When we first married, my husband and I used credit cards to fund "fun activities" that we'd pay off within 30 days—you kind of had to when you owned an American Express card. Then life happened and those "fun activities" were replaced with financial hardships: pay cuts, cut hours, job relocation, job layoffs, car repairs, medical expenses, and anything else life could throw at us.
To pay for those financial hardships, we said good-bye to the American Express card and hello to credit cards that would allow us to carry a balance for as long as necessary to pay off our debt. Once we got back on our feet, we used every bit of spare change we had to pay down those credit cards (we even sold our junk) and become debt free. The problem with this approach, however, is that when something unexpected happened—and it usually did, we had nothing to fall back on but our credit cards.
And therein lied one of our BIGGEST problems. Feeling defeated, we gave up and started using our credit cards for more than just our financial disaster(s)—we used them for little pick-me ups, too!
From a budgetary standpoint, we looked good. We could pay our bills on time every month and we could put food on the table… but we didn't have any spare money to save for a rainy day.
Understanding that not having a cash reserve to bail us out of unexpected financial hardships caused a financial burden that snowballed into emotional spending was a huge eye-opener. We could no longer deny the fact that we'd have to do some serious penny-pinching if we wanted to stop using credit cards once and for all.
So this time, as we work towards becoming debt free, we're trying a new approach:
- allocate x amount of money to a savings account,
- allocate x amount of money towards enjoying life, and
- allocate x amount of money towards paying off our debts.
If everything goes as planned, we should be out of credit card hell in four years.
© Alyice Edrich | www.alyiceedrich.com