You’ve seen people talking about credit card points everywhere. There are countless sites talking about how to completely game the system. And so many people adopt a philosophy to use their credit card for absolutely everything, even payroll. 

If you’re well disciplined, it’s easy to reap the rewards and benefits to the substantial offers that credit card companies give you. 

Free access to hotels, flights, upgrades, you name it. 

It’s what many of us desire, but is chasing these things what we should really be doing?

Before You Make the Leap, Examine Where You Stand

The first issue to consider before continuing to partake on this journey, or start one if you haven’t already, is to take a hard look at our own finances. 

Do we have plenty of money stored away, upwards of mid five figures?

If you do, you’re probably in the clear, but you may want to look out for these other warning signs regardless. 

How Secure Is Your Current Income Stream Really in This Economic Landscape?

The second biggest contributing factor is what our economy looks like today. 

Our economy is nothing like how it was half a decade ago. We see companies, large ones, actually the biggest ones in the world, issuing out layoffs left and right. 

How stable are our jobs really?

And if something were to happen to our jobs, how long would it actually take to recover and find a new one?

How Long Would It Take for You to Recoup Your Income If Something Were to Happen?

While experts have recommended to have three to six months in savings set aside, we need to take a hard look at the state of the world we’re in. 

Is it really going to just take six months for someone who loses a job in this economy to find a new one?

Probably not. 

That means that credit card could ultimately become a trap. 

How Are You Managing Income Changes and Is Lifestyle Creep Going to Perpetually Keep You Down?

Next, we have to consider both lifestyle creep and the perpetual increase in credit lines that are offered by the banks that operate our credit cards. 

Let’s say your after tax income is $4,000 a month. Your expenditures each month is $4,000. But you get a raise of $500 after tax and your income goes up. Chances are, you’re spending that extra $500 as well, as your lifestyle creeps up with your new level of income. 

This is how life is for most people, because they don’t carry the discipline to stay at a specific lifestyle when their income increases. The vast majority of people equate an increase in expenses as they earn more, while the few that do carry the discipline of a financial warrior are able to maintain their existing lifestyles. 

As lifestyle creep occurs, the amount of credit card debt increases as well. This makes it a lot more difficult for people who are about to face unfortunate financial circumstances in life to get out of. 

This Little Trick That Credit Card Companies Do to Keep You Constantly at Their Will (Even Though It Seems Like a Reward)

What’s worse, however, is the debilitating nature of the credit card limit increase. 

This is one of the biggest problems that most Americans face. An extra $5,000, $10,000, or more that’s added to a credit card balance just extends how much more a person could spend. 

For those who don’t fall into the category of that financial warrior — this is what equates to the massive amount of debt that Americans face and continue to try to get out of for the rest of their lives. 

Scoping Out Beyond Where We Are Today to What the Future Looks Like (Inflation Included)

Now if we flipped the scenario around and looked at the golden years of our lives, what are we supposed to do when our income drops, we have all this debt, and additional periods of inflation increase the price of a simple Coca Cola to $5 for a 16 ounce can?

At this specific moment in time, the most important thing for you to do in life is to get out of the credit card system, start moving to cash and begin funding your future. 

Have You Considered Future Periods of Inflation Into Your Retirement Projections?

Americans recently thought they needed $1.25 million to retire, according to a recent survey. And that may be the case if you’re retiring today. But if you’re planning on retiring in 20 years from now, that number reaches a lot closer to $4 million, factoring in all the variable additions in cost. Here’s what a million dollars looks like in 2040. Here’s what it looks like in 2050.

If you don’t believe me, take these data points. I’m 38 today. When I was 18, a can of Coke was 25 cents. A few years before the pandemic, that same can of Coke was 75 cents, and 99 cents for the 16 ounce can. Now, that can of Coke is $2.25 to $2.50. 

That’s three price increases over the course of two decades. 

You’ve seen the increase in the cost of goods and services as well. Your grocery store bill is a lot higher than it used to be. So are your restaurant and entertainment expenditures. Not to mention utilities, property tax, healthcare, you name it. 

If We All Band Together, Prices Will Start to Go Back Down, Won’t They?

Unfortunately, this is not the case. These expenses in life never go down. They always increase. Yet, so many people are completely unaware that a recession or a period of inflation has happened historically every decade to two decades since the inception of the United States. 

However, let’s take a step back and come back to where we are today. Let’s say you have what banks would consider an average amount of credit card debt. 

That’s $9,260, according to Credit’s website.

If your average earnings are $4,000 a month take home and your expenses are at $3,000, you might have an extra $1,000 you could use towards paying down that debt. 

But here’s where the biggest variable lies. 

Have You Factored in These Measures Into Your Financial Landscape Yet?

How secure is your income really?

What happens when your income takes a turn for the worst?

Let’s say you have 6 months of expenses saved up. 

That’s $18,000. 

Let’s say you collect unemployment for 26 weeks. You may collect an additional $10,800. 

Cutting expenses is going to be extremely difficult. You may be able to cut out a few hundred dollars, maybe even a grand if you’re lucky, but now you’re working against yourself. 

Your credit card interest continues to increase. You’re trapped in a lot of expenses you can’t get rid of. And there’s a timeline to recover everything or you face a destructive situation, if nothing is situated in time. 

And how long is it really going to take to actually find a new job?

According to this, it’s a lot longer than 6 months (if you’re in your 50s). 

This could become the reality for a lot of people, so what this tells us is that we need to start making plans. 

The 4 Simple Steps You Need to Take to Prevent This Type of Situation From Happening to You

The first would be how to eliminate that credit card debt. 

The second would be moving into a cash system. 

The third would be how to stack up savings. 

And the fourth would be on securing your financial future. 

Should I Be Trying to Tackle This Alone? Or Who Do I Go to for Help?

Going at it alone is going to be quite overwhelming. You wouldn’t believe how much quicker you could get somewhere when an outside expert takes a look into your finances. For example, when someone went through my expenses on my credit card, we found over a grand a month we could just cut right out. 

That’s why it’s so imperative to talk to a financial advisor. They oftentimes can see things that we ourselves can’t see, and help us get back on track for the future. 

The Type of Expert You Need in Your Corner to Get You Back on Track (and Secure Your Financial Future for Generations to Come)

If you don’t have a financial advisor already, we implore you to make a free AdvisorCheck membership, so you can get all the tools at your disposal to pick and choose the right financial advisor for your specific situation. We’ve had our experts work behind the scenes to extract out the most relevant information and research for you through our proprietary system. Once you have your membership intact, search through our database to find a CFP, a Certified Financial Planner, who takes a holistic look at the entirety of your finances, in your area, and start working on the road to securing your financial life both today and far beyond in the future. 

While these points and offers that credit cards offer seem like an appealing carrot to jump at, the truth of the matter is that they aren’t a carrot at all. And if you still want to reap the benefits of a credit card, express your financial goals to your financial advisor instead. They can lay out a detailed roadmap to help you achieve them. 

Get ready to say goodbye to that credit card and hello to your financial advisor who will lead you down the path of financial freedom. 

Written by Leonard Kim

Fact checked by Billy Quirk

Reviewed by KJ Kim

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