So You Need A Credit Card
A lesson from my Grandfather
THE PERILS AND PITFALLS OF CREDIT CARDS
A Credit Card for anyone just starting out into the world of Credit Cards it can be a Rite of Passage into adulthood and/or a new type of financial power. It can also be the first step leading to a life of stress and struggle. There are consequences if one chooses to ignore the Pitfalls and Perils of that little piece of plastic called the Credit Card. This is my story. Don't let it be yours.
THE EARLY YEARS
When I was young, I spent every summer vacation with my Grandparents at their summer cabin in the Berkshires. Grandfather was a Butcher, and traveled up and down the East Coast to Cattle Auctions buying and selling cattle, and sometimes he took me with him. During these trips he would tell me stories about how he came to the United States with very little money and just the clothes on his back and how he built his business through hard work and dogged determination. He used these trips to teach me some of his life lessons.
WORDS OF WISDOM
My Grandfather had what my Grandmother called, "Words of Wisdom". He used these "Words of Wisdom€ to teach me his Life Lessons. The most memorable was and still is "Take Care of the Pennies and the Dollars Will Take Care Of Themselves".
ROAD TRIPS WITH GRANDPA
One of the Life Lessons he tried to teach was all about money. When we returned home from the Cattle Auction, he would sit down at the kitchen table, pulling money from his wallet and pockets, and stack it in a pile on the kitchen table. I was probably eight or nine at the time and seeing all that money made my eyes pop. He gave me the task of sorting it out and counting it. He showed me how to make neat piles of the $1.00's, $5.00's, $10.00's, and $20.00's, then separate, and stack the coins according to their denomination. Anything over $20.00, he fished out of the pile and stuffed into his pocket. I looked forward to that part of the trip. I knew if I did a good job and counted everything correctly, Grandpa would pay me with two handfuls of pennies, which could buy a Hostess Cup Cake (2 for 5 cents) and still have plenty left over to save for another day.
TURNING PENNIES INTO DOLLARS
It was during that time my Grandfather would remind me "If you take care of the Pennies the Dollars will take care of themselves" and true to his word when I had saved 100 Pennies he would trade them for a brand, new, crisp, $1.00 Bill. His method of teaching worked to a point. I never forgot the "Words of Wisdom"; unfortunately, I did forget the lesson attached to it.
When I finished Nursing School, and began earning a paycheck, I discovered that magical instrument called the Credit Card. How cool is this I thought. I don't need to worry over my pennies anymore. This little card has the dollars built right into it. Finally, liberated from the dread and drudge of worrying if I had enough cash to buy something I really wanted instead of something I needed. I decided to baptize my shiny, new, card at my favorite little Dress shop which until then I had always paid with cash. I felt a sudden surge of independence and power. This was a new experience for me and it felt so good.
THE YELLOW SLICKER
My eyes landed on a bright, Yellow Slicker, with a matching Fisherman's hat, which was all the rage back then in New England. A feeling of glee came over me. I could buy that trendy, Yellow Slicker with my brand, spanking new Credit Card. As I fumbled in my purse for my wallet, another of Grandfather's "Words of Wisdom" seeped into my memory. "Take care of your needs before you take care of your wants and you will never be poor or beholding to anyone.€ I pushed that thought aside and marched my bright, Yellow Slicker and matching hat, up to€€the Counter, pulled out my freshly minted Credit Card, handed it to the Clerk and declared my independence from my Grandfather's ever nagging €€"Words of Wisdom" and my frugal "Cash Only" days.
There was good news when the first Bill came in. I had spent more than I would ever spend using strictly cash but I only had to pay a small fraction of the total amount and I could stretch it out over several months. There was Interest to pay and fees for membership and there could be fines for late payments€€but I had a good job. I could afford it. I was responsible and I always paid my bills on time. It was all good.
MORE GOOD NEWS
There was more excitement! It wasn't long before I started getting applications from other Credit Card Companies with offers of more Credit than I was using. It was not long before I had ten Credit Cards totaling in the thousands of Dollars. It was about that time I began to have illusions of grandeur. I had the ability to purchase more than I ever imagined. The temptation to overspend was compelling and eventually I gave in and threw caution to the winds. It was only a few extra dollars a month and I had a good job. I could afford it and I was responsible.
PAYING THE PIPER
Gradually the Bills coming in outpaced the paycheck so I began using one credit card to pay the other credit card. I even took a part-time job to keep up with the minimums, but it was too little, too late. I was on the hook for a few thousand dollars with no way to pay even the minimums on all of them.
CLIMBING OUT FROM UNDER
Eventually I filed Bankruptcy to get out from under the mountain of debt I had accumulated. I worried; would ever be credit worthy again. Only then did I remember my Grandfather's Lesson, "Take care of the Pennies and the Dollars will take care of themselves". The first thing I did was open a Savings Account and committed $50.00 a month for deposit into that account. I needed to wake up the Savings part of my brain and get some discipline. Then I applied for a Prepaid Charge Card. The purpose of the Savings Account was to remind me of my Grandfather's Lesson - Pennies turn into Dollars. The purpose of the Prepaid Charge Card was to apply discipline to my out- of- control buying habits and regain the power to be in charge of my life once more.
THE ROAD TO RECOVERY
I made the Deposit small enough so I knew I could make the deposit every month. I used the Charge Card to relearn the lesson from my Grandfather to take care of needs first. Between the two strategies, I forced myself to become financially healthy once again. In the beginning, I wondered if I was up to it. It took a while but it wasn't as difficult as I thought it would be and even with the Bankruptcy, I was able to re-establish my credit, and in the process accumulate a tidy Savings Account, which eventually made it possible to buy a house.
If you have, good to excellent credit use it wisely and protect it. Shop around for the best terms you can get. Remember banks and credit card companies are in business to make money and they compete with each other to get customers. If you have poor credit or no credit, a Savings Account and a Prepaid Charge Card are essential to bring discipline to your spending habits and create a foundation to be eligible for a Credit Card. Once the savings habit takes hold, you will feel compelled to make that monthly deposit. As you watch, your savings grow and earn interest; you can start thinking about more advanced financial instruments such as a 401K or a Certificate of Deposit. Finally yet importantly, remember my Grandfather's Words of Wisdom. "TAKE CARE OF THE PENNIES AND THE DOLLARS WILL TAKE CARE OF THEMSELVES."