Can you guess what the following figures represent?
Give up? These are the last twelve monthly balances
on our one and only credit card
. This Platinum Plus
card we've had since 1979 has a $24,000 credit limit
on which we pay a rate of less than ten percent annual interest
We also have a personal line of credit
of $15,250 at 12.9% annual rate
from a credit union
. We haven't had a balance on that for years, but we've kept it open just in case.
In an age when American households' average credit card balances
remain between seven and nine thousand, ours hasn't exceeded six hundred dollars in over a year.
With the exception of a few miscellaneous purchases, the majority of new charges each month are for gasoline. We try to pay off
much of what we have charged each cycle - usually about three or four hundred a month.How do we do it?
You might expect me to say that we were once like the typical American family - forehead deep in debt, or worse. Then perhaps you could take a pearl of wisdom to make changes in your own life to take a bite out of your own indebtedness.
I can't. That's not how it was for us. I don't remember in recent years feeling "saddled with debt," and have never maxed out
that credit card. Far from it. As I'll explain below, we've rarely had the balance exceed $3000 and we get uncomfortable if the balance approaches a thousand dollars.I guess I've just always felt that credit cards are little more than an expensive way of borrowing money in order to postpone the inevitable need to repay our debts.
Over the years, our credit rating
has allowed our financial institutions
to continually raise our limit
and lower our interest rates
- most likely in attempts to encourage us to charge more. But that hasn't changed our philosophy when it comes to borrowing - there's no free lunch.
Though the last year has found us with low balances, we do occasionally use the card for major purchases
. We put a cruise on the card a few years ago. We bought a bedroom set on the card. We're planning a new kitchen, and we may put the appliances on the card. Many years ago, I even purchased a car on the charge card.
But for the cruise and the furniture, we made larger payments and paid them off in about six or eight months each. We plan the same for our new kitchen. The $7500 car was only on the card less than a month, during which time I refinanced
at a lower rate through my credit union. So basically the large charges were more out of convenience.
I neglected to add that we can borrow from three IRAs at relatively good rates
as well. And while we're on the subject, we have about a hundred grand in equity
in our house against which we could borrow, I suppose, but I've been reluctant to borrow against our place of residence.
So basically we have a whole bunch of credit against which we can borrow, at arguably good interest rates
, yet we choose not to.Living within ones means
Before you write us off as miserly individuals who live in squalor in order to hoard our money, let me state that we are living quite comfortably. We have a house that's a little larger than we need in a great neighborhood. Our cars are somewhat modern and have been paid off
for several years.
There's GOT to be a secret, you might think. Yet, there's not. I guess we've always been ones to try to live within our means
. Maybe even beneath our means at times. I've always been somewhat of a saver. Put a little here and there for a rainy day. While some families look at raises and promotions as opportunities to add to their possessions, we would look at our life and ask, "do we need anything?" If things were stable, we might put much of our increases into savings
or add to the contribution to our IRAs.
That said, we'd always make sure that we spend a couple grand on ourselves every year. After all, we need not pinch pennies. We regularly eat out, (and my Dr would probably like to see even less of that,) see shows, go on regular vacations, and so on.A little history
If pressed to define some token life experience against which we might have drawn some of our financial tendencies, I might be inclined to say that it was watching our parents handle money. Few of ours had solid strategies when it came to handling money
, and in some circumstances, the turnout was quite tragic.
So who says you can't teach your kids about money?
Labels: credit cards, living within means, maxed out