Only Spend the Money You Have

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Part 5 of our Back to Basics series.

Let’s face it, we all get distracted by the latest and greatest gadget, style, or trend. 

Does this following scenario sound familiar? We go to the mall, get pulled into a store, see something we “need,” and without hesitation take it up to the counter and put it on our credit card. After all, our credit limit always seems to increase and we get points – right?

If this sounds like you, there may be a serious problem underlying this credit card fueled shopping spree: buying something on credit when there’s no money in the bank. It’s often easy to forget that the available credit remaining on your cards or lines of credit is not actually your money. To use that limit, you are essentially renting it – at a very high rate! Sure, you may feel great buying everything on credit, but remember, you need to pay for it eventually. I’m not saying that credit is a bad thing, just that it is a powerful tool and, like a chainsaw, can be dangerous if not used properly.

It is difficult to control our spending when we want something. Most situations that we have seen involving out-of-control consumer debt could have been avoided had there been some education and discipline in the use of credit.

Since credit is a valuable tool that we have never been taught how to use properly, here are a few simple guidelines that might help:

  1. Never buy something on credit that you cannot immediately pay off.
  2. Even though you may have a lot of credit available, regularly spending over a certain percentage of that limit has a negative impact on your credit score.
  3. Use cash or debit instead of credit – I know you might argue against this saying “but what about my points?” Let me just say that sacrificing those points is cheap compared to the outrageous interest costs and stress if you cannot control your spending.

We have several great articles that also talk about the use of credit, cash flow, and debt elimination if you find yourself in those situations.


Credit is an important tool in this world. It has great power and requires responsibility, discipline, and proper use. Without fully understanding the potential risks associated with credit and spending there is a real possibility of damaging your financial future. Don’t let the distractions and greed of this world pull you off track. Only spend money that you actually have and take control of your financial future.