Thoughts on: The Usefulness of Credit Cards

Let’s talk credit cards.

After all this talk about envelopes, there is one thing I have to clarify here.

Credit cards are not an evil thing. It is the mishandling of credit cards that causes trouble, rather than the cards themselves. I will not tout the usefulness of credit cards to people who have bad control. If that is you, carry on. You need to work on other things, first. Progress with the course and return to this blurb if you know you have bad discipline, tend to spend more than you earn, or get too excitable with the power of credit cards in your hands.

But if you have discipline, credit cards can be useful things. In fact, it can be used to accelerate your budgeting success.

We personally used it to our advantage, so it would not feel right if I did not mention their usefulness. You see, in return for using credit cards, you are rewarded with points which translates into free money.

The best translation of those points usually lies in travel, and we use credit cards in order to fulfill our travel needs, which then reduces the amount of money we need to save for the lifestyle we want. TravelMiles101 is the best course to learn how to do this.

If you are not a fan of traveling, then you may also trade in those rewards for money itself. It will be at a lower trade value which would be less optimal from a money standpoint, but from a life standpoint, free money is free money. Not everyone loves to travel, but we can all benefit from getting money when we have to spend money.

In order to have credit card success, you must:

  • Spend only within your limits and buy only what you need.
  • Pay each credit card bill IN FULL at the end of the month.
  • Keep track of each credit card in your budgeting (as an account, not a category).
  • Recognize when credit card usage is out of control, which in my definition is strictly when you cannot make a full payment every month.
  • Close credit cards if they are hurting your budgeting path.

The last two steps are very important! If they are not serving you, then you must get rid of them.

If you learn to control them, then they can help you greatly!

That is all.