Why I’m performing plastic surgery on my credit card


Many years ago, I applied for a credit card that offered 2% cash back on all purchases. That was pretty generous, so you can tell how long ago that was!

Every month, we would use the card for all of our discretionary spending (that is, anything we bought on a week-by-week basis such a food, fuel and so on). We’d pay off the card every month in full. Then, once or twice a year, we’d get a decent cheque in the post with our cash back amount.

As we always paid off the balance in full, the credit card company actually made little money from us directly.

When I’ve used a credit card

I still have a credit card but I don’t use it for everyday purchases. Instead, I have used it for that one-off, occasional or unusual purchase such as our daughter’s prom dress.

However, because of the ease with which one can use a credit card in this way, there’s always a nagging thought in the back of my mind. Every time I do this (even for a relatively modest single item of expenditure), I‘m borrowing against next month’s income.

In effect, I’m creating a shopping hangover.

A change of heart

So, I’ve had a change of heart. The fact of the matter is this. If we’re going to win with money in the long term, this is what I’m going to do.

I’m going to perform plastic surgery on my credit card. Yes, I’m going to cut it into little pieces and throw it away.

Now, some of you still use your credit card in the way I used to. You tell me that you find it easier to track your spending this way (although, for me, I can’t understand this).

For me, it’s crunch time and here’s why.

What the research shows

Research shows that credit cards are ‘friction free.’ That is, handing over a card is less painful psychologically than handing over actual cash. In an article for Psychology Today, Scott Rick explains that people tend to spend more when they use a card than they do when handing over actual cash: “Experimental research….suggests that credit cards can stimulate overspending: People are often willing to pay more for the same product when using credit than when using cash.”

Indeed, Rick cites a range of psychological factors, which compel consumers to use a card over cash.

Even though I don’t put a lot on my card, I know that when I previously experimented by cutting up my card, I definitely spent less money overall.

Business Travel

“But what about business travel?” I hear you ask?

I once attended a work conference, which across the pond in Anaheim, California. I took my credit card for ’emergencies’ and actually ended up having to use it when I found my employer had failed to pre-pay my bill.

At my hotel’s reception desk, ready to check out, but fully expecting my account to have been settled, I learned that the transaction hadn’t gone through. Worse, the time difference between California and England meant that there was no-one in the office back at home to sort it out. I’ll admit that this was a time when I was glad I had my personal credit card.

However, this does not deter me from my plastic surgery. What I’d do in the future is request a corporate card, rather than rely on my own personal card, which required me to claim this expense on my return. No corporate card? No travel!

But a credit card’s for emergencies!

In my last post, I wrote about why I believe we all need an emergency fund.

In fact, a fully funded emergency fund should contain 3-6 months of expenses. So, if we have a fully funded emergency fund, we shouldn’t need to use the ‘shopping hangover’ method to cover unexpected bills.

The post-Christmas hangover

As the nation anticipates its post-Christmas credit card statements, I decided to do some research on card spending. What I learned really shocked me.

The UK’s spending habits

In October 2017, an article in The Independent warned that credit card lending was on the increase, in spite of warnings about the high levels of UK household debt. In the article, journalist Ben Chu cites regulators’ concerns about the extent to which households are turning to credit to finance their consumption.

Indeed, in the previous month, we saw headlines suggesting the UK was experiencing a ‘debt crisis’, as household debt had increased by 7% in the preceding 5 years.

Going slightly further back in time, the sheer volume of annual card sales is revealed in the UK Cards Association’s report of April 2017. I was staggered to read that, in the month of April 2017 alone, 315 million purchases were made on a credit card (up on the previous year’s figures by 41 million transactions). The overall total of money spent on a credit card that month was £16.8 billion (versus £15 billion the previous year).

What the hell were we all buying?

The report shows we’re using credit cards for a whole range of goods and services from food to fuel, with a marked increase in the use of cards (both debit and credit) over cash in these categories.

What if you have to use a card?

If you listen to Joshua Fields Millburn and Ryan Nicodemus’ podcast, you’ll have heard them say quite clearly: “If you have to use a card, you can’t afford it.”

In my case, if I decide to use a credit card, I’m swapping convenience for a shopping hangover. And I no longer want to do that.

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Why we all need an emergency fund


Happy New Year 2018!

January’s blog post theme

During the month of January, I’m going to be thinking about money, as we have set some specific financial goals for our family in 2018.

It follows that my blog posts may follow a bit of a financial theme in this first month of the new year.

Holiday listening

In particular, I’ve been listening to Dave Ramsey’s podcast over the holidays. Ramsey’s consistent, straight-talking and sound advice has benefited thousands of people worldwide and his simple series of Baby Steps has helped his readers, listeners and YouTube watchers get a grip on their finances and – in Ramsey’s words – “Change their family tree.”

Baby Steps

The Baby Steps help break down Ramsey’s plan into manageable chunks and build momentum. Indeed, the small wins that can be achieved early on in the programme through these Baby Steps help psychologically with motivation.

Baby Step 1

The very first of the Baby Steps is to start an emergency fund of $1000 (or, in the case of us Brits, £1000).

This should be done as fast as you can.

If you’re already a seasoned declutterer, you may find this easier than you think. A good rummage through your garage, wardrobe or loft may yield some excess stuff you no longer need, so you may soon be able to pull together the funds to get started.

