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The My Story series will give you a peak into my personal journey to financial peace.
On the My Story page I share a bit about my journey to financial peace. The journey started in July 2007 when co-worker recommend the book The Total Money Makeover: A Proven Plan for Financial Fitness to me. I was only 26 years old with $104,616 in debt and no solid plan to get my life together. Little did I know that my financial life was about to change forever. A lot has happened since that day in July and I am forever grateful for my co-worker’s recommendation.
The First 10 Years
It is so easy to meet people where they are today and not know what they have been through to become the person who stands before us. I wish I would have started blogging at the beginning of the journey, so that I could look back on the journey and share it with others is greater detail. The success story is nice, but the story of the journey is better.
Between 2007 & 2017, I have worked through the 7 Baby Steps to get out of debt, build a 3-6 month emergency fund, maximize retirement and buy a home. Currently, I am focused on baby step #6 – pay off the mortgage.
Today – October 2017
The 7 Baby Steps have served as a plan to get me from where I was to where I want to be. You don’t get to stop at baby step 7 because life keeps changing for good and bad. Sometimes I find that I have to go back to the basics when I find myself getting to comfortable in my situation and I stop focusing on the goal.
About a two years ago I decided to go back to using credit cards. I had two one for IHG Mastercard (hotels) and the other for AAdvantage Mastercard (flights). I primarily used the AAdvantage card to get miles. My plan was to put the money on the card and transfer the payment from my checking account. This worked well for some things, but for most things it became a logistical nightmare. Long story short I am tired of constantly moving money and not being sure where every dollar is going.
I did the math to see how many miles I potentially earn in a year. You know you can not use credit cards for certain payments (utilities & rent) without a fee and any fees cancel the benefit of points. I found that I spend approximately $1,439 per month on groceries, gas money, fun money, donations, cell phone, internet, health insurance, alarm services and gym membership fees. This is only 17,265 miles per year or 1.38 one way tickets.
It is most likely that I would use the miles to fly from Norfolk (ORF) to Wichita Falls (SPS). A one way ticket requires 12,500 to 20,000 points and cost about $316. The $316 savings is not worth the hassle of constantly monitoring the money flow between accounts.
There is one more thing I confirmed by having credit cards and it is that the statistic that states people spend more with credit cards is in fact a true statement. I definitely found myself using my card with the idea that I had the money in savings and could afford the item(s) at the time of purchase. This is not something I would do if I had cash on hand. I am fairly confident I spent $316 more than I wanted to in the past year.
With this said, is there really a savings by using points?
No there is not, so I am saying goodbye to the credit cards for the second time. Life was better and easier without them.