— Cents and Sensibility

The Shopaholic's 10 Credit Card Commandments

Hello. My name is Mary and I am a shopaholic.

Okay, former shopaholic. I had to make a serious effort to kick the habit when I realized that adulthood is expensive and I was going to die of kidney failure from all the ramen I was eating. Also, credit card debt is anxiety-inducing and no fun at all. Having two accountants for parents and a few years of experience in finance, I really should have known better.

It’s just so hard, you know? When you are a worldly girl who likes pretty things, interesting foods and fun social gatherings, it’s hard to say no to temptation. It’s even harder when you have a piece of plastic that allows you to have fun now and pay later. Without discipline and a keen eye on your budget, you might pay dearly for lacking of self-control.

Thus, I have listed the 10 Credit Card Commandments that my fellow shopaholics can follow in order to fight the good fight and keep their finances on the right path.

I) Thou shalt fully comprehend the power of having a credit card.

By having a credit card, you have the ability to build an amazing credit history that will allow you to own the things you want and need, like the right house or the perfect car. But you also have the ability to ruin your credit history and put all those possibilities out of reach. Take your financial responsibility seriously.

II) Thou shalt leave your credit cards at home sometimes

If you have more than one card, consider taking one with you in your wallet and leaving the rest at home. You won’t have the available credit to overspend. In the case of retail cards, you won’t even have the card handy to get the promotional discounts.

III) Thou shalt make a budget – and actually track it

If you don’t have the time to make a spreadsheet and log your expenditures, sign up for Mint.com. It’s one of my favorite websites. It securely tracks all your checking/savings accounts, credit cards, loans, real estate and investments. It even has a handy tool to create budget limits. Also, by categorizing expenses you can see where your money is going and if there are areas to make cuts.

Also, a budget is useless if you don’t follow it. Make it a point to look at your accounts a few times a week to ensure that you are staying on track. Seeing your spending in hard number form might make you more careful of your spending. As an added benefit, this makes it easier to track fraud or simple mistakes made by banks or merchants.

IV) Thou shalt take advantage of the magic of technology

Emotions can really screw up your financial discipline, like when you are too scared to look at your credit card statement or when you’re having too much fun to notice if you can afford your lifestyle. Lucky for you, computers have no feelings! And they will tell you the harsh truth if you ask for it. Here are a few things you can do:

  • Use Auto Pay whenever possible. It’s easy, inexpensive and environmentally friendly. It’s foolproof for forgetful procrastinators like me. And since it’s automatic, you are forced to pay a fixed amount and unable to talk yourself out of paying less. Bonus points if you set it to pay off the entire balance for the entire month. (You should probably do that anyway – interest charges are the worst!)
  • Set up direct deposit or automatic transfers into a savings account. That way you pay yourself first and reward yourself with what is left over.
  • Create a weekly alert that lets you know the balance on your accounts (this is great for preventing identity theft, too.)
  • If you’re using the budget tool on Mint.com, you’ll get email alerts anytime you overspend on a category. I get one every year on Thanksgiving for overspending on groceries – oops!

V) Thou shalt not charge both day-to-day and one-off expenses

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