Sharing some quick tips for purchasing items on a credit card….
First things first –
You should only use your credit card in two instances:
- When you can pay the balance in FULL at the end of your next billing cycle (for smaller dollar amounts)
- When you can pay the balance in FULL on a personal lay-away plan (for larger dollar amounts)
So for the first option, this may work with smaller purchases or expenses. Maybe that trip to the spa to recharge after a brutal winter in sales bares a $150.00 fee after you realize you need to tip … and you only have $75 in expendable income at the present moment. So you charge for the recharge. Well put that $75.00 that was available out of reach, whether in a brick-and-motor bank with a savings-only account, or in a thrice duct-taped shoebox in your attic. On your next payday, take $75.00 and add it to the $75.00 you save from last pay period and pay that bill in full. Then commence in doing a happy dance!
For the second option, you have to be diligent and steadfast. You may need to bring in reinforcements to have someone yell at you, or gently remind you, to pay your credit card statement each month, and on time, as you would with a layaway. Taking a step back – a lay-away is when you pick out an item at a store, put a certain monetary percentage “down”, and then promise to pay the remaining balance on a predetermined schedule, with a pre-determined dollar amount until the balance is paid in full by the predetermined date. If you do not pay in full – you lose your items. And you’ll be sauntering out of the store in a very, very sad dance.
Now in applying this principle to your personal like, the key here is to treat your purchase and terms in the same manner you would a lay-away. Accept the notion that you have ONLY 90 days to pay your balance in full (this is where the reinforcements would come into play!) and make sure that balance is paid off on – or ahead – of schedule. *Insert happy dance*
All in all, if you cannot pay off your balance within one pay period [for smaller purchases] or within 90 days [for larger purchases] you should not be buying the item or footing the expense on your credit card. Act your wage folks. There you have it on your Finance Friday!