To my long-time readers, you may remember me mentioning my relationship with my credit cards once... twice... three times a ledyba. To my newer readers, I will probably mention it again, but feel free to frisk my bag pockets anyway. When it comes to my credit card relationship, its frustration has always been much stronger than its return.
I received my first credit card when I turned 18 years old and moved to college. I thought of credit cards as the opposite of layaway. I could use the credit now and pay off the credit over the next couple of months.
I had heard stories of college students getting into trouble with credit card debt and I did not want it double, so I decided to use it only for emergencies. It was a good plan, but what I considered an emergency was not technically an emergency. My emergencies felt urgent and were necessary purchases but I didn’t have the cash at the time. These included doctors’ visits, trips home for holidays, a computer replacement and car repairs with few small purchases. In grad school, I added YOLO to the list when I visited a friend in Japan and spent $300 at Tokyo’s Pokémon Center.
After I moved to New York City, my struggling budgeting skills led me to use my credit card in new ways. I used it for cash advances, daily small purchases, and I even got a second card. As my budgeting began to improve I thought my credit card relationship would naturally follow. I was wrong. I maxed out my American Express within 6 months of having it.
Problems In The Relationship
I can still remember the first time I realized my credit card relationship was on rocky terrain. In grad school, I realized that the extra payments I was making were not doing extra damage. I did some quick math to learn that the credit I was spending each month was using follow me to absorb all of my payments’ damage and leave the interest unharmed.
I knew there was a sticky barb in this relationship and it took me five years to figure it out. I determined that it was that after years with my credit cards I had no real idea what my credit cards really were and work with them. I was using them like debit cards loaded with free cash, completely forgetting about the interest. Credit card money is quite the opposite of free. I was also treating the credit card debt like a substitute just sitting there waiting to be hit. Credit card debt is active and alive. If I use it while I am paying it down, it goes right back up.
My current solution
My first thought was to cut myself off frozen unfezant, but I rely on them more than I ever wanted to. It comforts me to know that I have the credit cards in case I end up in a temporary situation that I cannot afford. My cards have become an important part of my financial pokémon team and I couldn’t get rid of them.
I don’t remember how I came up with it, but I transformed a core concept from Pokémon into a financial strategy. Every pokémon attack has a certain number of power points or pp. Each time an attack is used, its pp goes down one point. When the pp reaches zero, the pokémon can no longer use that attack until the pp is restored with an item or at a Pokémon Center. My plan was to give my credit cards pp that would be restored on the 1st of every month.
To keep track of the used pp I made a sheet that has four months on it with a column for both credit cards. (see below) Every time I swipe a card, I put a sticker on the sheet. When the section is filled up, the card is out of pp and gets stored in the lock box under my bed. Inconvenient to get to, but I can access it in the case of a real emergency, and I don't have to wait for it to thaw.
This pp strategy comes down to one core objective, to control the number of times I physically use my cards each month instead of the dollar amount. Thus, my initial rule was to not feel guilty about using my credit card as long as I had swipes available and to not stress about the dollar amount.
I created some other guidelines to set my own tempo and prevent confusion.
I may restore a swipe if I pay it in full immediately after use.
Bills on autopay before I started are grandfathered in and do not count toward a swipe.
A swipe is a swipe. There are no dollar amount exceptions, limits, minimums. A $0.50 swipe counts the same as a $500.00 swipe. A swipe for a burger counts the same as an E.R. bill.
Online purchases count as one swipe per checkout. (not visit) So, if Amazon splits one click of the checkout button into three charges, it counts as one swipe.
How It's Going
I have no idea why I thought this idea could work, but it sounded fun. During my first month, I thought I was going to lose this battle too. Almost every swipe I was adding extra things to my cart to “make the swipe count” or “cheat the system” since the dollar amount didn’t matter. I was anxious that I had topsy-turvied my large number of small purchases to a small number of large purchases. But by month three I was no longer unnerved by using swipes on small things. I did start off with 6pp for each card after all. (see below)
Then Christmas hit like a lava plume and everything was left burnt. I went over my pp limit but I could tell there was some more restraint on my overspending than usual. I didn’t let that set me back and returned in January with a new sticker sheet for the next four months. I could already tell that this was going to be a good system to slowly wean me off my credit card dependency.
After a year and half of this system, I can feel how my credit card relationship is changing. I feel more control over my use of the card cards. I have a better understanding of what I spend my credit on, take my time to consider using a swipe and rarely swipe spontaneously. As I started my second year, I increased my difficulty by lowering my base 6pp to a base 4pp and haven’t exceeded my limits yet.
I can feel my credit card relationship improving, but there is still plenty of work to be done. My credit cards’ balances still seem to increase almost every month. My credit card debt continues to make personal records. It reminds me of beating the first gym leader. I’m glad to know I’m doing well, but I know there are still 7 gyms, one “evil” organization, the elite four and a champion still to battle. It’s a long journey before I can claim victory.
How would you rate your credit card relationship on a scale of 1 to 10? Why? Do you have any credit card strategies or suggestions that you’d like to share?