I drive Ava to school most mornings.  One day last month Tracy was taking Ella to the dentist during the day.  On the way out the door, I told Tracy to use the credit card to pay for this.  When we got into my car, Ava said, “I thought credit cards were bad to use dad.”  You can tell whose daughter she is, huh?  Whenever such an opportunity arises, I make sure to use it as a teaching example.

I explained to her that yes, for many, credit cards are not wise to use.  A lot of people use them without having the money to pay them off in full each month.  I then told her that Tracy and I have two accounts at the bank – a checking account and a savings account.  I have divided the money we have in our savings account into different categories including medical (other categories include expenses I know will come out including car insurance, Christmas and vacation).  I went on and explained that I get paid once a month and, instead of constantly transferring money from our savings to our checking account, Tracy and I keep track of what we put on our credit card – this is written down on a post-it note that is in our check register – and just transfer this entire amount over at the end of the month to pay-off our credit card in full.

I pointed out to Ava that the most important point is we know we have the money to pay for anything we purchase on our credit card.  People that buy things knowing they don’t actually have the money to pay for them usually end up in trouble.  Ava then showed me that she understood how important this was by saying the following, “Dad, those people that don’t pay off their credit cards each month can lose their house.”  Wow, pretty deep for a seven year-old.

Once again, this conversation was a reminder that our kids are listening more than we think and understand a lot more than we give them credit for.  Yes, Ava may have been stretching it a little bit by thinking that anyone who does not pay off their credit card each month will eventually lose their home; however, I was not about to correct her.  I would love for her to continue to think this way.  If she continues this line of thinking, she will hopefully never buy something that she does not have the money for because the fear of losing her home will come to mind.  I would much rather her be wrong in this assumption than buy things she cannot afford.  You see, if she does the former she may one day lose her home.  If she does the latter, the odds of that happening are slim to none!

Here are a few carnivals we recently participated in – Carnival of Financial Camaraderie, Household Budget Carnival, Carnival of Financial Camaraderie, Carnival of Personal Finance, Tax Carnival

This year we’re arranging another trip and have booked our tickets using airline miles.  I still travel on business (4 – 5 times per year) which has helped me earn some of the miles.  We’ve also earned miles by using our Citi Platinum Select AAdvantage Visa Signature Card for a lot of everyday expenses as well as larger budgeted purchases throughout the year.   We pay an annual fee of $85 to use this card, but the annual cost doesn’t compare to what we would have to pay to purchase the airline tickets at regular price.  Note:  fee waived for the first 12 months.

MAUI ROAD TO HANA © by DirectDish

You might be thinking it requires a lot of spending to earn miles with your credit card which can be dangerous if you’re not careful.  I suppose you’re right, but you might also be interested to know that we don’t have any credit card debt.   We make sure we pay the balance off every month by tracking our spending using YNAB and also make sure we don’t purchase more than we can pay off that same month!  We never put ourselves in a situation which we have to deal with the credit card company about a late payment, interest charges, etc.

Obviously, this post shares my view of credit card spending.  As you can tell, I don’t have any issues with credit cards.  Yes, they do get a bad reputation and for a lot of valid reasons.  Credit card companies don’t exactly make it easy to get out of credit card debt.  The bottom line is that we don’t abuse the credit the card company provides us.  Honestly, I only focus on spending within our budget.  The form of payment doesn’t really matter to me, but the amount we’ve spent does and it’s tracked almost everyday!

Now we’re working on trying to find hotel accommodations at a reasonable price.   My wife has become quite good at searching all over the web for the best deals.  We’re searching for deals on rental cards and hotels and hoping we can further minimize our cost, stay at a nice place and experience Maui again 10 years later to celebrate our marriage.

Do you use an airline miles credit card?  If so, tell us about your experience and if it saved you money on airfare.