Using Credit Cards 101: Beginners Building Credit

I remember getting my first credit card at age 22. I knew nothing of credit cards, but they were an excellent way to purchase things online.

The year was 2005, and Amazon was becoming a big deal for online shopping. I stayed on top of my credit card for many years until I got married and had kids.

Things get a little out of hand when you have unforeseen family and housing expenses. If I had a guide to using credit cards back then, it would have saved me a lot of headaches.

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The guide to using credit cards. So, I will write the guide to using credit cards I wish I had 20 years ago. Today, I want to start at the beginning of your credit card journey.

Credit Cards are bad; debt is evil. From the start, you should have a negative view of credit cards and debt. As a 41-year-old father, husband, Marine, and business owner, I hate credit cards.

I hate debt because it is a tax against my future. You need to build this mindset before you even touch a credit card.

Here is a screenshot of my Navy Federal credit card balance. As you can see, I have a positive balance, which means I owe nothing.

My credit card limit is $25,000, and I have $25,000 available. At one point, I owed $23,500 on this card. That’s right; I was -$23,500 on this one card.

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I had other credit cards that had a balance also. It was not a fun time, and it didn’t change until my wife, and I started taking life seriously. 

Getting started with credit cards. I tell you my horror story to show you how bad debt can become. It doesn’t happen all at once; it builds over time.

Before considering getting a credit card, read my Staying Debt-Free at Any Age series (20s, 30s, 40s, 50s, 60s, 70s). These articles will preview the debt traps of life before you arrive at your destination. 

The first place to start with a credit card is your savings account. Yes, that’s right. We will save our first $1,000 before getting a credit card.

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Do you even need a credit card? If you can save money, why do you need a credit card? Hiding from credit cards isn’t going to make you better financially.

Eventually, you will have to use some form of debt to achieve something in life. Whether it’s a home repair, house remodeling, or kid’s college, you will need to use leverage. 

The sooner you can learn to control your urge to spend and consume, the better off you’ll be in the long term. 

At a point in my life, I couldn’t even leave my credit card info inside Amazon. I had to add it and delete it to keep myself from spending. Now I have no urge to spend anything outside my Recession Investing Plan. 

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How your spending should look. The picture below is how your spending account should look. The top number is my checking account and my budget for the month. Once I run out of money, all of my budget money is gone.

The bottom number is my Discover high-yield savings account. Together, they should cover all my expenses and any emergencies that arise throughout the month.

How do credit cards factor into the plan? We only use credit cards to build credit; they are not part of our spending life. 

Don’t buy anything on a credit card if you don’t have the cash for it. To prevent ourselves from getting into a sticky situation, we will first save the money for our credit cards.

We will save $1,000 in our bank of choice, say Navy Federal, and then ask for a credit card with a $1,000 limit. 

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The bank will offer you at least $3,000 to $5,000 on the card but politely only take $1,000 to match your savings. 

Using your credit card. As I said earlier, your checking account and high-yield savings are the lifeblood of your spending plan.

You can use your credit card on small items from time to time. By small, I mean $20 or so. Or, you can put your Netflix or Hulu payment on your credit card.

You want to show the credit bureaus that you are using your card. However, you do not want to get into debt. 

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If you cannot pay the debt, you can tap into your $1,000 savings to ensure the bill doesn’t roll over into the next month.

Getting behind. Once you get behind on a credit card, your entire life will change. The magic of compound interest can work in your favor to make you rich.

However, compounding interest can work against you. Credit cards are the worst type of compounding. It is difficult even to understand how they calculate the interest payments.

You need to implement control measures if you cannot keep your credit card at a zero balance. You need to learn how to handle your card and spending habits. 

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You can keep your card at home in a desk drawer and delete it from all online stores. You don’t want to cancel your card because the longer you have it, the better it is for your credit score. 

Why learn how to control your credit card spending? Even if you never want to use a credit card, learn how to manage it. 

You may marry someone with a spending habit or who loves using credit cards. If you can control your spending and credit habits, you may be able to help them.

If you two are incompatible financially, then you may as well never marry. If you learn to save, invest, budget, and spend, you’ll find someone whose habits match yours.

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Conclusion. Yes, life would be better if you never had a credit card. However, we are moving to an all-digital world.

Learning to control your spending is much better than hiding from credit cards. Face your fears, and it will pay off long term.

My wife and I overcame our debt and spending habits and are much better at it. I can sit on Amazon all day and not spend a dime. 

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I owe my spending mastery to working myself out of debt. However, you don’t have to dig yourself into a hole to learn this lesson. Learn from me.

Start a savings account and accumulate $1,000. Then get a $1,000 credit card to match it. If you can keep a zero balance for a year or so, you may want to up your limit to $3,000.

Having available credit is an excellent way to reduce stress. Having a massive balance is a good way to increase anxiety. It is a dangerous road, but one you must face.

I want to give you the safest way to face your fear. That is by having cash available specifically to pay your credit card before it rolls over. You got this! 

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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing