If you read my recent post about My History with Debt, you know that we amassed $20,000 in credit card debt a decade ago. Realizing the error of our ways, we canceled the cards, and began an aggressively repayment plan.
During the debt repayment process, I found inspiration from Dave Ramsey. You know, the “debt is dumb”, “credit cards are evil” guy. While there were a lot of things I didn’t agree with him on, the ‘debt is dumb’ concept wasn’t one of them.
I fully expected that I’d never own a credit card again. I was not only okay with this, but also quite proud of it.
After paying the last payment on our student loans and achieving debt freedom, I was at a bit of a financial loss. It was great being debt free, amazing in fact. But the goal I had worked towards for 8 years was now over. I felt directionless.
In the last year of our debt repayment process, the goal of debt freedom felt inevitable. Prior to that it had felt like a daunting impossibility. Dave Ramsey’s message was so helpful during that stage. But as we neared completion, I felt like I had outgrown his message.
Around that time I had started reading personal finance blogs and finding new financial influences. These new voices agreed that the debt had to go. However, they also introduced the idea that credit cards weren’t evil, but rather a tool.
I didn’t disagree with this idea. However, I also had a history of irresponsibility with that particular tool. I figured why tempt fate.
What Changed My Mind?
Over the past couple of years a few things have conspired to change my mind on owning a credit card. First, a decent sized emergency fund has made me a lot more comfortable with owning a credit card again. I know that I can easily wipe out any amount of money I rack up on the card.
Additionally, I have the painful experiencing of having spent 8 years repaying debts. If the past 8 years haven’t taught me responsibility with a credit card, then nothing will.
Finally, we’ve begun to travel more. This has affected my thinking in two ways. First, having to pay an extra $8 a day on a rental car, just because I was using a debit card instead of a credit card. Second, I’ve learned more about travel hacking. While I’m still new to this idea, I’ve been reading more about it and want to see for myself what it’s all about.
With the Great American Road Trip on the horizon, I thought this would be the perfect opportunity to give travel hacking a shot. However, I plan to venture back into credit card ownership with an abundance of caution.
The card will be paid off as quickly as possible. I won’t know exactly what this looks like until I get the card and make my first payment. However, I’m guessing it’ll be within days of making a purchase.
- I can’t spend more than what is available in our checking account. (With the exception of preplanned expenses.) If the money isn’t in our checking account, we can’t charge it on the card.
- I can never, under any circumstances carry a balance on the card. If I end up paying one cent in interest, I’ll cancel the card that day and give it another decade.
- In order to keep the card, I have to realize some sort of benefit. I’ve heard numerous statistics about the low percentage of credit card owners who actually get some benefit from their rewards. This article cites just 15% of travel rewards earners have used their rewards.
I’ll write a follow-up to keep you updated with how my foray into travel hacking goes. In it I’ll give more details about the card I will use and the benefits I’ll claim from it. For now, I’m cautiously heading back into credit card ownership.
I’d love to hear from you, let me know what you think. Have you had success with using credit cards for travel hacking? Do you think credit cards are a bad idea? Comment below: