Credit Card Statement Shock:
After Christmas and Any Time
Vicki will never
day when Mike got
As the person in our
home who routinely pays the bills, he was getting ready to write a
check to pay toward what had become an out-of-control account when he
discovered that the amount he was preparing to send wouldn't even cover
due that month!
As a bit of background, Vicki had gone through a
Biblically-based financial freedom seminar some years before and vowed
not to get into debt.
But that was years before she met Mike and he had
not had the benefit of that training.
So, when things got a bit tight
he started to put our expenses "on plastic."
Some Day The Bill
The problem with living on credit is that some day, the
bill comes due. Vicki had prayed
for Mike for months to be able to "see" what he was doing. Finally,
that day, he did.
Mike realized that every bit of money showing in
interest on our credit card statement was money that wasn't being
in appreciating assets. He promised that from that day
forward, he would work to pay off the debt and never get in
Having been through truck
driver training school and
gotten experience as a professional driver, he knew that his best
option for paying off the debt as fast as possible was to get a truck
driving job, which he did.
took over a year to make it happen,
but after pulling in our financial belt very tightly, that
whopping debt was finally paid off.
Hurray! The credit card statement showed that we didn't
owe anything any more!
We encourage every professional truck driver to
faithfully pay off all of the revolving credit he or she owes and to
never again pay interest.
This also holds true for drivers making truck payments;
the sooner an owner-operator can be debt-free, the sooner he/she
can start saving more money.
The Move from Payer to
Following becoming debt-free, we took a many-years-long
"fast" from using credit cards at all. Then, Mike
slowly began to use credit again, particularly using one card through
which we could earn cash back bonus rewards.
Of course, the credit card companies can afford to
pay rewards off the backs of folks like we used to be, who pay them
Did we hurt your
feelings when we said that? We didn't
It's just that we've been on both sides of the credit
definitely feels better being on the "earning" side than the "paying"
side when the credit card statement comes in.
As one astute speaker said, "Some people pay interest,
others earn interest. Which are you?"
The Credit Cycle (Debt
realize that some folks get caught up in a credit cycle, like a
gerbil on one of those exercise wheels.
They never seem to be able
to stop, especially when it comes to buying Christmas gifts for their
You may be one of them. That's why we're writing this
Mint.com explains the seduction of using
credit cards this way:
Spending money is easier with a credit card than
cash because you don't feel like you're spending money.
Individuals might be less likely to pay
much they are spending or question their bill when using a credit card.
So, here's the challenge (since this was originally
written just weeks after Christmas 2010): we encourage you
to make up your mind never again to have credit card statement shock by
doing the following:
- Pay off all of your credit card debt as soon as
possible. If you need it, perhaps you would like some goal
- Some people have been able to pay off the principal
they owe more quickly by transferring credit card balances to a zero
interest credit card.
- Vow that you will pay off any new credit card debt by
the due date on your statements.
- The first month you cannot pay off the
entire balance, arrange so that you cannot use the card
until the balance is paid off. That way, you can't compound the
problem. (Some people cut up, microwave or bake their cards in the
oven. That way the card is literally unusable and the source of
temptation is removed. Of course, you still have to keep paying the
- Evaluate your spending, set up a budget
guide) and stick to it with any flexibility you've built into it. (Did
you know that even
rich people need a budget?)
- Start to save up money toward certain purchases in
advance, especially big ones.
- If your one big "splurge" is Christmas and you end up
paying for it for the rest of the year, you may want to consider
some clever alternatives.
- Some family members have
agreed together that they will
buy only one gift for a designated family member that costs no more
than a certain amount.
- Or they may make something
homemade with their own hands from items they already have on hand.
- Or they may repurpose
an item into something that is really needed.
- Or they may agree to buy
only good quality used items, such as you may find through consignment
stores, thrift shops or an online auction.
- Or, if they have a cash
bonus type card, they may choose to give a gift card purchased with the
Learn to Build
Mike tells the story of how he saved up his driver
loyalty or rewards points through a certain truck
stop chain and waited to buy chrome until that
chain was selling it at a significant discount. Part of
the excitement of making the purchase was the anticipation.
don't know much about building
purchases these days because we feel that "we owe it to ourselves"
(whatever "it" is) and that sense of instant gratification is
stroked through the use of plastic as often as we want to swipe it
across the point of sale machine.
swimmer pictured here is waiting for the right time to jump in the
pool. If he jumps in too early, he will disqualify himself. It's a word
picture that speaks volumes to us about proper timing.
When we force ourselves to wait for certain
- we get a better
perspective on it;
- the likelihood of "buyer's
remorse" from making rash
decisions will be greatly decreased; and
- there is no credit card
statement shock because
will have been carefully planned out.
A saying that we once read on Twitter went
something like this: "The best way of saving money is to forget who you
it from." Well, not only is that dishonest, but to just keep ignoring
credit card statements, eventually the creditors will demand
By the way, for you to use a credit card, you have
agree to their terms and you become obligated to pay for whatever you
You have to agree to terms when you enter into
every financial contract,
like making a truck payment.
You don't want to run the risk of ruining
credit history or credit score, and you surely don't want to risk
Trouble Paying Off
As a final thought, if you have trouble paying off
balance as soon as your credit card statement comes in, you may want to
have a close friend
hold you accountable for your spending decisions.
The use of credit is neither good nor bad. The misuse of
credit is the problem. Mike says that, regrettably, the credit
card statement shock he got was a hard lesson to learn. Now he
understands this principle: The borrower becomes the lender's slave.
Being debt-free is extremely freeing. We're seeking to help
you either get out of a money pit or never fall in.
Bear in mind this principle: Always spend less
than you earn. If you need help tracking your spending, you may want to
Money saving tip: One
of the most helpful things
that Vicki ever did was to calculate in a spreadsheet how
small regular deposits into a compound interest-bearing account would
yield interest over time. You don't have to do that because there are
calculators online (like this one) that do the grunt work
Also, she saw the wisdom of investing
commodities that had a history of appreciating in value over time.
Now, instead of paying a credit card company
interest, it pays us
in cash back rewards. No more credit card statement shocks for
us. Join us, won't you?
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