Home > Our (Not so Good) History with Credit Cards

Our (Not so Good) History with Credit Cards

September 8th, 2023 at 03:38 pm

Our history with credit has not been particularly good.  Our credit score has always been very good, but our use of credit was almost always irresponsible. There have been times in our life when the use of credit was absolutely necessary to keep us afloat. There have been times that we used credit to live far above our means; and there have been times that we have been living just at our means. Currently, we are actually living “below” our means in that we are saving for both short and long term and decreasing our debt a little bit each month. However, while we are living “below” our means, we are still paying for all the times we lived above them.

When we bought our first house, we had a one year old and I was three months pregnant with our second child. I didn’t work much. I worked 2 days a week at a shoe store, making decent money and my husband was working in IT for Safeway. Once our second child was born, I took 6 full months off and then went back to working at the shoe store part time. At times, we had to charge groceries because we didn’t have enough money to cover all of our expenses. I wouldn’t even say we were living paycheck to paycheck because our paychecks weren’t cutting it. This is where our debt roller coaster really started.

Fast forward a couple of years and about $10,000 in credit card debt and I went to work full time and became a teacher. At this point, we could afford all our daily bills and then some. We could cover all of our monthly expenses, put some money aside for savings, and work on paying down our credit card debt. I said we COULD, not we DID. When I started receiving a paycheck, we used that as our excuse to spend even more money. We still lived paycheck to paycheck, and we started charging “stuff” and vacations we didn’t need and couldn’t afford. But we were paying cash for all our needs, and we could afford our minimum payments, so we just kept living that way.

That yo-yo went on for literally years. The lowest I remember our credit card every being was $8,000. However, it was at the end of this period (only 18 months ago) when we reached our highest credit card debt of almost $25,000. That was April of 2022. That was our wakeup call. We charged so much money that our credit card raised our credit limit because we had exceeded it. But, since they knew we were really good at making minimum payments, they were happy to allow us to dig our whole deeper. (To be clear, I don’t blame the credit card company for our debt. I’m just saying that we were their ideal customer, and they did appreciate that we always made our payments on time.)

April of 2022 our statement balance was $24,905.68. That was probably the scariest number I had ever seen! It finally gave us the kick in the pants we needed to work on truly decreasing our debt.

April of 2022 we finally started living “below” our means. We still contribute to our retirement accounts and put a small amount into savings, but our credit card bill is finally decreasing. We have decreased our credit card debt by $10,037.89… that’s 40% of our total. We still have a long way to go, but I feel like we are finally getting it. In addition to these wins, we are also working hard to fully fund our sinking funds. As envelopes becomes fully funded, we will take that envelope’s monthly allowance and add it to what we send to debt each month. Our sinking funds are one more step towards financial freedom.

It's sad that it has taken us until our mid-40s to get our financial life together, but we are doing it. We are decreasing our debt, paying more than the minimum payments each month, paying all of our bills on-time and with cash, slowly building our emergency fund, and contributing 20% of our income towards retirement. Small steps add up to big change.

We are on the right path and we are making progress. Currently, I am on a mission to find $175 by Tuesday, so that when our credit card bill closes, and after interest we will owe less than $14,000. As it is, we’ve brought the balance down to $13,925, but that’s before interest is added. I’m working every angle I can right now and trying to figure out where I can scrounge some extra money up from! Wish us luck!

5 Responses to “Our (Not so Good) History with Credit Cards”

  1. Wink Says:

    Thanks for sharing the history. I think it's helpful for others to hear the "how and why" debt happens because people can relate, and it helps to know they aren't alone in their own financial journey. I also had a LOT of debt in my 40's after a divorce. But, like you are doing, I dug myself out and changed my behaviors. I think you are doing great! keep up the good work!

  2. KellyB Says:

    Sometimes it takes a while, but good job on recognizing your issues and working to pay off your debt. Some people never do, so congratulations on being on the right path now. Best wishes on the debt payoff, you’ll get there soon!

  3. Lots of ideas Says:

    I am going to make suggestions for you to consider whether they are a safe strategy for you.

    1. Call your credit card company and ask them to reduce your interest rate. If you are refused, ask to speak to a supervisor/manager twice before you give up

    2. Since your credit rating is good, seek out a card that will both pay an opening bonus and allow a zero % interest balance transfer. It will cost @3% to do the transfer but that is better than any interest rate you are paying. Transfer only as much as you are sure you can pay off and prioritize that payment because missing it can incur interest on the full transferred amount. Do not put this card in your wallet.

    3. Open a third card with cash back rewards and an opening bonus. Use this exclusively to pay recurring bills like phone, cable, insurance, subscriptions as long as there is no fee to pay by credit card. Set this card for automatic withdrawal and don’t put the card in your wallet. You can earn 1-3% on this - which is tax free money and costs you nothing.

    These are risk free, anyone can do them with no risk
    4. Remove your credit card information from every place you shop on line. Put a post it note on the cards you carry with a word like NEED? REALLY? WAIT! STOP! DEBT FREE!

    5. Set aside 10 minutes each day to find out what you already have. Clean out a drawer or cabinet. Move what doesn’t belong there. Throw crap away. Anything you can sell? Anything that would make a good regift or donation? Do it. When you see what you spent money on, it can make you wan to not spend! Just do 10 minutes per day.

    Best wishes

  4. LivingAlmostLarge Says:

    Good luck and balance transfer. Do it and take your best shot at paying off the debt without interest. You've made the hardest change which is mental.

  5. LuckyRobin Says:

    When I transferred debt to a card with a 0% interest rate, I would find the one with the longest time period. Back in the day when I was doing this, they had 6 month, 12 month, and even 18 month time periods, though the last was rare. 12 month were more common, but I don't know if that is still true. I would work hard on paying down the card with interest, only paying the minimum payment plus the transfer fee on the 0% card, but I would be on the lookout for the next great card offering 0% at least 2 months before the term was up so I could transfer that amount onto the new one. This way I never had to worry about the interest rate going up there. I did that again while I paid down the interest card and when I got down to just having one 0% interest card I would pay that off. It depends on how much they will give you on the 0% card and how long, as to how many times you will have to do this. It took me longer, because I had more debt. Sometimes I was fortunate to have two 0% cards going at the same time. As long as canceled cards as I paid them off my system worked. I wasn't in it for cash back or bonuses or anything. Just to get the debt paid off. All that other stuff is for stable people who have been out of debt for a while. If you are worried about opening another card or two to play the 0% interest game, then don't. It's not worth the risk of digging one or two more holes when you thought all you were doing was just filling one back in.

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