It was towards the end of my college career that I began my relationship with plastic. I was already what I consider a fortunate college student in that it was paid for by my family and with a partial scholarship. I worked during summers, but was free to just focus on being a student the rest of year.
I remember when plastic and I first met. There were some representatives from Discover at a booth handing out free T-shirts if you signed up. I mean what college student doesn’t love a free, oversized T-shirt (I’m pretty sure I never wore it)? If I remember correctly, the credit limit was $500.
My relationship began innocently, but with my lack of knowledge of interest rates and all things personal finance in general, my relationship began to spin out of control, and continued to do so most of my 20’s.
I don’t know about you, but back in “my day” before blogging I kept journals. To look back on the stuff that concerned me then makes me laugh today. “Oh Tonya…you were so young and innocent.” I would pine for months over guys who never showed any interest in me, or write overly dramatic and lengthy entries about no one understanding me. I also seemed to write about being broke all the time.
The funny part was I actually had good jobs most of my 20’s and 30’s! I was just the absolute worst at money management, and forget about this thing called a budget. I flew by the seat of my pants…and by the way those pants were probably purchased by my good “friend” plastic.
Plastic made me feel good. I was classically present hedonistic in that I did everything spontaneously to make myself happy in the moment. There was no regard for future and what using plastic would really cost me in the long run. I bought clothes, travel, concert tickets, CD’s, nights out with friends, and other “stuff” to create an image that I was cool, hip, fun, and successful.
And it wasn’t just credit cards…I bought two new cars in my lifetime that were financed at mediocre interest rates, but for five or six years. More debt.
I don’t remember what my highest total debt ever was with credit cards…I think it was somewhere around $10,000. I’ve heard of worse…much worse.
And so when the weight of what I’d done to myself finally hit me, so began my fear and hatred of all things credit cards. Like the saying, “money is the root of all evil,” so could be said about credit cards. Or at least that’s what I thought.
By some good fortune I had managed to do one thing right: I always had excellent credit since (even though I was sometimes making interest-only payments) I always paid my credit cards on time. But the one major regret I have is thinking how much things “actually” cost me with all the interest I paid, not having paid my credit card in full at the end of the month.
Looking back though I realize the problem isn’t credit cards. The problem was me and my lack of understanding and education about personal finance.
But over the last year something has changed. I grew stronger and have learned so much more about how NOW I can actually make credit cards work for me. With my good credit, I’m able to sign up for cards that give me back something instead of just take take take. Cards like my Southwest Visa have given me enough points to travel to New York, Detroit, Portland, St. Louis, and Denver.
Other cards have given me cash back on groceries and gas, or gift cards to useful places like Best Buy and Target. Using a site like lowestrates.com is a great way to sort through all the confusion about the various cards out there, and gives you comparisons about what card would be right for you.
There are many options for responsible credit card users. I say “responsible” with the utmost importance because using credit cards is a delicate thing and needs to be in the hands of a responsible user. It took me a long time to get to that point, but now I no longer fear using plastic, and think it can be a very useful tool.
Are you at a point where you can use plastic responsibly? What kinds of rewards have you gotten using credit cards?
Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net