I was given a credit card in college. I didn’t sign up for it-my parents put the card under their account, but in my name. I was told to only use the card in emergencies. Since I was involved in athletics, I was on the road frequently and the on-campus dining was not always a feasible option. Practices would run late and I was starving, so I would run to Chipotle, Taco Bell/Del Taco, or In-N-Out. I also purchased textbooks each semester and would call my parents when I made a purchase so they weren’t surprised by the dollar amount.
Post college, I signed up for a department store credit card (to make sure I had clothes for my new job) and would pay it off every month. Clarification: I would make the minimum payment for 2-3 times and then pay it off. All the while, I would charge for things I didn’t have the cash for at the moment, but wanted badly. My behavior wasn’t erratic, I felt like I was in control.
Now, you cannot use a department store credit card at any other place than the specific store, so I “needed” to build my credit on a different card. I took out a small balance card (roughly $1,000) and again made the oath, “this is only for emergencies.” I didn’t have the cash on several occasions, so I just used the credit card. This is living! Or so I thought. I didn’t realize that I was forming a behavior of borrowing constantly. I used it for fuel for the car, for car maintenance, and other “emergencies.” Any time I went out to restaurants / bars I would pay for drinks for my friends thinking I was on top of the world when in reality, I wasn’t even close to the top. If you have heard the phrase “scraping the bottom of the barrel,” well it wasn’t that bad, but pretty close.
It wasn’t until 10 years later that I finally decided to stop using credit cards. It was difficult at first. When I had my beginner Emergency Fund in place, and started working toward a fully funded emergency fund, it became easier.
You tend to spend more on credit cards than you do with cash. When budgeting, make sure you withdraw the right amount of cash for the different buckets that you need. When the cash runs out, that’s it for the month (unless it is groceries).