It used to be an annual post holiday tradition in our family. My Mom (wonderful woman, not the best money manager in the world) would spend, spend, spend during the holiday season and then from December 26th onward dread the soon-to-be received credit card statement. She would worry and fret and hope that the bill wouldn’t be too high (she never said anything to us kids but we felt the stress all the same).
(Note: Hope is not the best financial strategy.)
Why did she hope? Because she had no clue. It is so easy to lose track of spending with credit cards because the process is… well… easy. One swipe and the transaction is done.
So make it a tad more difficult. Take an extra minute and record the purchase in the checkbook or blackberry just as you would if you had written out a check. If you carry a running total (which I recommend that you do), then you’ll see right away whether you can afford the purchase or not.
What about those monthly charges? The cable bill or insurance policy that is charged automatically? Deduct those right away (as you would any preauthorized payments from your bank account).
What if you’re putting a group meal on your credit card and collecting the cash from your tablemates? Record all of the bill. Odds are, the cash will be spent by the time you get your credit card statement.
Tracking your credit card spending daily may not make that big bill less painful (though I’ll bet you’d spend less) but it will decrease the worry (necessary or not).