Be honest, how often do you actually pay cash for anything?
These days cash is “so yesterday”…we live in a digital world now. With apps like CashMe, Venmo, or Apple and Google Wallet, cash is simply old news.
When we’re not feverishly blowing through stacks of dough using our favorite apps, we’re swiping left and right for any and everything.
True confession…I used to whip out my Visa card to pay for everything, EVERYTHING. Starbucks…swipe…gas…swipe…Forever 21…swipe…Target…swipe swipe swipe! It was bananas.
I was reading an article recently where Robert Kiyosaki recounted, “When [he] was young, people lived from paycheck to paycheck. Today, it seems like they live from credit card payment to credit car payment.”
And to be honest, he’s totally right.
It was rare that I could pay my bill in full every month. It’s like I was taking out a mortgage for that cute halter top, or the Caramel Frappuccino’s I sucked down faster than Usain Bolts.
Can you imagine…how silly is that??? Taking out a loan to buy stuff that’s forgotten in a hot second!
Well, people do it all day, everyday! I have since learned the error of my ways. There are just some things that have no bizness on a credit card, period.
Here are the top 13 things you should never put on a credit card if you ever want to be financially free:
1. Wedding Expenses
Nope, nada, none of it should go on a credit card. Not the dress, not the venue, not the honeymoon…none of it. Why, because its almost guaranteed that you will spend a lot more than you imagined when you put it on your card, because “you’ll pay it off eventually, right?”
Not only that, can you imagine the debt hangover you’re gonna have when you get back from your honeymoon? What a buzzkill. And trust me, marriage is already hard enough starting out, so why pack on the additional stress that comes with debt??? You can go here to real about how debt can destroy your marriage faster than a cheating spouse!
Not only are you almost sure to fatten the casino’s pockets, but the bank’s purse too by paying interest on those losses. And its #facts that when you spend on your credit card instead of using cash, you WILL spend more. There’s a disconnect between your awareness and how much you’re actually spending. Might as well just burn them Benji’s in the street.
The “fun” is just not worth the potential costs. I can think of much more exciting ways to blow money, but if you must gamble, do it with a predetermined amount of cash and leave your wallet in the room.
3. Plastic Surgery
In most cases, this is a vanity project…you want to get a loan for your nose, really? Boobs? Tummy tuck? By the time you pay the bill off, you will have paid double the amount of the original surgery costs. And let’s just hope you’re still just as ecstatic with the results.
One of my good friends had to have a corrective surgery done, so she ended up paying for two sets of boobies…that was 10+ years ago and she’s still in credit card debt. Those became some expensive knockers!
4. Baby Stuff
Babies grow…like exponentially fast. Your cute little bundle of joy will outgrow all those new clothes in weeks…all his fancy toys in months. But the bank will never outgrow charging you interest out the wazoo! Just don’t even go there.
5. Down Payments of ANY Kind
If you have to finance the down payment on an item you’re about to finance…yea, you can’t afford it. Walk away.
6. Little Luxuries (eating out, clothing, etc.)
It seem like only $10 bucks here or $20 bucks there, but all of those little treats and outings add up over time. You’ll open your bill one day and wonder how in the heck the balance got so high. Blame your Starbucks addiction.
See point #1…debt hangovers are not fun, it’s the quickest way to kill a vacation high, well right next to the thought of having to clock in on Monday.
Instead, use your anticipation as motivation to save for the trip, otherwise, when you get home and get that bill you’ll have ZERO motivation to pay it off. Why would you, the fun stuffs all over!
8. Mortgage Payments
Robbing Peter to pay Paul is one of the first signs of financial distress, you can learn about other signs here. If you’re finding it difficult to cover your bills each month, you might be tempted to put them on a credit card. But DON’T! Most lenders won’t allow you to directly pay the mortgage on a credit card anyways. But there are 3rdparty services that will go around this for a hefty fee. In the end, it’s not in your best interest.
Not only will you be compounding the interest by paying the interest on the mortgage, but also the interest on the amount charged to the card. A mortgage is typically a large expense, putting it on a credit card can lower your available credit which negatively impacts your credit score by pushing your credit utilization up.
If you find that you can’t pay your mortgage, the first thing you should do is contact your lender. Often times they are able to come up with temporary solutions to help you through a rough patch. Go here to find out what other options may be available to you if you can’t pay your mortgage.
9. Medical Bills
If you rack up huge medical bills, the last thing you want to do is put them on your Mastercard. It would be better to take out a personal loan to pay them because the rates are typically lower than credit card rates.
Better yet, most health care institutions will allow you to set up payment arrangements when you can’t pay a large bill in full. Unless it is a medical emergency, try to avoid paying for medical expenses on your cards.
10. Household Bills
Many household bills, like utilities, offer discounts when you connect your credit card to your account and set up automatic payments. While this sounds nice and convenient, if you forget to track your balance you could accidently go over the credit limit, or miss a payment incurring late fees and extra interest.
It’s also another one of those small things that can keep your balances creeping up if you’re not paying it in full every month.
Getting slapped with a big IRS bill is crazy terrifying! But don’t be intimidated into putting it on your credit card. The IRS is more than happy to set up payment arrangements to pay back any amount that you owe with a smaller interest rate than your credit card company. Setting up payments is a relatively quick and painless process. And the payments will be MUCH more affordable, trust me I know.
We paid off a huge $12k tax bill will paying anywhere from $50 – $155 a month based on what we could afford at the time. They were super flexible as long as we communicated!
12. College Tuition
College is already expensive, so why add more costs than necessary. If you’ve exhausted all means of free financial aid (scholarships, grants, etc.), then your next best bet is traditional student loans. Student loans will have lower rates than what is available to you on a credit card.
In addition, most colleges will charge a 2-3% processing fee, yikes! Lastly, tuition is almost always a fairly large cost, which can drastically increase your credit card utilization and negatively impact your credit score. Not to mention taking a million years to pay off.
13. Cash Advances
Credit cards ain’t free money, so don’t use them like an ATM. Pro tip: Banks usually charge much higher interest for cash advances.
To be honest, if you want financial freedom to be part of your future, then the goal should be avoiding credit card debt like the plague! But if you gotta drop some plastic from time to time, just make sure to steer clear of putting any of these particular items on your card. In the end you’ll cost yourself more money and in some cases harm your credit score.
If you’re frequently guilty of one or more, then you might be headed for a money meltdown, go here to find out if you’re headed for a financial disaster and what you can do about it.
Did I miss anything? Lemme know in the comments below.