The problem was with me, and my spending habits. And maybe my accounting methods, too.
I wrote a post last year detailing my reasons for giving up credit cards, even though the rewards points (and subsequent rewards) are basically free money, if you can manage things properly. But it wasn’t because credit cards are evil or anything, it was because my tendency to justify poor purchasing choices (and put off dealing with the consequences) meant that our cash reserves had dipped to an all-time low.
I blamed the fact that my wife and I were using credit cards. But the real issue was the fact that I felt like we had plenty of cash reserves, and I would justify spending more than I should on items that weren’t in the budget. Since I didn’t have to account for those purchases until the next month, I would just ignore it until it came time to pay the piper.
In hindsight, a little of the blame should go to my poor accounting practices, since I was using Quicken at the time. See, Quicken is a rear-view personal finance program, which means that while you can easily download and import transactions, it’s practically useless when it comes to projecting out next month’s budget and expenses, at least in the way I was using it.
But a funny thing happened that fall. With my transition to YNAB I began rethinking my entire financial management philosophy, and decided to throw the baby out with the bath water. “No credit cards!” I decided. Debit only! If we don’t have it, we can’t spend it.
Recently, however, I’ve been rethinking that strategy, for two reasons.
First, I’ve figured out how to track credit cards in YNAB just like they are one of my normal accounts. I can apply purchases to my envelopes immediately, and over the last year we’ve done a very good job of being responsible with out budget. I’ve realized that we can use our credit cards exactly like our debit cards, and “feel” the results of a purchase immediately in our budget, even though the credit card doesn’t have to be paid for another month or two.
Second, my coworker has been talking to me about the rewards points he earns on his credit cards, and I read credit card churning posts from all of you. I have a Chase Freedom card, which gives me rewards points if I use it, but it’s been strictly a backup for the last year. I don’t think I’m quite ready for churning cards or anything, but if I can seamlessly earn rewards for doing what I’m already doing, I think I’d like that. I even went to the victoria secret credit card login on my wife’s laptop and realized how much she is spending, but also racking up in rewards points. My thought is if she is going to spend that money regardless, then we might as well get some additional rewards back from it anyways. Monetary rewards that is!
So here goes! I’ll try to update you on our progress, and if we hit any bumps or roadblocks. I’m hopeful that very soon we’ll be earning rewards with our cards just like you all, but without my poor spending choices.