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Tuesday, March 23, 2010

I'm NOT the Exception to the Rule

Have you ever heard an expert in some field make a statement and then find yourself thinking that it's true for most people but not for you? Ever think you're the exception to the rule?

We've been participating in Dave Ramsey's Financial Peace University course through our church, and Dave has a strict no-credit-card policy. I agree with him completely..... Except when it comes to our Visa that earns points.

Now before those of you who've been around for a long time starting wondering if I've lost it, let me explain. You know that I'm TOTALLY anti-credit card. We quit using our credit card about a year and half ago, and we almost have it paid off. (YAY!)

However, we have a Visa with no balance that earns points. We use it for large purchases (car repairs, etc.) that we would have been buying anyway or things like our monthly prescriptions. Our insurance company makes us pay 100% up front and then reimburses 90%. So we would charge the prescriptions, earn the points, and then use the insurance check (plus 10% of our own money) to pay the balance each month. We were cruising along quite nicely, earning TONS of rewards points and redeeming those points for gift cards.

That all came to a screeching halt a couple of weeks ago.

I had been waiting for a reimbursement for my yearly eye exam and a year's worth of contacts, and I had left the charge sitting on the card. My plan was - as usual - to pay it off when the check arrived. But somehow this check was delayed.

... And I wasn't paying attention.

........ And we paid a few dollars in interest fees.

................ And I vowed to NEVER use that card again.

I know that Dave said that it doesn't pay to use credit cards just to earn points. I heard him loud and clear. I smiled and nodded. But I thought that I was the exception to the research that he's done for the past 20 years or so. Ahhh... vanity... pride...

The day that I found the interest charges was the day that I told my husband that it wasn't worth it. I realized that he had that idea all along and that I wasn't listening to him. (My pride again.)

We now have an envelope of cash earmarked for prescriptions. We have money in our bank account to cover car repairs or other emergency purchases, and larger planned purchases are budgeted. We really have no need for a credit card, points or no points.

The biggest irony of the whole situation.... Our bank awards points for using their debit card too. They don't accumulate as quickly, but it doesn't matter. It's not worth finding another stray interest charge on our account, especially when it's my own fault.

Lesson learned: I'm NOT the exception to the rule, even when I think I am.

Am I alone in this? Have you learned a lesson the hard way like this? Feel free to share your story.... and make me feel better!

This post is linked to:
Works for Me Wednesday hosted by We Are THAT Family
:: Frugal Friday hosted by Life As MOM

Photo credit


Loan N. said...

I agree that the manipulation of accounts for rewards & the management of it all can be a lot of hassle. The only suggestion I have is calling your credit card company - I've always had good results when I apologize for the late payment & request a reversal of the finance charges. Because of my good payment history, they have always reversed all finance & late charges.

Anastasius Widjaya said...

we must be careful to use credit card. Credit is not to shopping but use just for business.

Ashley said...

We've never used CCs in our marriage, but my husband had a few before we were married that his parents paid on. They had us put a few 'big' purchases on them before we got married, telling us they'd pay for them. Three years later, we discovered that, yes, they were paying for them - three or four times over! YIKES! We jumped on board, and with our most recent tax return, we were able to get the final CC paid off and closed!

Jennifer said...

Loan - Not a bad idea to call them. But I've already paid it and won't be using it any more. I'm going to chalk it up to "stupid tax" and never use it again.

Anastasius - I've decided not to even use the credit cards for our businesses that we operate. Operating on cash has brought us a lot more peace of mind. It took us a while to get there, but we're doing it. And it's worth it.

Ashley - You're WISE to not use credit cards. And good for you for stepping up to pay off the cards from the past. That's a great feeling, isn't it!?!

Mom2fur said...

The snowball effect of growing debt doesn't happen like an avalanche, all at once. It happens little by little by little--a flake here or there. So slowly that most people (myself included!) don't see it until it's almost too late. (Of course, it's never really too late.) Be glad you caught it when there were only a few dollars to spend...not thousands. I'm recently out of debt and believe me, I was almost buried by that CC avalanche. We got a homeowner's line of credit, paid it all off, and have only one card now, as well as a Sears card we almost never use. (At 27% interest, you can bet we rarely use it. I'd rather save up the cash!)
I guess what I'm trying to say is: you're human, but you're smart, too. Better to learn late than to never learn!

Alli said...

Ah! We are getting so close to being debt free! I got so frustrated because we had paid off a card, and then I got a statement in the mail for $1.91!!! They said that was interest that hadn't recorded on the statement when we paid the bill off! So annoying! So, now I have to check everything even though I paid them off!!!
And it is really hard not to use them knowing how much "room" they have! I can't even carry them!

SI Saver said...

Loved this post! We haven't been using our CCs and are trying to pay them off this year. I had one for Old Navy and kept getting coupons but the catch was I had to use my card so I would think "Ok just this once I am going to charge this small amount". Then I forgot to make a payment on time and my $3.83 "deal" turned into an extra $39 headache due to the late fee. I realized it totally wasn't worth it! Needless to say we have cut up ALL our CCs and I too realized I was NOT the exception to the rule!

lundgren79 said...

Oh my goodness, it is as if you are speaking my language. Our family also practiced Dave's plan and also disregarded this CC idea. We too paid the balance every month so we just got points and with those we got all kinds of goodies. Not really because we were not spending that much even with the credit cards. But one day, it caught up with us, similar situation. Always paid online, got distracted with vacation and viola! Trouble. Using the envelope system now. Thanks so much for your post! This is great!

Kristia@FamilyBalanceSheet said...

We use ccs for points too and pay off at the end of the month, but I also got distracted right after I had my first daughter and missed the due date. I called the company and asked them if they would reverse the fees since it was my first offense and they did. It is always worth a try.