The Bottomless Cookie Jar

A credit card is like a bottomless cookie jar. With easy access to credit, there’s no reason to wonder when the treats will run out, and you are never disappointed. Want a new outfit? Just stick it on a credit card. Want to have dinner with a bunch of friends? Desperately in need of a sunny vacation to beat the winter blues? There’s room on the card and that’s just what it’s for, right?

When credit became a commodity, lenders started hiking limits and offering incentives to take on more cards. People started behaving like greedy children, gobbling cookies without a thought to the tummy ache that would eventually follow. Now Canadians are spending almost 1.5 times what they make every year. Talk about lack of self-control.

How did we get so much credit? All you needed was a shiny credit score and you could have all the credit you wanted. Do you know that people who make only the minimum payment on their credit cards have a better credit score than those who pay off their balances in full every month? Why? They score higher because they’re more profitable customers. Do you want to be some company’s dream customer, paying gobs of interest and twisting in the wind when the company decides to change the rules of the game? Or do you want to be in charge of your money and your life?

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Being in charge means being out of debt. It means paying off your balance in full every single month. It means having only as much credit available as suits YOUR needs.

Living within your means isn’t as hard as some may think. Yes, it does mean you have to make choices. And yes, you may have to wait a while before you can take that vacation. But when you stop treating your cookie jar like it has no bottom and start living within your means, you’ll be in charge. Sometimes there are cookies, and sometimes not. And if there are no cookies, it doesn’t mean it’s the end of the world.

Gail Vaz-Oxlade The host of Til Debt do us Part and Princess, is a Canadian financial writer and best-selling author. Her latest book, It’s Your Money (Harper Collins Canada, 2011), guides women to financial independence.