The following is a guest post from Martin of Studenomics and Passive Income Now. He’s finishing up his first guide that will show 20-somethings how to conquer credit for once and for all. He wants young people to be able to live life on their own terms without being stuck in debt.
“Credit is a system whereby a person who can’t pay gets another person who can’t pay to guarantee that he can pay.” — Charles Dickens.
I must confess that the past three years I’ve been running my blog off some crappy laptop I bought for $500 in 2008. My laptop finally died on me recently. Normally this wouldn’t be too big of a deal. The reason that it was a colossal problem was that I was in Budapest, Hungary, a country where I don’t speak the language. Did I mention that I earn most of my income off the internet? Yep it totally sucked. I lost my most important files and was worried about how I would access the internet for the duration of the trip. I thought that my life was over.
Sure I could still enjoy cheap drinks and great company. How would I blog without a laptop though?
Then I found a solution. I realized that there was an Apple store in town. Long story short is that I ended up picking up the MacBook Air, a piece of technology that I had fawned over since I first saw it in the store a long time ago.
Now it’s time to finally answer the question in the title. What’s the biggest problem with a credit card?
A credit card will let you buy anything that you want without asking any questions.
Thankfully I had the money in my savings account waiting to be transferred over. If I didn’t have a decent savings account I would’ve been totally screwed. I would’ve been screwed over because my credit card doesn’t ask questions. I bought my Macbook Air without much thought put into it.
That’s not a very wise decision for a personal finance blogger. A personal finance blogger buying a a brand new laptop without planning for it? I’m pretty sure that’s a sin.
Before I go on with this article I want you to know that I’m not one of those anti-credit dudes. I’ve actually been using a credit card since I was 18 and it helped me build my credit to the point that I got a home mortgage at 21. I do believe that there are many issues that need to be resolved when it comes to credit cards and 20-somethings.
If you have a credit card I’m 100% positive that you experienced this before. Your credit card will never ask you any questions. You don’t have to ask for permission. Your credit card won’t ask you if you have the money to pay for this. The store associate won’t ask you how long it’s going to take you to pay off your credit card balance. There are no questions asked. As long as you stay below your credit limit you can have anything that your heart desires.
You can have anything that you want without having to answer any questions.
What’s my solution for this problem? What’s my quick way for dealing with the biggest problem with a credit card?
Before every purchase that you make with your credit card ask yourself the following questions:
1. Do I really need this right now? Can I wait another few weeks to make this purchase?
2. How will I pay for this?
I guarantee you that just the time that it takes you to remember these questions will be enough to start second guessing yourself. Once you ask yourself the questions that your credit card won’t ask, you’ll realize that you’re making the wrong choice. You might even realize that you have other stuff you would much rather save up for. I personally try to save all of my money for trips. Going out in town or buying a new pair of shoes is alright. Going on a trip a few times per year, well, that’s how I want to live life for the next little while.
Have you experienced this with a credit card? Have you ever gotten carried away just because your credit card doesn’t ask you any questions?