I Pay Off My Credit Card Balance in Full Each Month – But I Still Have a Balance
One of the strangest things about becoming debt-free is using my credit card responsibly. I am still getting used to this new-to-me phenomenon. You guys have no idea how much enjoyment I get out of looking at the bottom of my credit card statement where it says “Total Fees Charged in 2013: $0.00, Total Interest Charged in 2013: $0.00” HUGE RUSH.
But wait. I’m still not totally comfortable because I think I still need a couple thousand bucks in my checking account so that once a month, I pay whatever the total balance of my credit card is in full. But at the moment, what I do is pay the statement balance each month, which ensures that I won’t be paying any interest, but there are costs that have been incurred on the card since the statement closing date. And since all of my expenses are now going on my card, and I am aggressively saving any extra money in my down payment fund, I hardly ever want to pay the entire card balance. I just want to pay enough so that I don’t incur any interest.
Here’s an example. Last month, my statement balance was $1,300. I had about 4 weeks to pay it off, during which time, I charged my regular expenses, including business expenses on my card. At one point, my balance was $3,600 because of outstanding business expense reimbursements. Once I had the $1,300, I paid my statement balance and then reimbursement checks flowed in to bring the balance down. But still the balance of another $400 or so remained until next month.
It makes me a little nervous. Why don’t I pay that $400 off right now? Well, it’s not due right now, and I can put any extra money I have towards saving and investing. It’s been over 7 months that I have been using my card AND paying it off in full. I wouldn’t say I’m out of the woods yet, and with wedding expenses, the temptation to just swipe it exists. I’ve made a few rules to keep me in line until I truly master financial discipline.
- Know exactly what my credit card balance is at all times.
- Continue to write down all spending in a notebook (keeps me in check)
- Have the funds to pay the statement balance each month, and, if possible, pay the entire outstanding balance each month.
- Do not use the credit card to finance impulsive purchases, including but not limited to: clothes, handbags, weekend trips, deciding to treat 10 people to dinner because I want to appear generous and munificent.
I definitely still don’t feel like I’ve got plenty of cash to pad any hard landings, but since paying off my debt, my net worth has experienced a 45% growth in less than four months. As that number grows, the percent increase won’t be quite as dramatic, but I am committed to positive growth every month for at least the next two years, when I intend to buy real estate with a comfortable 20% down payment.
Do you pay your credit card balance in full each month? Or just the statement balance?