Originally Posted by Snake_Lady
I understand the long term debt, like in this case, having to make monthly payments. But...
as far as a credit card goes, I don't count it as debt IF you pay it off every month
We have one card in particular that we use for everything.... (living expenses/groceries/vets/gas/etc) and pay it off in full every month.
Would you still feel like you were in debt doing it that way? (paying a card off every month if you used it)
To be honest? I don't trust myself with a credit card. My intentions always start out very well, and for a period of time I follow through. But it's been my experience (maybe this time would be different though), that eventually I get lazy or complacent and paying in full at the end of the month falls by the wayside.
A large portion of the debt I wrote off with bankruptcy was consumer debt. Mostly interest from having been only able to make minimum payments on a large balance; much of it incurred while I was off work on disability before I started to get my disability income and I had to live off of credit cards for nearly 6 months.
Given how I feel about debt now, I don't think that would happen again. But right now I really am not interested in getting a credit card.
When I need to buy something via electronic means I use those gift cards, PayPal or use a bank money order instead. I don't even like to write cheques because the funds aren't taken from my account immediately and I hate not seeing an up-to-date balance when I look at my accounts. When I make a purchase in person I tend to use my bank debit card. However, I don't even usually carry my bank debit card with me when I go out. I usually only bring a certain amount of cash with me for emergencies such as taxi fare.
I could easily get one of those secured credit cards where you give a sizable deposit ($500 or $1,000) and after so many months of being on time with your payments they return the deposit to you. Or I could get a prepaid credit card (which doesn't help build credit). But neither appeal to me right now. Even though it's not always convenient, I do like paying for things in cash.
I've decided what I'm going to do about my bedroom! I called my bank this morning and asked them to lower my biweekly transfers to my RRSP account. I was playing catch up and socking in money into it since I've been back to work. I'm having them transfer a certain sum each payday to another account. In a few months I'll be able to pay cash for that bedroom set. However, what I'll do at that point is once again apply for financing.
Their terms are that if you pay for it within 90 days you don't have to pay interest. If I have the entire funds in my bank account but go ahead with the financing, if I get the heebie jeebies about being in debt, I can give them the money. I guess that would be the same as having a credit card and paying it off at the end of the month. But unlike a credit card, once the loan account is paid, it's done; no being able to reuse that credit limit like you do a credit card. So this way I get financing on my own, the bedroom that I want, no interest and a favourable report on my credit record!
Then I could do it again for a dining set.
I think also that a large part of my anxiety was the interest. Because I currently have an R9 credit I am considered high risk even though I make a good income and have zero debt. Personally I think that would make me a low risk candidate. But I don't make the rules. Anyway, if you are a high risk candidate they obviously charge you a higher interest. So if I were to pay that furniture loan over the 18 months, with the compounded interest I was going to be paying about 50% of the retail price in interest. That didn't sit well with me either.
My sister-in-law is excellent with budgets and we have discussed this. She offered to co-sign a loan for me if I wanted to go elsewhere to buy my bedroom. If she co-signed the interest would be lower. But I want to do this on my own and not have to have someone put up their credit on my behalf.
So I'm tightening up my budget belt and saving, saving, saving!
Today I get one purchase that I've been wanting to make out of the way: my air conditioner. That was a goal I set out for myself this summer and have met. Next is the bedroom.