I said hard cap, not hard hat! Via Shutterstock
For the past three months, Hubs and I put a hard cap on our credit card spending. We agreed that together we’d spend no more than $2,000 in each cycle. And each month we made our goal!
A lot of Bargain Babe readers use debit cards – when I asked on our Facebook page, 9 out of 10 readers who responded said they had NOT A SINGLE credit card in their wallet.
Have you ever set a cap on your debit or credit card spending?
The problems with a hard cap on spending
- It is a vague way of spending less; specific categories are not targeted
- It leaves little room for big, irregular purchases, like the $856 we spend on wood to rebuild our backyard fence
- Check writing is ignored (the majority of our spending, aside from our mortgage, goes on the card, but some expenses, like babysitters, only show up in the checkbook)
- You are still at risk for credit card surcharges and fees if you pay late
The advantages of a hard cap
- It is a simple way to spend less on your credit card
- It forces you to monitor your credit card balance more closely
- You have to prioritize spending when you get close to your limit
- You can make the rules! For instance, we decided to exclude any major purchases, like a new fridge, from the hard cap
- You still earn credit card rewards
What we cut
- Eating out less
- Seasonal clothes
- Home decor
What we spent most of the money on
- Gas
- Groceries
- Eating out (it’s one of my favorite ways of indulging!)
- Two mini-vacations on the weekend, first to Boston and then to hike in New Hampshire
- Downton Abby Season Three ($15 on Amazon)
What we excluded from the spending limit
- Check writing (mostly for babysitters and the rare massage)
- Major purchases, like a new car or appliance
How we put the plan into action
- I set a reminder two weeks into our credit card cycle and again three weeks into the cycle to check progress
- I updated Hubs on how much we had put on the card at two and three weeks
- If we were close to our $2,000 spending limit in the final week, we both agreed to only buy gas or groceries
- If we went over $2,000 one month, we would subtract the overage from the next month. So if we spent $2,200 in January, the hard cap would lower to $1,800 the following month
Have you ever tried capping your credit card spending?
What penalties or consequences do you set? How do you motivate yourself to stay within your limit?
Submit your credit card statement (anonymously) and get free help from the Bargain Babe to cut your spending!
Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price.
I use credit card spending as a rough estimate of our total spending. I’ve never put a hard cap on it, but I do have rough goals!
@Jenny So you have more of a range of credit card spending that you aim for? What happens if you go over? Have you ever tried to reduce your credit card spending?
I make it a point to pay with cash, and write a check for utilities, etc. I only use my credit cards when I have no option (like the occasional on-line purchase), but always pay the balance in full monthly. This keeps me from going overboard, so I don’t have to hard cap the cards. I think the dumb things I did when I was much younger taught me some valuable lessons in financial responsibility.
@Ellie Smart that you know your limits. I’m the opposite, if I spend mostly in cash, I have a hard time controlling my purchases. The money seems to fly out of my wallet! And I have a hard time looking back and seeing where the money went. Do you save and go through receipts? Or how do you track cash spending?
I’ve always kept receipts, but mostly as a hedge against the possibility of having to return a purchase. My advantage is my age. There just aren’t as many “things” I need or want at this point, and when I might be considering a ‘want’ instead of a ‘need’, I wait for a week or 2 before spending the money. Often I decide not to buy that extra unnecessary item. I plan my shopping needs before I leave home, and make sure I have the necessary cash to cover costs. Unlike you, I have only myself to worry about. I do enjoy cooking, so I can really keep food costs down, and still enjoy the occasional lunch or dinner out. I must admit, I wasn’t always this sensible when I was much younger, but over the years I learned how to keep my eye on what I was spending so I could rein in excesses.
@EllieD You are a wise woman and have clearly learned a lot over time. I still feel pressure to buy things, partly from seeing friends have fun toys or my mom friends who talk about the stuff they buy for their kids. Some of it is really cool! And would be fun to have. But I try to remind myself of my goal to live with fewer possessions, and to save money of course. My latest “want” is a gym bag. I’m using Hubs cheap blue drawstring bag that is annoying to carry (it always falls off my shoulder). I swim twice a week so it would be nice to have something easy to carry. Thinking of buying myself one for Mother’s Day.
You don’t specify what kind of gym bag (there are so many), but many kinds of bags can be repurposed in different ways. Do you have an extra diaper bag that doesn’t really look like a diaper bag? A couple of my friends have found sites that carry all kinds of things that were “gently” used and are re-sold at steep discounts. If you’d like, I’ll FW those sites to you the next time I see them. One of these women is on a personal campaign to try not to buy anything new. Knowing her, I’m sure she’ll succeed. She has a 3 1/2 year old daughter and is a full-time teacher, so she has a real challenge.
@EllieD That’s fascinating – a challenge to not buy anything new! With so many online sites, it certainly adds to her choices. I may well repurpose another bag. We do have a second diaper bag that is really a messenger bag with lots of small interior pockets. That would probably work well. Won’t know until I try it!
Hey BB,
I work at a bank and one strategy I recommend is open a separate checking account for debit card use, with a debit rewards card if offered by your bank. I use Accounts2 app to log my checking account activity, and you can categorize it. Or you can use Mint.com to categorize your spending to keep track of what is spent where. You could also deposit your budgeted amount in that account so you don’t overspend. HTH
@Tanya Cool idea! With a separate bank account tied to a debit card, I’d feel my money was safer. And it would be easy to track debit spending. Thanks for the tip!
I don’t know whether you have a Tuesday Morning store in your area, but they are featuring MisMatched sox for women and kids, along with duffel bags in matching prints. I didn’t save the add, so don’t recall the exact amount, but these products were under $10.
*ad* (not add.. D’OH!!!)