Credit card debt starts out small, manageable, and without much consequence. At first. You handle paying it off monthly, enjoy some of the perks offered by the company, and find that having a credit card is easier than carrying a wallet full of cash. Then comes an unplanned auto repair, a flight home to an Aunt’s funeral, and you are asked to be best man at an old college friend’s wedding. Then there is the normal stuff; dinners out, birthday gifts, and a gym membership. Life is spontaneous and expensive.

Almost 23 years ago, we married, and right from the get go we made it a rule in our home to avoid credit card debt at all cost. Oh brother, the things we did to keep that credit card bill paid every month! One night we went on a date to Burger King on all the change we found in the car. With less than two bucks we feasted on a split minuscule burger, fries, and two tap waters. But with that discipline, creativity, and building our emergency fund every month, we were able to avoid credit card debt. Dan knew that debt starts small and builds fast.

Here are some of the guidelines we follow to avoid credit card debt in our family:

  1. We settled on a dollar figure amount that needed discussing before being applied to the credit card. Back in 1993 that meant for us any purchase over $100 had to be discussed and a few questions answered. Was the item a want or a need? Could the purchase wait until a sale/birthday/or Christmas? What was the current credit card balance?
  2. Couples must be in harmony. This meant to know what each other was spending, develop and follow a monthly budget, plan known purchases in advance, and agree on a lifestyle. Planning a lifestyle means things like how many times per month you will eat out, go to the movies, types of cars you will drive, gifts you will give, and wardrobe needs.
  3. Pay credits cards in full every month. This was probably the number one discipline we followed. Therefore we were careful what went on that card. We knew that if we missed one payment, we would miss more and never get ahead. We saw friends do it and we didn’t want that to happen to us.
  4. Build an Emergency/MatterFund™. We started this right away, and it was very little at first, but compounding really does work! Flights home purchased by credit card were covered by the MatterFund. Unplanned car repairs paid by credit card were covered by the emergency fund. It is easier to compound debt than it is savings, but wiser to compound savings than debt.
  5. Enjoy the things you spend money on. Are you content? Coveting more? These are questions we all have to ask ourselves when it comes to spending. Things were tight when we were first married and many more times throughout our marriage, and it was tough seeing our friends get nice things while our own entertainment center was some old ammo boxes. Oh and that stupid purple Cadillac! But somehow we see those days as the good ole days, and without carrying any credit card debt forward with us, these are the good ole days too.

Dan and Robin Joss

Proverb: The rich rules over the poor, and the borrower becomes the lender’s slave.

For the PDF version, click here=> The Issue of Debt: Part 3, How We Avoid Credit Card Debt

Previous Articles:
The Issue of Debt: Part 1, The Role of an Advisor
The Issue of Debt: Part 2, 5 Types of Debt Defined