So many people misuse credit cards and find themselves in debt only able to make the minimum payment that is required.  A minimum payment mostly pays the interest, so your balance doesn’t go down very fast, and you have to keep paying for a long time.  Learning to use credit responsibly is a very smart thing to do so that you always have money to spend, money to share, and money to grow.

If you feel that you are ready to handle credit responsibly, then apply for a credit card.  The best kind of credit card is one that gives points.  I live in Vancouver and shop at a grocery store that has a Mastercard that gives points, so that’s the card I use for most purchases.  Every time I buy a product or service from anywhere, I use my credit card and receive points.  For every thousand points, I get a dollar off when I purchase groceries.

I’m Ambien’s wife, and I developed a credit card system that guarantees we never spend more money than we have.  For this system to work, you must make a budget and know how much money you have each month to spend.  You also need to have three bank accounts – one savings account and two checking accounts.  The first checking account is where your paycheck is deposited, and the second checking account is the one that pays your credit card bill.  As you go through the month, you use an envelope to record and store all of your credit card receipts.  On the front of the envelope you record the date, the name of the store where you made the purchase, and the amount that you spent, and inside the envelope you put all the receipts.  You do this all month long.  Every few days you add up the total that you have spent so far and transfer that money from your first checking account to your second.  When your first account is getting low, you know that you have to be careful with your spending because you can only spend what’s left in the account.  If you follow this system, you will never spend money that you don’t have.  When your credit card statement arrives at the end of the month, check each item on the statement against the receipts in the envelope to make sure that they match.  Then pay your entire credit card bill either online or at the bank.  When you pay your entire bill each month, you never pay any interest.  You get to use credit for free, and you get benefits.  Since we started using this system, we have found that it takes us about three months to earn around $250 worth of points that we can spend on groceries.

Using a credit card in this way will enable you to become a conscious shopper.  When you track your spending like this, you will know how much you spend every month, and you will also know what you are spending your money on.

Click on the audio recording below to hear the above lesson.

Vocabulary:

in debt:  owing money
interest:  money you pay for using credit
balance:  the total amount you have to pay
responsibly:  the best way
apply:  fill out a form
grocery:  food
purchases:  things that you buy
guarantees:  makes certain
system:  way of doing things
budget:  a plan on how to spend your money
deposited:  put into
record:  write down
store: keep
receipt:  the paper you get when you buy something
transfer:  move
statement:  a record from the bank of all your credit card charges
match:  are the same
entire:  whole, 100%
benefits:  good things
enable:  let you be able
conscious:  thinking well
track:  know by using a system

Pronunciation Exercise:  Listen and repeat the vocabulary above on the audio file below.

© 2014 Ambien Malecot