Editorial Policy

Money Bloggers Confess Biggest Credit Mistakes

LaRita M. Heet

October 24, 2012

It’s a common story: You pulled out the plastic at the wrong time — whether out of genuine desperation or the impulsive “need” to treat yourself — and lived to regret it.

We talked to three personal finance experts who shared their biggest credit card mistakes and the valuable lessons they learned from them.

Jana Lynch,  writer and blogger at Daily Money Shot:

Lynch admits she has a colorful past when it comes to plastic.

“I have made so many foolish purchases with credit cards that when I try to think of the most foolish, it’s hard to narrow it down,” she says.

The one that sticks out the most, however, involved an emergency room visit for her pet guinea pig. When the guinea pig, Jana’s first pet, became so sick she appeared to be dying, Jana took her to an after-hours vet, but was unprepared for the price of treatment.

“They charged way more than we expected, so onto the credit card it went,” she says. “I didn’t have a choice. Well, I did. I could have overdrawn my account or let the animal die that night, but at the time, [the credit card] just seemed like a better option.”

Looking back, Lynch says the price was worth keeping the guinea pig comfortable until her pet died a few days later. But she admits that using her credit card for an unaffordable emergency wasn’t the smartest move. She has since established an emergency fund for her pets — and recommends that other pet-owners do the same.

“That way, if something happens, you won’t have to charge it and pay the interest later on,” Lynch says. “You can pay cash and move on.”

John Schmoll Jr., owner of an advertising and copywriting business and blogger at Frugal Rules:

When Schmoll and his wife were newly married, they lived in Southern California in what he describes as a “shoebox of an apartment five miles from the Mexican border.”

“We didn’t have much income but we did have a generous credit limit,” he says. “Twice we blew off steam and indulged a wild hair by driving to Vegas for a spur-of-the-moment weekend trip. We put both trips on our credit cards.”

Credit card interest charges soon squashed the high the couple got from those trips.

“Long after the luster of losing money at the slot machines wore off, we were still paying off those two trips,” Schmoll says. “The feeling of freedom and spontaneity we felt as we drove through the desert beneath the stars didn’t feel so satisfying three years later, when we were throwing our tax returns, bonuses and spare cash at our credit card balance.”

Although it was a hard way to learn fiscal discipline, the experience taught the couple well.

“When we finally paid off our credit card debt; we didn’t celebrate with a trip to Vegas; we enjoyed a simple meal at one of our favorite local restaurants,” Schmoll says.

The lesson learned?

“Delayed gratification is much more satisfying than spontaneity, at least when that spontaneity comes at the hands of banks charging 30-plus percent interest on unpaid balances,” Schmoll says. “Now that we have three little mouths to feed in addition to our own, we’re thankful that we’ve learned how to live within our means and not beyond them.”

Greg Go, blogger and co-founder of Wise Bread:

Go tried hard to rationalize his biggest credit card buy — a $1,500 50-inch TV.

“My reasoning was that I wanted to watch LA Lakers basketball games, and felt that if I had a nice big TV, I wouldn’t be tempted to spend money on tickets to the games. I put it on my credit card because I didn’t have that much cash in the bank,” Go says.

Yet the debt on that big TV got pretty big itself.

“By my estimate, the $1,500 TV actually cost me around $3,000,” he says.

In addition to building up debt, the TV caused Go to pick up some unhealthy habits.

“I ended up watching a lot more TV, even terrible shows,” Go says. “Over several years, that purchase really cost me thousands of hours that I could have better spent working on my site, improving my life or hanging out with friends.”

The regrettable purchase taught Go a double lesson. First, that credit card interest charges can cause the original price of an item to balloon.

“And second,” Go says, “the true cost of a purchase can’t just be measured in dollars. These days, the 50-inch TV sits idle while I get a lot more enjoyment spending time with friends and family than I ever did watching all those terrible TV shows.”