Credit Cards

This week I wanted to tell you about Credit Cards (CC's) and the history behind them in the United States and the different fees the CC Companies can and, more often than not, hit you with.

I have said it before and I'm going to say it again to start off with "A CREDIT CARD COMPANY IS NOT YOUR FRIEND, THEY DO NOT GIVE YOU FREE MONEY, THEY ARE NOT A CHARITY, THEY ARE IN BUSINESS TO MAKE MONEY AND YOU ARE THEIR NEXT PAYCHECK!"

According to creditcards.com in 1946 the first Bank Card was introduced by a banker named John Biggins of Biggins Bank in Brooklyn called the "Charg-It" card. You had to be a member of Biggins Bank and the charge could only be made locally. The bill would be sent to Biggins Bank and the Bank would pay the merchant directly.

In 1951 a bank in New York introduced a charge card for use only by loan customers of Franklin National Bank in New York.

Then came the national recognition of Credit Cards by a man named Frank McNamara who introduced the Diners Club Card in 1950, this card could be used in travel and at diners, by 1951 Diners Club had 20,000 cardholders. Originally the card was made of cardboard, and then over a decade evolved into plastic, which we know it as today. (According the creditcards.com American Express and possibly other companies tried to get the public to accept the  concept of a charge card but were unsuccessful, it was the Diners Club that set the trains wheels moving.)

btoffice.co.uk

When I was in college (MEAGERLY EMPLOYED) I received my first CC, I remember a friend saying you have a CC? I said yeah I do, he said your going to go into debt. I said nope, and I didn't until years later. I would buy a small something on it  and pay it off every single month. Then I got another one, via an unsolicited phone call, again paid it off every month I used it. Then the inevitable happened, I didn't have the money to make the monthly minimum payment. Then the dominoes effect started, UUGGHHH! I FELL INTO THE GREAT CC TRAP!

Via Leo Blanchette

The pains of this were pain staking, I unfortunately let them go to bill collectors and as we all know, you don't have to be a genius to work in a dingy collection call center. After deciding I was going to man up I went and paid a debt management company to handle my outstanding debts by me sending them one lump payment and a little extra to cover the cost of them doing my dirty business. (All they really did was take my payment and divvy it up and send payments to the different companies and took $50.00 of my hard earned money.) I then had a thought while driving to work, I thought why the heck am I sending these fools an extra $50.00 each month when I could apply that to another bill.(We were living in Utah at this time.) So one night I pulled my credit report, and this time I saddled up and called each one of my creditors and told them I wanted to take care of these outstanding bills in a civil manner and here's all I could pay. I remember one guy saying "We respect your call and we would much rather work with you than the other companies anyway". We were able to get everything paid off but our car before we moved back to Wyoming.

When we got back to Wyoming, the cycle started all over again. I know, I know, STUPID with 10 Zeros on the end as Dave Ramsey would say. Then I lucked out, I got a large bonus from work and the only thing we didn't pay off was the Suburban. THE NUMBER ONE MISTAKE I MADE WAS NOT CLOSING THE CARDS! (I know there are nay-sayers that will say, well if you close a credit card you will hurt your credit.) I SAY CREDIT IS HOG WASH! SO DOES DAVE! SO DOES COWBOY!

If you pull any credit report, it will tell you that credit is (I'm paraphrasing) the ability to go into debt several times and pay it back several times. Now how smart is that to go into debt so you can take on more debt? I think you'll agree with me that it's pretty dumb.

There is a movie on Netflix called Maxed Out, and it will tell you some stories and numbers that will haunt your soul. Watch it, come on go watch it, JUST WATCH IT!

I unfortunately fell for the instant gratification of gotta have it now. We all know those people you're around everyday, who go out and buy stuff and come back to work and tell you "I bought this and this, and we went on this vacation and it was wonderful......blah blah blah" and you're thinking, how are they buying all this crap, going on these crazy vacations and we're making the same amount of money roughly? (Maybe they're dealing drugs or in some illegal black market scheme. My thoughts are if it's questionable and maybe illegal it probably will come back to kick you in the butt sometime soon.) My wife had a childhood acquaintance who would always brag about all these vacations and things they would buy and it came to light they were embezzling from the government and had to face a federal judge for sentencing. (Just an example of what not to do.)

Anyways I was back into CC debt, and for some reason the CC companies kept raising my limit, and I WAS DUMB AND KEPT SPENDING! And then I had to pay the consequences, AGAIN!

So how do Credit Card companies make their money and work? I'm going to show you this awesome flow chart!

thefinancialhighway.com

Did you see how they make money? If you didn't look again! Why would you pay these "friends" money that you work hard for? Instant Gratification? Why? Because you couldn't save for it?

I wanted Cowboy to build me another hat, so what did I do? I SAVED FOR MY NEW COWBOY HAT! I know, crazy! It took me a couple months to save the money, but guess what? I paid for it in CASH! Do you want to know how I did it? OK, fine, I'll tell you. I took an envelope, I wrote NEW COWBOY HAT on the front of the envelope, I then put CASH in the envelope and saved up until I had enough money to give Cowboy at Cowboy's Classic Hat Company to build my new Dwight Yoakam replica hat. (By the way you nailed it Cowboy.)

I say you truly can't be alcohol free if you have a beer sitting next to you at dinner, same goes you can't be debt free if your using a credit card each an every month. CUT IT UP!

flickr.com

Every time I get one of those dumb CC offers in the mail my kids fight over who gets to rip it up first, when my oldest daughter does it she throws it everywhere like confetti. My wife and I have actually outlawed the words Credit Card from our home. What? What's that? You ask why we did that? BECAUSE WE'VE FELT THE DEVASTATING EFFECTS IT HAS ON OUR FAMILY AND RELATIONSHIPS. 

My friends I hope you understand again THE CREDIT CARD COMPANIES ARE NOT YOUR FRIENDS THEY ARE IN BUSINESS TO MAKE MONEY AND YOUR THEIR NEXT PAYCHECK!

SO LET'S TAKE A STAND AND RID OUR LIVES OF THESE PLASTIC CARDS AND LIVE OFF OF COLD HARD CASH! (Well Mr. Mitchell what's in your wallet? A Credit Union issued Debit Card and CASH. A Debit Card works just like cash, I pay ZERO interest, I HAVE ZERO FEES!) Some merchant's will actually give you a discount if you pay with cash. My wife and I had to get a new washer about a year ago, we found the one we wanted, and I asked the lady are you going to give me a discount if I pay you cash because you won't have to pay the credit card fee of 4% and she came back after talking to her manager and he gave us 10% off. NOW THAT'S SUCCESS!

flickr.com

BOOK RECOMMENDATION

This week I'm going to recommend The Total Money Makeover by Dave Ramsey. This is the book that started it all for me and my family. He will walk you through common sense advice and show you why things are the way they are and back it all up with stories and statistics. If you read this, I think you will agree you will want to do all you can to rid yourself of debt.

COWBOY UP

 AND 

FIRE YOUR DEBT!