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Day 54: a credit card is not an income

So, earlier today I had a small epiphany. A quasi-piphany. And it happened when I was reading this article:

Control your credit cards

One of the things they say is "remember: a credit card is not a source of income." But rather, they are a quick loan, which must be repayed.

See, this is where I believe I headed down the long road toward Shopping Detox. I didn't carefully choose what kind of credit card to use, with like a credit cards guide or anything.

No, I got my first credit card when I was in my undergrad in university, because there was a guy outside of the Student Union building with a table where you could fill out applications. This was some sort of Visa, I think. Oh, yes, I remember now, it was a GM Visa. Apparently, it earned me points toward buying a car or something (note: I have never had a driver's license).

If there had been a Barbie credit card play set when I was a kid, would I have understood better?

But having a credit card was suddenly magic! I had, if I recall correctly, a $1500 limit which was AMAZING. At the time, I also had about $100 overdraft on my bank account.

I got my second credit card a few years later, a PC Financial Mastercard, which earned me points towards free groceries. And then I got an alumni Mastercard when I graduated with my undergrad. Total credit limit at that point was probably around $10,000 all put together.

I WANT THIS. Not to spend with, you know, just to like... to have.

And then the slippery slope began where I kept getting close to the credit limit on each card, which was as close as I was to being mindful of my spending. But then, like magic, they increased the limit! I always paid off at least the minimum payment, so my credit rating is good, but what I'm looking at right now is about 10 years' worth of using a credit card as a source of income.

Plus interest.

No, baby! It's not an income! It's a loan! A LOOOOOAN!

Two years ago, I closed out all of the above mentioned cards and consolidated it into a single line of credit which I'm paying off through my bank. And I guess when you look at it that way, I spent 10 years putting myself in stupid debt so it'll take awhile to get myself back out.

What I have going for me now, though, is my new frugal plan; a higher-paying professional job; and an actual understanding of how credit cards work. Oh, and also I've maxed out my current line of credit so it's not even a temptation to spend - there's nothing there to spend.

Gail Vaz-Oxlade posted recently about tips for young adults thinking about getting a credit card. I commented when I read it, and still think, that if you told me all of then when I was 18, I'd still be like, "Right, but I want that sweater*, so see you later." It was something I had to learn on my own, clearly.

* most of my credit card debt is seriously sweaters. And affordable footwear. I'm not one of those "champagne taste, beer budget," types. I'm more like "apple juice taste, water budget." I would spent $200 in one go, but I'd buy like three pair of pants, earrings, a lipstick, two shirts, pajamas, and a skirt for that $200. My closet is not full of brand-name anything.


Lindy said...

I would like to think that if I had heard this advice in my younger years I would have made better decisions about credit, but yeah, 18-year-olds don't always listen when there are word of wisdom floating in the air...and sweaters.

Great article, so much truth, and I covet that Hello Kitty card too.

Foster said...

Thanks, Lindy! I think everyone *thinks* they'd do things better if they could do them again... but that's what youth is for, to screw up, so we learn from our mistakes.

I'd like to get a Hello Kitty card and just like, frame it and display it.

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