proactive and smart. All it takes is focus and diligence — something I try my best to work on every day.
 Image via Flickr

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