I have the ultimate role model when it comes to simplified personal finances. I often wonder if Babci even has a credit score. She’s always been on a cash only basis. It wasn’t until I started managing her finances that she broke down and got a checking account. You’re probably going to ask how the heck did she pay her bills without a checking account? Well, back in the day, she’d walk to the utility company and pay the bill on site. The gas company was only about 4 blocks from our house, but the other bills we paid at one of those convenience stores that would have bill paying services. I think the fee was like $0.50 per bill. Does anyone know if those types of services still exist?
When I graduated from college, my life suddenly got complicated. I had lots of bills to pay every month, including several student loan bills. Without realizing it, I wanted to go back to my simple days where I could count the # of monthly bills on one hand, and so started my twisted obsession with debt reduction. In addition to that, I had a wonderful negative role model in one of my ex’s regarding credit cards. He was one of those people who paid the minimum on a bunch of credit cards and his balance never seemed to go down from month to month. It was enough to scare me and I’ve always kept my credit cards to a manageable number of 1. I had the same citibank credit card for 10 years, but after a few less than ideal customer service experiences, I closed my account and never looked back.
I began my breakup with Citibank by first searching for the best credit card deals. At the time Capital One had a pretty good cash back card and I said adios Citibank and I’ve been really happy with my card ever since. Just last week I was literally 16 minutes late paying my credit card bill and when I called to see if there was anything I could do, the customer service rep said she’d waive my late fees since I had just missed the cutoff by minutes. I was relieved because it was my after Christmas bill which was higher than usual. Needless to say, I’m still happy with my decision 5 years later.
Credit Cards vs Cash
Although Babci still believes cash is king, I like using credit cards for just about everything. I do it for the cash back but I also like it for tracking purposes. Thankfully, we’re at the point where I don’t have to truly budget anymore. We naturally spend less than we earn, so nowadays, I just like to periodically do a backwards look at my spending to make sure I’m not going out of control in any one area. I know it may sound strange, but having most of my expenses showing up on one bill is a lot more shocking than paying a bunch of smaller bills. It really helped motivated me to keep my spending in check.
Questions for the readers..just because I’m curious. How many credit cards do you have and what’s your system? Have you ever been tempted by those 10% off deals? Lately, I’ve been tempted by the Target card..they offer 5% cash back on all your target purchases. It seems like an incredible deal, but I wonder if it would make me spend more money than I normally would there. (I mean that’s the whole point by Target’s marketing group isn’t it?) I also thought it would be good to have a separate card just for home improvements to make tracking expenses for capital gains purposes easier but so far I haven’t.
Despite my strong desire to save a buck, my desire to keep my financial life simple so far outweighed the short term cost savings. I’m sure if I had 27 credit cards, I’d get way more mail and there would also be way more opportunity for me to miss payments and the savings would be offset by late fees. That’s my theory and I’m sticking to it.