Proper Use of Credit Cards

When it comes to paying purchases, there's no question that credit card is the most convenient mode of payment since we don't need to bring too much cash in our wallets.

But after using "plastic money", what do we normally do once we get home? Do we pay the credit card company immediately? Or we wait for the billing statement and pay only the minimum and we allow the bank to charge us interest?

I am not trying to make myself clean when it comes to these kind of things because I was once hooked by the credit card mania.  After using the card senselessly, I just waited for the statement and just pay for the minimum amount. There came a time when I no longer know how to pay for it. I got into several loans just to pay for the credit card.  Talking about financial ignorance. I simply did not live within my means. Salary is being spent out even before receiving it. And that it due to the improper use of credit cards.

So after painstakingly developing the discipline, one by one I first paid credits with the highest interest rate.  Cut off cards, with "hidden charges".

Please don't get me wrong, credit card is not evil. It is actually a tool which if used properly may also bring in peace of mind. Personally, credit cards must only be used in emergency situations when we have no immediate available funds. It should not be used to fund our lifestyle.

Right now, I only maintain one credit card and sometimes use it for items such as grocery, clothing, medicines, car maintenance, etc. But I make sure that when I get home, I pay all of it via online banking.  Though there were times that I'm not capable of paying 100%, I make sure that I pay at least 90%. So by that, I maintain my credit at a minimum level.

So think twice if we are a planning to use the credit card. It would be much better if we save for something we wanted to buy. Do not buy on impulse. We might realize later that we don't need that item we wanted to purchase especially if it is a want instead of a need.

One of the use of an Emergency Fund

This will serve as a prelude on my future post regarding Emergency Fund.  I just can't help but to immediately share my experience of how important having an emergency fund really is.

We normally leave the house to go to work around 7AM and we would normally use the car. But to my surprise, the car just wouldn't start. Twice, I tried to start the engine but to no avail. My initial reaction is to pop the hood and checked the battery terminals if it is loose. I disconnected the terminals and put it back in. Tried to crank the engine and it still won't start. The first thing I thought is, the battery is done. However, I didn't experience a hard starting the last couple of days. The only thing I remember is that it had a little jerk when I started it the day before.

Left with no choice, I told my wife to just call tricycle so she can go out of the subdivision. For me, I called on the Motolite hotline and requested for an immediate battery delivery. This time I ordered the Motolite Gold. The previous one was an Enduro.

Fortunately, I had an available cash which really came in handy in situations like this. This is the result of the discipline that I've developed through the years when it comes to money management (more of that in future posts :)). I was thinking of using my credit card but there were time that I'm already afraid of using it due to several incidences of double charging, which is sometimes one of the problems of using credit cards, even if I am going to pay it online afterwards.

Fast forward. The Motolite personnel arrived as scheduled. Tested the old battery and it really needs to be replaced.  Installed the new one an I was able to start the car.  After several testing, I paid the guy and gave him an additional tip for a good service. The good thing about this is I paid in cash without feeling hard about the whole thing.  Even if the battery cost around P5500.00.  That is because I have available funds intended for things like car maintenance.

With this experience, I really would want to encourage everyone to create an emergency fund regardless how much one is earning. It doesn't matter how much we earn. It on how much we save that matters.