If, like me, you’ve already learned to let go of stuff, freeing up unwanted items to contribute to this initial £1k may not be too much of a challenge. It may take only the effort of cleaning them up, photographing them, then listing them online on sites such as ‘Things for Sale in Kenilworth’ (our local community site on Facebook) or eBay.

Why Baby Step 1?

Ramsey’s approach is to establish this beginner’s emergency fund so that if you have a genuine and unforeseen expense, you won’t have to go into debt to pay for it. In a later Baby Step (#3), a fully-funded emergency fund of 3-6 months worth of expenses is put in place, but this starter fund is where we begin.

When you need an emergency fund

Between Christmas and New Year, we had a sudden and unwelcome fall of slushy, grey snow. We came down for breakfast the morning after Boxing Day and noticed something was odd about the hedge that usually sits against the wall by the side of our kitchen window. The supports to the hedge had given way in the wind and snow, so the prickly shrub had lowered itself forward over the border, covering all of the smaller plants and herbaceous perennials beneath.

Thankfully, with some significant effort (and 6 hours’ commitment), my lovely husband managed to shore up the woody stems, drill new supports into the wall, and push the hedge back into place.

However, this unexpected job reminded me that we weren’t quite as lucky when the fence blew down.

When the fence blew down

On the other side of the garden, we share a boundary with our next door neighbours.

One very stormy night two or three years ago, our shared fence decided it was no longer fit for purpose, leading to an unexpected but essential replacement. This cost about £375 per family, which our emergency fund was able to cover easily.

The point of this is that, whilst you’re taking steps to get your finances into good shape, the last thing you need is a mini-emergency to set you back.

In 2016, research by the charity Shelter found that 37% of working families in England could not cover housing costs for more than a month in event of job loss. Ramsey’s approach is designed to mitigate against this and putting an emergency fund in place is a first step in the right direction.

Do you have your emergency fund in place?

If you haven’t done so already, I’d encourage you to get your emergency fund in place.

So, when the metaphorical fence blows down, you’ll have the financial resources to deal with it. Plus, there’ll be no call on your emotional reserves either, as you won’t be stressed about how you’re going to pay for it.

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Budgets and teens: controlling impulses


As responsible parents, we are not only ‘mum and dad’, we are educators. We may directly – or indirectly – set an example to our young people that informs their approach on a variety of things: how to cooperate with others; how to handle difficult situations; or how to weigh up choices they have to make in life.

Personal, Social and Health Education

Life skills discussions at school are delivered on a variety of topics, many of which are also on the school curriculum. These include philosophical/ethical discussions or practical advice on issues such as staying safe online. These lessons spark follow-on conversations at home and form a useful part of every teenager’s personal development.

What about money management?

However, none (so far) has dealt with the matter of personal finance. As parents, how do we set an example to our teens on how they can manage their finances? Where do we begin in showing our young people how to manage their hard-earned money?

How to manage money becomes more pressing when our teens start making a little pocket money of their own, either through a part-time job or perhaps by earning a bit of commission on tasks they might do to help at home (Dave Ramsey’s preferred approach).

Lots of parents I know also provide a monthly allowance, so that their teenagers can make decisions on how to spend their own cash. This begins to instil some self-discipline; our own daughter commented that having a pot of money for which she was responsible helped control her ‘impulses’.

Under 19’s account

We found that opening a bank account was a great first step towards our teen developing financial literacy. There are some great accounts around, such as TSB’s under 19’s account. Opening a ‘proper’ bank account (as opposed to a savings account over which a ‘controlling adult’ still has full oversight) was a key milestone. A meeting with the bank manager was necessary and the formality surrounding the account-opening event signalled a step-change in the financial life of our teen.

Do apps help?

As well as the online banking app provided, I suggested that an app like Spending would be useful. By using the app, our daughter could immediately record transactions she had done. She soon realised that a transaction could take a few days to show on her actual account, so being able to keep a record that was bang up to date was incredibly useful. Now that she is more accustomed to checking her own bank’s app, she has let go of the need to do this cross-check but it can be useful at first.

Controlling those impulses

Amy from More Time than Money wrote a really good post on impulse buying, which links really well with these thoughts. As adults who care about sticking to a budget, we already know it’s important to be super-intentional with our spending.

It’s no different for teens: they soon begin to appreciate the value of things when they have to pay for it themselves. The cost of eating out, for example, (something our girl’s group enjoys), can be expensive. Choosing to go out to eat might mean passing up another opportunity or deciding not to purchase something new for a party.

So, when I think about teens and spending, there are a number of things I’d say:

  • Keep some for a rainy day
  • Be intentional with your cash
  • Know that buying X may preclude you from buying Y
  • Just because everyone else is buying one doesn’t mean you have to
  • Do you really need it?
  • How useful will it be?
  • Would you buy it at full price, if it wasn’t on offer now?
  • Would a lower-priced item do just as well?
  • Can you get it at a lower price second hand?
  • Can you borrow one?
  • Do you already have one that would do just as well?

Hmm. Maybe this is good advice for all of us – for kids of all ages – as we enter the ‘season of acquisition’.

What advice would you give your teenage self on money matters? Do let me know by replying to this post, below.

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