Debt is not something you suddenly have. Well not in my case. Debt is something that crept up on me. When I finally decided in October 2018 to become debt free and remove credit cards from my life, it definitely wasn't a straight forward thing to achieve. I didn't realise that 25 years of being reliant on having a credit card wouldn't be an easy habit to break.
At 18 years old it was so easy to get a credit card. I remember getting an offer in the mail, all I had to do was sign and send back the form. No credit checks, a week later I received the card in the mail. I remember feeling so grown up.
The years that followed, periodically I received letters in the mail again. This time with auto approvals to increase my limit. I was making regular payments so it seemed okay. There was no real harm in it.
Before I knew it, my credit card limit on my first credit card was $13,000. I decided to refinance the credit card to an interest free balance transfer offer. This process over the years was repeated more than once. The biggest issue with this is I wouldn't have the the balance transferred paid in time before the interest free period was over.
Then, when I bought property, I borrowed a little extra to absorb the credit card debt into the home loan. It made logical sense as I would have a lower interest rate for the total balance. My downfall again here was as a part of the home loan package they gave me a credit card. I said I didn't want the card, I was told it was part of the package and don't worry, you don't have to use it. This was like telling me 'here is a box of chocolates, but you don't have to eat them.'
I resisted for a while, then once I made a purchase, I made another and another. Before I knew it, the balance of the new card was $6,000. The limit on the card was $6,000.
I kept thinking, how on earth did I get here again.
October 2018 I had 3 maxed out credit cards. Financially we were at out limit, I was looking at our bills and thinking which one could we afford to pay first. I was considering what work I could increase to increase our income. Then my son said something that became a catalyst that changed everything. My 5 year old son said 'Don't you like spending time with us.' I was heartbroken.
I decided things had to change, it was no longer about working more. I started to think, what if I could become better at managing our money. To make our budget more efficient without compromising our quality of life.
What if there is a better way?
I'm the first to admit, when I started paying down debt I didn't take it seriously. However when I got to the 3rd credit card, I got curious. Before making the final payment I went and reviewed all the statements to see what payments and charges occurred over the 18 months. I was stunned.
A $5,000 credit card, yet it 18 months I paid $7,507.54. The consequences of a convenient credit card. The irony is how much I had to work to pay for it. Yet without it, there is one less bill to pay, and more opportunity to be spending time with my family.