Over the course of the last year, we have made some financial mistakes. One of the biggest has been taking on more debt than we should have. We were coming off tax season and we had a little extra money in our pocket, and I decided we could begin building my credit. This is how we took on too much debt, and what it costs us per month.
Store credit card
I applied for a store credit card and was approved. I was given a $300 limit, which was quickly doubled after making payments on time each month for a few months. I used this to buy Christmas presents for my son and for a few family members. After all was said and done, I owed $500. My monthly payments doubled, and that was something we were not planning for ahead of time. Instead of $15 a month, it is now costing us $30.
A few months after getting the store card, I applied for a Mastercard to help build my credit faster. I was approved after paying a $19 processing fee. My credit limit was $300 and that was quickly maxed out. My monthly payments are $25, and each month that money is spent again. I am up for a credit line increase shortly, and it will probably be bumped to $600. That credit increase can be dangerous for us.
Our laptop died last May. I needed something to continue my work from home and we were forced to use a rent-to-own place. This was a huge mistake. We are still making payments on the computer and paid nearly double what it is worth. Desperate times called for desperate measures I suppose. The payments are $160 a month and it will be paid off in September. In the future, we will not be using this service again. If we happen to need something again, a short-term loan will be the way to go.
It is amazing how easy it is to rack up debt. While we definitely needed to build my credit, this was too much too soon. Now we have three payments, two of which were not necessities. We have learned our lesson and will plan better in the future. It is nice to have a credit card available, but the bill can sneak up on you and destroy your budget if you are not careful.
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