Living 100% debt-free may be the best thing to do, but sometimes, it is simply not a viable option. Because it is impossible to predict the future with 100% accuracy, it is quite likely that you will always bump into unexpected expenses that you cannot avoid.
Buying new books (for you, if you are a student or for you children, if you are a parent), having to fix your car, having to attend that one birthday or wedding you completely forgot about – these things are not usually planned and, most of the times, you cannot dodge them easily.
In these cases, having a credit card on hand can be an extremely useful way of getting a quick loan. If you use it wisely, and only for the expenses that simply have to be met, then a credit card will not lead you into much debt and the interest rates will not lead you into trouble.
However, credit cards can get quite addictive and it can become difficult to tell whether an expense is a “must” or if it’s just something you really, really want to do/buy. If you want to find out if you are actually living beyond your means, then try out the following method of “checking” your loan.
Every year, choose one month in which you will pay off your debts entirely (and all of them!). During this month, do anything to bring your credit card to zero (remember to stay focused on this goal, no matter what it takes). Check with your lender, see exactly how much you have to pay, and do it without any hesitation.
Choose wisely which will be this month. Obviously, expecting to pay off your credit card loan in December is unrealistic, and so is in any other month with a lot of holidays/ celebrations. Analyze your situation and see which of the year’s months you have to pay less money for bills and other necessities.
This may be June, if, for instance, you are a student. Or it may be the month of your birthday (since getting all the presents will feel like a reward for having done so well with your lender).
If you can make it through this month, bring your credit card to “ground zero” and not cheat at all, then your debts are still under control. On the other hand, if you feel like not paying off your loan entirely, or if you simply cannot afford that, then it means that you should start using your credit card more carefully.