Saturday, March 24, 2007

Managing our credit cards

Our marriage has proven to be a sixteen-year failed experiment in... responsible credit card use. There is something about being able to have something now and pay for it some other time that my wife and I just can't get past. It's actually caused a lot of problems for us, and we've tried a number of solutions that have ultimately failed.

This year we are trying prison. Not for us, but for the cards. We rented a safe deposit box and every non-gas credit card goes into it and stays there except for trips. (The runner up solution: freezing the credit cards in a block of ice--a fun idea from Ben).

We have also switched over to a cash economy... pay the bills with the checkbook and put the checkbook away for the month. Each week we withdraw whatever food & everything else money we have allotted, and that's it. If we want to know if we can afford something, we look in our pockets: if we have money, we can.

At some point aren't I supposed to become mature and be able to handle these kinds of things?


kent said...

I would like to think that somepoint maturity will occur, but alas, it has been a longer wait than I expected. And what is particualrly annyoing is that maturity seems to have a checkered arrvial pattern. it shows up in some places and not in others. Why it can just come all at once is a mystery to me.

Knumb said...

This sounds like a good plan.

For me, I tend to make just as much money as I have to. But, that tends not to cover making enough to pay unexpectedly high taxes, to contribute to a Roth, savings, and retirement.

I know it's a little different than a professor's life, with relatively fixed income.

Brad Wright said...

Good point, Kent. Even when (if?) maturity shows up, it's doesn't always stay for long.

Brad Wright said...

I suppose with a fixed income then the focus is primarily on managing expenses... makes sense.

Corey said...

I have two credit cards: (1) A mastercard for emergencies and (2) a Discover card for all basic expenses (groceries, gas, medical, etc). I try to keep $20 cash in my wallet for various expenses. I've discovered that I'm more liable to spend frivolously with cash than credit. (That whole potential of paying 12 to 24% extra in interest charges functions as a spending brake for me). I pay off the full balance Discover Card each month (thereby using it like a debit card, with the added bonus of float and cashback incentives). This year I bought Christmas presents with gift-cards from Discover's cash back program.

I've always been terrified of debt. Having just experienced the nightmare of trying to sell a home in a depressed housing market just reinforces this fear. There are few worse feelings than writing a check each month for something you no longer want nor need. To the extent that I still follow Biblical principles (being a lapsed evangelical and all) I try to be a good steward of the resources that God has seen fit to provide me. Debt can be a God granted resource... My daughter and wife both had some health issues requiring expensive procedures (that still broke the budget after my insurance company paid 80%). Credit cards made it possible to keep them healthy. But had we been spending frivolously with those cards, we might not have been able to afford these procedures (e.g., no room on the card).

Anyway, I wish you luck with your strategy. I also need to start a budget. I've always relied on my miserly nature to make ends meet (which isn't exactly healthy either). It's time for balance.

Brad Wright said...

I'm so sorry to hear about your family's health problems--probably all the more reason you are happy to have sold your house.

I agree that debt can be valuable... in fact, I have no problem with debt--that's the problem. I need some of your "miserly" nature.

Interesting about your Discover card payback... I just figured that was a marketing thing to be ignored.