Biggest Money Mistake - Credit Cards
March 24th, 2008 by Ana
Millionaire Money Habits has just started up a new contest on his blog called “What’s your biggest money mistake?” and y’all probably know where I am going with this one … CREDIT CARDS! I know I am in good company with this hideous money misstep. Credit card companies are expert marketers and have managed to snare so many people …
I’ve blogged about this before, for those of y’all who were reading back at the beginning of the year for my great credit card debate. For me, the big money mistake started when I was a naive 18 year old college freshman with only a minimum wage part time job at Taco (H)Bell on the weekends. Citibank, that notorious campus predator, snared me young. With a 21% interest rate, I ended up working more than just the weekends, since I had very poor money handlng skills … well let’s be honest, I was simply clueless and easy prey. And it only took one missed payment for my interest rate to get jacked up to 29.9%.
You might think I learned my lesson with my Citibank experience, but I had dug in and fortified my position in the Land of Stupid by getting another credit card, and with this second one “only” having an 18% interest rate I actually thought it was a “good deal.” Of course, that was the credit card that my ex and I used to buy a horse (no, I am not kidding!) and of course we didn’t read the fine print that said cash advances on the credit card had a 26% interest rate.
Let’s not forget the Bealls card for my 19th birthday, the JC Penney card, and of course the Sears card that I never had the opportunity to use since it always had tires or tools charged to it. Those store credit cards all start at 21% interest, and it just gets uglier from there if you miss a payment, which we did due to disorganization and inattention (and not having a budget!).
The ironic thing about all this is my grades and IQ tests all claim I am highly intelligent. When it came to money, I was completely uneducated and DUMB DUMB DUMB! I was lost in the Land of Stupid and making just about every money mistake in the book. I didn’t like what was happening with the credit cards, but I had no idea how to fix it. I finally stopped using those insidious little pieces of plastic, but the bills lingered for another EIGHT YEARS because I was still quite ignorant about how to handle money.
Once the old credit card bills were paid off, I still wandered through life clueless about how to suceed with money. I didn’t get any new credit cards, but six years later I did something TRULY STUPID: I urged hubby to get a couple credit cards to “build his credit score.” I wince just typing that. I didn’t want the things myself, but thought it was a good idea for hubby … I’m sure I could write a whole ‘nother post on that alone. But, that was how we got back into credit card debt hell. It was my idea (and yes I am ashamed of myself, even though I hadn’t found a better way by that time).
Then about ten months into doing another stupid money mistake, I found out about Dave Ramsey. THIS was what I had been looking for! This was what I had been needing for fifteen years as I wandered through life making money mistake after dumb money mistake. I got busy, got myself on a budget, and paid the three credit cards we had off in pretty good time.
I’m never going back into that particular Land of Stupid. I am never again paying stupid tax in the form of credit card interest or fees. And just in case anyone hasn’t figured it out yet, I will use this blog to try to prevent others from making the colossal money mistake of using credit cards!
Posted in stupid tax, credit cards |
March 24th, 2008 at 10:33 am
Yeah, Ana, been there done that. I bought the t-shirt, too. Credit cards are just about the stupidest way to lose money.
March 24th, 2008 at 5:35 pm
Nothing like a 26% cash advance to make you really sick later on :(=
March 24th, 2008 at 8:11 pm
CC’s are crap for the impulsive.
I am impulsive.
I only have one. it’s for business. I buy a lot of Hardware when i do bids and pay it off immediatly. I do get milage points. enough for FC tickets when we go on vacation.
having the CC for the business is great, but for personal life… the temptation is too great at times.
i’ll find myself buying a case of wine when my “blow” money is low.
Or we use it on a trip in an emergency, such as the wife’s vacation in Paris a few weeks ago. I told her she had a $1000 cushion if needed. she used some of it.
The funny thing is. using DR’s plan we built up large cash reserves. EF, 5 months expenses in the case of a contract not being renewed within a month, sink funds for insurance, car purchase, home repairs, etc…
The sad thing is, we are afraid to spend any of it. I think the hell we experienced before and after the bankruptcy did it to us. We almost split up. we had nothing. we had kids. we were living with her parents.
Having all that cash available ‘if things go wrong’ really gives peace of mind. However. insurance comes due and i think, well I could pull the $300 out. or I can put it on the CC or take it out of checking and just budget to pay it off.
Same thing happens with home repairs under $500. we will suck it up for a few months, putting it on the CC and paying off, or saving for it, instead of pulling it out of savings like we should.
I think we have a mental abberation.
March 25th, 2008 at 8:37 am
Your story is remarkably like mine. Freshman in college, NO job (why give me a CC????) and Citibank graces me with a card.
From then on, my life went like this:
1. Charge the card up.
2. Get a rate increase.
3. Lather, rinse, repeat.
That particular card is now the last thing left in my snowball. I owe about $10k on it (balance transfers) and I can not wait to finally be out from underneath it.
March 25th, 2008 at 10:22 am
[…] credit cards were my biggest money mistake […]
March 25th, 2008 at 10:30 am
Oh boy. Used inappropriately credit cards are hell. But I think if used responsibly they can be great.
I admit that it is SUPER easy to get sucked in and start charging them up and get to the point where you can’t pay them off in full each month. So far hubby and I have been able to pay them off in full each month for around a year. But they seem to get a little bigger and then a little bigger.
Using them in full consciousness is a challenge. I’m not going to get rid of them but I MUST maintain constant vigilance and think about each and every charge. Is it needed, necessary, and affordable?
March 27th, 2008 at 9:11 am
[…] Biggest Money Mistake - Credit Cards […]
March 27th, 2008 at 9:28 am
I don’t own a credit card. It has been 10 years now, I guess that’s what made us get out of debt quicker. I had a head start!
March 27th, 2008 at 9:40 am
Moneymonk, I am sure that helped!
March 31st, 2008 at 7:37 pm
Excellent webpage! I gave it a thumbs up with stumble and I Digged It too! Very informative and helpful about credit!
Jim S.
March 31st, 2008 at 11:30 pm
[…] My Biggest Money Mistake - Credit Cards!- DebtFREE-Revolution […]
July 21st, 2008 at 10:50 pm
Credit cards can defiitely ruin you financial future if not used properly, but if you can maintain just one line of credit over time that can be a huge boost to your credit report, especially if you don’t have very much credit history.