Mo’ Money, Mo’ Problems [Part Two]

Life without a credit card?!

When Sheila interviewed me for the Post, I think she was surprised to hear that I don’t own a credit card. I think most people would be surprised to hear that! The fact of the matter is that I only recently moved to America, & as I have absolutely no credit history here, it would be nigh impossible for me to get a credit card (even if I wanted one, which I don’t!).

This puts me in the position of actually having to EARN my money BEFORE I spend it, & while this may sound like an epic drag, it is one of my keys to being financially secure. (Putting a bunch of your money into savings every month is obviously another good step!)

I was discussing this with Molly Crabapple the other day. She knows Sheila & I was telling her about the discussion we’d had — especially the part about not having a credit card. She said,

“Not having a credit card is so key! I don’t have one either. Not having a credit card is I think one of the best ways to allow yourself indulgences without getting into the sucking maw of debt. You know exactly how much money you have, and so you can spend it or save it without being irresponsible.”

I was definitely an irresponsible spender when I was younger. In New Zealand, I had been with the same bank since I was about 12, & when I got my first job, they happily offered me a credit card. I accepted with delight. ‘Free money!’, I thought, & so, with absolutely no regard for what I could afford, I spent my way through my youth, & at the end of every month I would sit around chewing my nails, unsure whether I had enough money to pay my rent.

When I started this website (at 23 years old), I was living off my credit card, & eventually I hit my limit. When that happened, things changed. I could only spend what I actually had in my hand, & while it was immensely stressful & difficult at the time, it actually turned out to be a good thing — & has set me up with good habits.

Credit cards can be wonderful (say, in emergencies, or as a way of building up good credit), but they can also be extremely dangerous! It’s so easy to rack up debt without even thinking about it, & if you know you’re irresponsible with money — especially when you’re young — you will save yourself a lot of anguish later on if you can put off getting one until you feel like you can be trusted to be responsible with it.

When your bank sends you a sweet little note in the mail asking if you’d like to increase the limit on your credit card, please be smart about it. Spending money you don’t have has consequences, & you will learn it sooner or later! I learned the hard way, & you shouldn’t have to. Bear in mind that collecting late fees from credit cards is a constant & easy stream of income for a bank. The majority of people will be paying off the interest on their card for years & years.

Here are some choice facts about credit card debt.

The average household owes $16,007 in credit card debt.
There are 576,000,000 credit cards in circulation in the United States… & the population is only 309,000,000.
98% of the U.S.A.’s debt stems from credit cards, & it totals $864,000,000,000. That’s $864 billion!
The average credit card holder has 3.5 credit cards.
Half of all college undergraduates had four OR MORE credit cards in 2008.
Credit card penalty fees ALONE reached $20.5 billion in 2009.
(Source.)

If you do have a credit card, make sure you know how much you can afford to spend, & pay it off every month! If you can’t afford to buy something, don’t buy it! It’s a simple premise, but it will keep you out of a lot of trouble.

Another thing you might like to do is transfer the money you plan to spend in a month from your bank account to your credit card. Then just charge everything onto your card. It’s a good way to accumulate “points” (if your card is on a points scheme) & to generate a good credit rating. Additionally, this way, you’re never spending what isn’t there. You just need to keep an eye on it!

What is “shopping”?

The funny thing about the article on shopping that I was quoted in is that the word “shopping” wasn’t defined. I think we all have a different idea of what “shopping” is. Is it an all-out blitz, a credit card frenzy? Or is it more about window shopping & weighing your options? My view of shopping leans more towards the latter — I don’t think of “shopping” as purchasing, necessarily. When I say I’m going to go shopping, what that really means is that I’m going to see what’s available. So while I may spend some time looking in stores & browsing online, that doesn’t mean I’m handing over my dosh! It can sometimes be more fun to create an incredible outfit on Polyvore than to have your eyes roll back in your head with sticker shock!

I do love to shop, though — window or otherwise. I love the challenge of it, the thrill of seeing what’s new, the way everything is merchandised, the excitement of putting things together, comparing & contrasting items, & maximising the value of the things I buy.

I’m also in the fantastic position of being able to shop as research — & regardless of what anyone might think, it’s necessary to find out what’s happening in the world of fashion. While the top tier of fashion is what’s happening on the catwalk, what it REALLY comes down to is what people are buying! How do people look in those latest styles? What do they say to their friend in the dressing room over about how they feel in the clothes? Fashion is about what happens on the street, & you only learn about that by pounding the pavement, looking in windows, & observing other people as they shop.

It is absolutely possible to be a smart, intelligent & discerning shopper these days. There is almost no reason to pay full retail for anything, & I do so extremely rarely. I don’t care about being the first off the block with the hot new pair of shoes or the “it” handbag, because I don’t have any love for trends & I can’t think of anything worse than owning the same thing as everyone else. Who wants to buy their way into a clique? Other people perhaps, but not me.

Even beyond getting a bargain, the concept of shopping one’s own wardrobe, buying vintage & re-purposing what you already own is a fantastic way to get out of a sartorial rut & not feel the strain on your wallet. Way, way, waaaaay back when I started galadarling.com (2006 baby!), the reason I began doing daily outfit photos was to show people how useful it could be to document their wardrobe. You get an idea of what fits & what doesn’t, the items which suit your shape or colouring, & you realise what a treasure trove your closet already is! The idea was not to encourage you to spend like mad — a fact compounded by the fact that I had no money & couldn’t do so myself! — but to inspire people to wear their old favourites in new ways.

The site has changed since then, & I no longer find writing about fashion or style as satisfying as I once did. While I appreciate & adore clothing, writing about improving your life, learning how to be happy or the thrill of travelling is much more interesting to me these days!

Despite all this, I am still not the world’s most responsible person with money! I live in the realm of fantasy a lot (um, if you hadn’t noticed!) & previously, I have been less concerned with paying my rent than perhaps I should have been! But as I get older & more mature, I’m a little more thoughtful about where my money goes — & what my priorities are! I’m not perfect, but I’m working on it.

Tell us…

How much time do you spend shopping? Do you consider yourself responsible with money? Do you have a savings account? Did your parents teach you how to be smart with money or have you had to figure it out yourself? What’s the best piece of money advice you’ve ever been given?

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