Hope from New Jersey writes: I definitely can relate to living on a low income. I just paid off $3000 debt in less than a year playing the credit card game, making some financial sacrifices and getting a windfall. I love using a credit card (I only have one now with a $400 credit limit), but being in debt like that scares me. I don't want to go back to that again. I'm thinking about getting rid of the card, but then what will I do to build a good credit history? I'm also afraid that I might need it one day. (I'm living on a low income with one special needs child and one child that's not.) Should I keep my credit card or get rid of it?

Tawra: Hope, we would suggest that you keep your credit card. Here’s why: Credit cards aren’t the problem --it’s self control that’s the problem. You sound like you have your spending under control, so I would suggest that you keep the card.

I would use it for convenience when you know you have the money to pay it. Keeping a credit card is good for things like making online orders or for getting gas when you don't have time to go to the bank and withdraw the cash. As long as you have the money to cover the charge and you don't spend it on something else before you pay your credit card bill, you should be fine.

Then pay it off each month so that you can build your credit. They are very handy to have around for those types of things. If you need a way to keep track of what you put on it just write it down in your check register and put a C in the left column so you know that is what was put on the credit card. This is also a handy way to double check and make sure they charged you correctly.

A credit card can also help with emergencies, but you have to be careful what constitutes an emergency. If you use the card for an emergency, you have to expect to plan to sacrifice somewhere else to cover the emergency, but it sounds like you've already experienced this.

This part is not really directed at you, Hope, but for other readers who are reading:

Regarding emergencies, going out to eat or taking a vacation because you're under stress is not an emergency. An emergency is something like a life and death hospital emergency, fixing the only car you have so you can go to work and earn money, etc. Keep in mind that even "emergencies" have to be paid for eventually!

If you feel that you don’t have control of your spending, I would suggest only keeping a credit card for true emergencies.

As for you, Hope, it sounds like you have done very well and are on your way to being permanently debt free. Congratulations on your hard work!

 

Tawra