I am not and never have been an advocate of credit cards in a traditional sense. In fact, I am pretty strongly opposed to them in most cases. We didn’t even have one for the first several years of our marriage because I wanted NO debt associated with a credit card. In fact, my goal is to have no debt at all..but that is a totally different post and story altogether.
In most cases, I feel that credit cards give people a false freedom to live and act in a way that they are not truly financially capable. That little $25.00 payment every month is easy to pay, and people just keep moving forward and accruing more and more until they are eventually drowning and see no way to escape.
Well, credit cards do not HAVE to be that way. In fact, the way we use ours, it is the complete opposite. It actually FREES us to live exactly within our means, while giving us bonuses for doing so! How?! Well, we do something a little different than most, but before I get started, let me say…I am not a financial adviser by any stretch! In fact, I struggle everyday with the best way to save money and stretch it as far as it will go. But, in saying all of that, I have also learned a thing or two along the way…and that is what I want to share with you! Now, this that I am telling you about today is ONLY for those that are very disciplined with money and are using a checkbook register already. If you aren’t, you may want to get that going for a little while before trying this.
Step 1: Commit to NO debt with your card before ever getting one!
I know this is a foreign way of thinking in the credit card industry, but I am certainly not in the credit card industry. I am in the “Re-fab your checkbook” industry! (Had to throw that in there!)
Before you ever get that card, commit to never buying anything that you do not already have the money to pay for. Here is how we do this differently than many people:
We use our credit card exactly like a debit card. Each and every item we buy, deposit that is made, etc.. is written into our checkbook register and recorded. I keep a running total of every dollar we have and how much we “truly” have in our account. My actual online banking account may say we have $3,000, but according to my checkbook, I know I truly have $500 because I have written every item down and kept track of it. Now, when it comes time to pay the bill on the 26th (when mine is due), I simply get online and hit PAY. I already know the money is in there, and I am good to go! There is never any second guessing as to if we have enough to pay the bill, and there is no guilt of it we “over-spent”.
This is something that has really worked for us because we have been very disciplined to ONLY buy what we have the money to buy. We never buy it if the money is not in our account, and we have never had a single balance on our credit card. We have been doing this for over 2 years, and I can truly say, it has been AMAZING for us! I know many people who pay off their card every month without doing it this way, and that is great! I wanted to do things a little differently so that I could truly keep better track of the money (control freak really).
Step 2: Get a credit card with a good rewards program!
I don’t believe in just 1 certain card that works for everyone. We use a Chase Sapphire Reserve (no compensation from them to talk about this), and it has an annual fee. The fee is low when you factor in what all you get in return. We get points in return for every dollar spent on the card. Certain items get double points or even triple points during certain times. Each month there are different areas that have higher rewards. Those points NEVER expire (awesome!!!), and they can be redeemed for money, gift cards, travel, and the list goes on! Most cards even offer you a big bonus to sign up, so that is automatically lots of free points at the very beginning before you ever make your first purchase. We have never cashed in any of our points, and we have ALOT. In fact, we are on target to have enough to pay for an entire vacation (airfare and all) in another year or so, literally by doing nothing except buying what we always buy. We literally put every single purchase on our card. The points add up very fast. We are also protected completely by using a credit instead of a debit card (another bonus).
Step 3: Start optimizing your money today!
Like I said before, this is only a method for people who can truly be disciplined in not over-spending. It is so easy to run a card and not think twice about what you are buying or how you will eventually pay for it. By writing each transaction down and seeing the true amount of money coming out and your balance right then and there, it forces you to take control of your own finances.
By following this simple method, you can be well on your way to the vacation of your dreams, without ever spending an extra cent! No matter how long it takes, you are buying your daily needs anyway…and the points are accumulating. Once they get to a level you are satisfied with, cash those babies in and do something FUN! We choose travel because that is our passion, but you can choose anything your heart desires. In fact, because of doing this- we will be able to take a fully paid vacation to Ireland next year, unless we change to a different destination! But, wherever it is, it is paid for with NO debt!
I hope this is something that can help you in getting on the road to re-fabbing your wallet!
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*I know there are countless ways to use credit cards, save money, and pay your card off each month. This is just my way of doing it. I don’t think it is the only way.*