I’ve paid off over $25,000 in credit card debt

The title is true, well kind of…

While, I’ve never had a balance on any of my credit cards, I still make charges on them and incur “debt” even though it’s paid off completely every month. So technically I have had that large amount in “credit card debt” in the past few years. I got my first credit card at 18, and I was purely using it to gain credit for a long time. It definitely helped my score, and I was able to learn how to control my spending at a young age.

Yes, I’ve paid that much in credit card debt. Probably over that amount. Just recently, after our December credit card bill came, the balance for all 3 of our cards was around $1,500. Yes that’s a lot for one month, but of course other months will be smaller.

Also, I’ve seen a couple of other bloggers do this (not recently, so I can’t remember who did it, so let me know if you remember!) and I thought it was interesting to see where others come in on the credit card debate. I’d love to link-up.

Some prefer to be mostly cash based, whereas I would be lucky if I was caught with $1.

Last night in my banking class, our professor had us raise our hands if we did NOT have credit cards. Only one person rose their hand. Do you have a credit card(s)? I’m not sure if I was more surprised that only one person didn’t have a credit card, or the fact that the majority of us did.

Then I started wondering about how much credit card debt some of these people might have. Started wondering if anyone was drowning in consumer debt and the list goes on and on. You could tell that some were ashamed to raise their hands, but others thought it was funny.

The reasons why I like to use my credit cards:

1. Rewards.  Up until December of 2011, we always had a non-rewards Capital One card. I can’t believe how much we’ve been missing out! We got $600 altogether in cash back sign-up rewards, and enough points for around $100 in cash. Of course it won’t be this much all the time because our expenses aren’t that high, but so far it’s been nice.
   • However, I don’t spend more money in order to get more rewards. This is a common trap that people fall into.
     
2. Cash Flow.  One thing that keeps getting reiterated in my classes is that cash flow is king. Yes, cash is good, but cash flow is great.  My professor last night said that he likes to use his credit cards to do this as well and then he is able to get a better 30 day rate on his actual cash (he used to be a big bank executive, and now he’s a bank consultant).
   • As an FYI, this does not mean that I don’t have enough cash to cover myself, I just like the extra 30 day cash flow. I’m not paying interest on any of this, so I’m not being negatively affected.
   • I like having the flexibility of extra cash in my account, mainly because of my obsessiveness in having a large buffer in our checking account. Our buffer is big, and I would like to maybe switch to a penny based budget, so that everything is accounted for.
   • I also know to stay below the recommended 30% utilization rate.
     
3. Scared to carry cash.  I tend to be an obsessive checker. So I’m always checking to see if my keys are in my pocket or that I haven’t forgotten anything. I have 4 alarms in my bedroom because I’m scared of one not going off and it ruining my whole day. Obsessive? YES! But this is how I am with cash also. I don’t like losing money and I know I’d be obsessive with that as well.
   • I would like to get into a cash based system though. I feel like we could probably save a lot this way.
4. I am able to control my spending.  I positively know that I will pay my credit off at the end of the month. Yes, I can admit, that at first when I had credit cards, it was a little intimidating, but I still have never carried a balance. I can control my spending and I am still fully aware with each purpose how much I have allocated to each section in my budget.
   • This is a common problem for most. They’re afraid that with credit card debt, that they won’t be able to control themselves.

However, while all of this is said, I hate that the BF uses his credit card for anything. I hate the random $2 fast food purchases because I’m terrified of going through the trouble of someone committing identify theft against us. Of course our credit card carries protection from this, and so does our debit card, but the hassle is still scary to go through.

While credit cards may work for me, they’re of course not for everyone. Some people like to use only cash so that they can hold themselves more accountable, some are afraid of not be able to stay under the recommended 30% utilization (for a good credit score), among other reasons.