Watching my best friend rack up over $10,000 in credit card debt made me put 5 checks and balances in place to avoid the same mistake
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- It took my friend years to pay off $10,000 in credit card debt and I don’t want it to happen to me.
- I review my credit card spending weekly and avoid using my cards on certain days of the week.
- Building an emergency fund and staying accountable helps me avoid getting into trouble.
- Read Insider’s guide to the best rewards credit cards.
In my early twenties, I surrounded myself with a lot of friends and family members who had a similar mantra when it came to how they used credit cards. I’d be out shopping with them or deciding where to eat for dinner, and when I questioned how they (or we) would be able to afford something, the response was always “just charge it to the credit card.”
I never felt comfortable putting things on my credit card I knew I couldn’t afford but the more I was around people who put clothes, food, and self-care expenses on their credit card — like they were spending free money they never had to pay back — I gave into that temptation. By my mid-twenties, I found myself with large credit card balances I couldn’t fully pay off quickly enough and slowly accumulating credit card debt.
The moment that made me promise myself that I’d stop leaning on credit cards to purchase things I couldn’t afford was when my best friend confessed to me that she had racked up over $10,000 in credit card debt. I watched as she spent years trying to pay off that debt and struggled with a damaged credit score.
I desperately wanted to shake off the credit card habits I had picked up from the people around me. I decided to put five checks and balances into place to make sure that I’d never fall into the trap of accumulating credit card debt ever again.
Weekly credit card transaction reviews
A lot of my credit card spending happened without me keeping track of it. I set a reminder in my phone to pay my credit card bill on the 25th of the month and then occasionally would spend the time to review all of my transactions. This passive approach was becoming dangerous. I wasn’t holding myself accountable for tracking my spending or even reviewing my purchases.
To curb this habit, I made a weekly commitment to myself that I would sit down and do a credit card audit. I start by reviewing my purchases for the week and then record those transactions in my budget tracker (a self-created spreadsheet I use). That way, I can control my spending as the weeks go on and make sure I’m aware of what I’m putting on the credit card every week.
Strategize new credit card opportunities
One of the ways my best friend fell into a pile of debt was because she opened three new credit cards, back-to-back, to reap the rewards. Sure, she got a couple of free vacations using those reward points but when she returned, she had a lot of debt she couldn’t pay off.
I put a limit on how many new credit cards I’d allow myself to open (just one a year) and strategically planned on when I’d open them. I picked times of the year when I knew I had to buy something expensive (whether new furniture for a move or wedding planning) and once I knew when that time of the year would be, I’d start saving to be able to pay off the credit card before the high interest kicked in. I found myself scoring nice reward points but also mitigating the potential of a lot of debt by planning this process out in advance.
Opening a credit card and using it responsibly can actually help improve your credit score — and by timing your application when a card is offering a limited-time increased welcome bonus, you can earn more rewards.
Going credit card free
To help make sure I’m not overusing my card every month, I make Tuesday and Thursday credit-card-free days. I leave the card at home and either pay for any must-have items in cash or try not to spend a dollar on those days.
I plan in advance so I can reduce my spending on Tuesdays and Thursdays. Doing this has allowed me to be more mindful throughout the week and also remind me that I don’t need to swipe my credit card for takeout and coffee every single day.
Building up an emergency fund
Another reason my best friend accumulated debt was because of a health emergency that she didn’t have enough cash to cover. This made me think about how something like that can happen to anyone.
To help plan for unexpected and expensive emergencies, I started to prioritize building up an emergency fund (of cash in a savings account) so that if something does pop up, I won’t have to put it on my credit card with no way of paying it off for months or years.
Having my husband hold me accountable
Joining finances, and lives, with my husband meant that we needed to be on the same page with our spending and saving habits. We don’t have any joint credit cards (yet) but we do commit to the same credit card behaviors so that we can hold each other accountable and make sure neither of us accumulates debt.
We have monthly financial reviews, brainstorm ways to save money rather than spend money, and make sure we ask each other questions (like how much do you really need or value this item) before we charge something on our personal credit cards.
Jen Glantz is a personal finance writer, small-business owner, and the author of Amazon-bestselling books “All My Friends are Engaged” and “Always a Bridesmaid for Hire.”
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