Recent Divine Discussions

Friday, September 7, 2007

Step 3: Never let my credit card be my only option

Back in July I decided to take the time to understand why I keep building more debt. I am on a mission to find out exactly what the underlying factors are when it comes to my accumulation of credit card debt and find a solution to each one. Here is what I have discovered so far.

Step 1: Unsubscribe from all store emails.

Step 2: Find a cure to my ESS.

And now I have discovered another flaw in my ways and have developed step 3.

Step 3: Never let my credit card be my only option.

On a previous post I shared what I had decided to do with any money leftover at the end of each month. In the midst of coming to that conclusion, I realized that I have been committing the same mistake every single holiday, birthday, and any other significant event where I would need to spend money.


I knew that these occasions were coming up and that I would need to spend money yet I never thought to plan ahead. See this is what I didn't realize:

Dimples has always had somewhat of a budget where ALL her money is allotted for something. Every payday, she pays all her bills, transfers money to savings, and anything left over is directed towards debt. So when a birthday, holiday, wedding came along she had to resort to using her credit cards to fund the birthday party, wedding gifts, holiday meal, decorations, etc.

(ok enough of me speaking in third person.....getting lil eerie)

My credit card was my only option. I didn't plan ahead and save money. Even when I was paying bills I could have easily set aside some of that remaining money and just not applied as much to my credit card debt. If you count up all the holidays and birthdays and gifts that have been sponsored by my credit cards then you can see how much all that can amount to. Shoot, I did the very same thing with my sister's wedding two weeks ago. And yall saw how much my cc debt increased by. What if I had planned ahead and saved money for it.? Ugh! I swear, its times like this where I am amazed on how I can be an engineer and still not be able to figure out something so simple.

Well I plan on changing that trend. From now on I will always have a plan. Next big event for us is my daughter's birthday. I will get two paychecks by then. I plan on setting aside $25 each paycheck for a total of $50. Then I will add $50 from my miscellaneous budget for a total of $100 to use for her birthday. Next big event after that is Thanksgiving. I will be going home to my parents for that holiday. But I will set aside $50 to use just in case I need to help my mom buy food and cook.

I created a list of all upcoming big events up until my birthday in January and have "budgeted" a set amount for each. These are situations where I would be tempted to use my credit card and spend spend spend. Doing this I will be able to avoid that.

Anyone else in the same boat? Or were in the same boat?


SingleGuyMoney said...

I used to do the exact same thing, if something came up I wasn't expecting, I just used my credit card. I've since setup a "Freedom Account" to account for things I hadn't planned for. I contribute at least $200 to this account each month. For example, this month I forgot to budget money for gifts for 2 birthdays. I did use my credit card but scheduled a payment from my freedom account to pay off those charges.

Velvet Jones said...

Yep. Count me in on this too. It's just very recently that I realized that I pretty much have to anticipate almost everything when it comes to a budget. My most current budget is the most detailed I've ever had, and I just realized that I didn't a few things. It's a pain, but it's a learning process. :)

D.C. 2 said...

I am definetly in the same boat Dimples. I don't plan well enough ahead for birthdays

SavingDiva said...

I think you know that I'm in the same boat...I'm trying to start setting aside money for random car expenses...and I've started a Christmas fund...we'll see how well I stick to it!

Good luck with your early savings!

Sistah Ant said...

it's not just birthdays, it's anything. the key for me was american express. you have to pay it off within a month. if i needed to use it, i did, but i could only use it for as much as i knew i could spare from my next paycheck. it kept me from getting into more debt, and it helped my credit history. but i only used that as an emergency measure. having a savings keeps you from needing credit.