Top 15 Blog Challenge: Kimberly Carthage

Editors note: We asked each of our Top 15 to tell us a story about a money-related blunder that they've made.

American Blunder

Recently, I had a trip down memory lane. It’s a lovely street lined with strong trees forming a tunnel of perfect serenity (think American Beauty). Well mostly lovely, as I was driving along in my sleek powder blue Jaguar XF (a girl can dream, right?), I hit a huge pothole! I know what a bummer! When I got out to check my front passenger tire, I noticed that the pothole had a little marker flag peeping out of the top. When I leaned over to take a look, I saw that the words Thoughtless Credit were typed neatly across it. Oh yeah, that (o_O)! Ok, when I was a sophomore in college, I wanted a new smart phone and I found one on EBay that was reasonably priced, at least for what the phone usually cost at that time. Since I was even more impatient then than I am now (I’m working on it), I decided to open the EBay Credit Card that was advertised right below the Buy Now button. I mean, who could resist having the cool new gadget I wanted right away, and not having to pay it off for 6 months with no interest? I fell for it and ended up biting off more than I could chew. It was a bad start to having credit and, trust me, it can get out of control really quickly. Here are some of the problems with the decision I made:

  1. I made a financial decision out of want. That’s like going grocery shopping hungry. JUST DON’T DO IT!
  2. I was not in the financial position to practice good credit maintenance habits and keep my balance paid off or very low.
  3. I had not done my research. I wasn’t in the market for a line of credit when I made that impulsive decision, thus I didn’t know anything about the interest rates, hidden fees, or small print!
  4. I got credit to spend when I didn’t have the money to pay. This is one of the biggest mistakes young people make. You should open a reasonable line of credit to build your credit in a well controlled way, not to build your debt.

These are just a few reasons that pothole is in the middle of my lane of memories. But fret not, it’s getting smaller! Now, I know that after that horror story, you may be thinking that it’s better to stay away, but my story does not have to be yours. If you decide to start building your credit now, here are some tips to get you started:

  1. Charge only what you can afford-If you can’t pay it off this billing period, wait!
  2. Pay your balance in full and on time- If you do number 1, this won’t be a problem.
  3. Use only a small amount of your credit available-If you must have a balance, try to keep it below 40% of your limit.
  4. Start with one credit card-Seriously do you really need the temptation of more?

So remember, when you’re driving in your fantasy car, down memory lane in the future, try to protect your imaginary wheels by remembering these very real examples of the dos and don’ts of credit.