At a very young age, I was taught about the difference between needs and wants and had to not only provide the cost-to-benefit ratio of anything that I wished to have purchased for me but also had to show how the item would benefit me in the long run of things.
This left me with the habit of making lists, spending below my means and overspending only when faced with total loss or catastrophe and carrying spare funds in case something that is not on my list is identified and it is of too high quality to pass especially if it can turn a profit.
So let us try this exercise now: Look around you. Look at your space. Look above, and look below. Do you really need all of the things that you possess? In some instances, the answer will be a resounding YES and in others, you will find that you cannot only eliminate a few items but also will be able to sell or donate them. The former gives you extra funds and the latter helps another person possibly make ends meet.
The same holds true for getting credit cards. Do not acquire them impulsively. They are not Pokemon Cards or collectors’ items. Once you graduate, you will notice all types of offers coming in your direction. Choose wisely. Do not take every card that comes your way. Three cards should suffice. One should have a credit limit of $2500 (you can build up to this with good buying and paying habits if your initial approved limit is lower), a second should have a limit of $1000 (the same note as before holds with respect to the credit approval limits) and a third should have a limit of $500. This means that your total credit will be $4000.
When you use the cards, always use less than 30% of that total. So, in any given spending period the maximum that you owe should not exceed $1200. Additionally, remember that your credit card is a loan. It is not free money. So, the more rapidly you pay off the $1200, the better it is for your credit rating.
It is best to be a Transactor. A transactor pays their credit card bill on time and in full every month. So, if you cannot be a transactor, then do not use your card for a purchase that would not allow you to pay it off four days before the due date. “What do you mean by that?” you may ask. Well read what comes next carefully.
Do not pay your credit card bill on the due date, given that it might not post in time. If it does not post in time, then your payment is considered to be late.
When credit card companies see that you pay your bills on time and in full each time, they tend to raise your credit limit. Do not fall into the trap of buying more when that happens. Buy only what you need.
Additionally, if you can make it, do not buy it which is why I carry my lunch, as well as a canister for my tea. Once in a while, I will buy lunch or a hot beverage, and it usually has to do with optics (meeting with a stakeholder or being assessed by a stakeholder who associates brands with success) or a lapse (inadvertently left the container or canister at home, the beverage in the canister spilled, I gave my lunch to someone who needed it, …).
With respect to business deals, buying lunch or a beverage often is necessary if I am meeting with a high-maintenance individual whose expertise is needed on a project, or I am buying lunch as part of the business proceedings. More on that at another time possibly in another module.
So, to reiterate, the key points for today are as follows:
If you do not have the cash to cover a purchase, then do not use your credit card. Wait until you have the cash to cover the payment.
Never use your card to make purchases that go over 30% of your total credit limit.
Pay your bill at least four days before the due date.
Optimally, pay your bill in full.
