Editorial Policy

Credit cards can be a lifeline, but not all the time

Erica Sandberg

August 26, 2014

QHi Erica,

I have absolutely no money after rent, and I don't get paid for another week. I have a little left over on my credit card and almost no food in the house. You say credit cards aren't for emergencies, but this is an emergency. My son and I need to eat. Do you have any other ideas? — Erin

ADear Erin,

Without question, you and your son must have food. That is indisputable. If the only way for you to provide sustenance is by charging, swipe away. Today.Ask Erica

As for tomorrow, I want you to do things a little differently. OK, a lot differently. Not because you're wrong to borrow for bread and milk, but because I don't want you to be in this position ever again.

Credit cards are an excellent source of funds for the things you want but also can afford. That means you should have at least enough cash left over after paying your vital expenses to pay the balance on your credit card. Without that, your troubles will escalate:

  • Skip or make partial payments and the interest rate will increase dramatically, adding more to what you owe. Credit damage begins.
  • Become seriously delinquent and you'll have to deal with demanding collectors. Credit damage worsens.
  • Creditors or collectors may choose to sue you for the debt. If you lose the case, you could get hit with a judgment and you'll owe far more than you did before. At that point, you'll suffer severe credit damage that can negatively impact future employment and housing options.

So after charging your groceries this time, entertain all reasonable and creative options for strengthening your financial circumstances. I gather that you have a job, so a paycheck is coming in. Take control and spend it according to a strict set of priorities.

I'm not implying that you're splurging on luxuries while neglecting essentials, but ensure the absolute necessities are covered before a penny is spent on anything else. The five non-negotiable budget line items are food, shelter, utilities, medical expenses and transportation. If you only have enough to meet these — or are short — then you surely do not have any funds left over to send for a credit card payment, or pay extra for the financing fees on the revolving debt.

Write down what you take home on a monthly basis. Subtract the big five from that figure. What are you left with? If anything, expand your budget to include other basics, such as necessary clothes and home and vehicle maintenance.

On the other hand, if you're running a deficit, you have only two options: Add more cash to the coffer or seek financial assistance.

There are no easy answers to increasing earnings. Working extra hours, obtaining another or a better paying job or asking for a raise are possible, but can take time to achieve. Don't discount them, though. Try anything reasonable and feasible. Also, it appears that you might be a single mom. Pursue child support if you're not getting it or aren't getting enough.

If your son is in his teenage years, he may be able to contribute with a job of his own. Horrible? No. I've been there. When I was in high school, my divorced mother was struggling to care for seven children. She asked us older kids to donate a portion of our babysitting earnings to the household. At the time it wasn't pleasant, but in retrospect it was the right thing to do.

As for financial assistance, I'm referring to the government, nonprofit organizations and charities. Starvation and homelessness are not acceptable. If the only way to meet your necessities is with welfare programs such as TANF or Temporary Assistance for Needy Families, food stamps and community help from a church or local food bank, do not hesitate. Consider it temporary and work your way out and up.

Credit lines and loans will never take the place of income or money that you aren't obligated to repay. They can work for the occasional crisis, but only when the near future looks far better than the immediate present.

Got a question for Erica? Send her an email.