Miss MoneyPenny loves credit cards! What a shocker, huh? I have three and I work the daylights out of them. I don't think that their corporate heads like me very much. This is definitely not what they had planned when they issued me a card.
In the olden days I was their perfect customer. I only paid the minimum and was always at my limit, living the dream, like I had good sense. One time, back in the 70s, I was out to dinner with some friends. When it came time to pay up, I handed over my card. That was when they used to call the credit card company to get an okay. They kept my card!! It seems I was way over my limit and they asked the restaurant to mail my card to them! Now, that was embarrassing. Luckily, one of my dinner companions bailed me out so I didn't have to do dishes. I couldn't even get a credit card for a few years after that.
When I finally got credit cards again, I was much more careful. By that time, I was married to my favorite ex husband, and we would pay them off every month. When I found myself single, I started carrying a balance again. I was living beyond my means and didn't have the money to pay them off at the end of the month, so I was paying some pretty hefty interest fees. When I finally got out of denial, I knew that I had to make some changes. I figured that if I didn't have money put aside for all these "emergencies" like Christmas, that kept coming up, I would never get out of that vicious cycle of debt.
This is when the "don't worry" part of my budget came into being. I decided what these occasional "emergency" categories were and starting funding them every month. This took time to build up. What I did was pay the minimum on my credit cards and took that "extra" money that I would have put towards my cards and divided it among my categories, so that I had the money for new tires, instead of having to charge them. When I decided that my categories were on their way, I took a look at the credit card balances. I chose the one with the least balance and concentrated on it, paying the minimum on the others. When it was paid off, I started on the next one, using that new freed up money on it, while paying the minimum on the last one. I felt like I was making real progress by doing it this way, rather than applying equal amounts to all three. It seemed to go quicker this way. You could also start with the one with the biggest interest but I needed to feel like I was getting somewhere sooner.
What I do now is make sure that my cards work for me. Example: I was able to put $2000 down on a plumbing van for my son's business with rewards from a credit card. I get to shop the sales at Macy's with the coupons that they send me in the mail, saving a lot on clothes. My other card has a rewards program that pays you 4% for gas, 3% for restaurants and 1% for everything else, so I get a nice fat check every spring. I put as much as I can on this card when I shop and then come home and billpay it. None of these cards have a yearly fee.
The deal with this is to never run a balance or "they" win. Then they will have their way with you and will help themselves to your money every month. That can really add up. I'd rather spend my money myself. Wouldn't you?