Be sure to not track twice!
**This article is for members of the Million Dollar Year and Wealth Building Accelerator.
Tracking Credit Cards
How you track credit card expenses on the Financial Dashboard depends on how you are using your credit cards each month. Find the scenario below that best describes your situation and follow the steps from there.
Charging & Paying the Balance in Full Every Month
If you are using your card for new expenses and paying it in full every month, track all of your credit card purchases with the corresponding type (need or want) and category, and then do not also track the payment for those purchases. That is duplicative because once you enter an entry on the Use of Money tab, you are effectively saying you do not have that money to spend since it is already allocated to pay for the charge you made on the card. When you transfer money between two accounts that you are managing on the dashboard, you do not need to track the money transferred. In this case, you will later move money from one account (checking) to another account (credit card) to offset the new charges you have already tracked and that your dashboard has already taken into account, not to pay for previous debt. So the payment does not need to be tracked at all.
Charging & Paying the Balance in Full Every Month + Carrying a Previous Balance
If you are carrying a previous balance (not fully paying a previous balance but still using the credit card and paying off the new purchase in full) - track all of your new purchases individually with the corresponding type (need or want) and category. Then track any additional amount you pay towards the previous card balance as a “debt payment.”
Example: If you had a $700 rolling balance on your card and charged an additional $500 this month then paid $600 total to the card for the month. Track the $500 of new charges as they're made with the corresponding type and category and $100 as a debt payment. **See NOTE below
Charging New Monthly Expenses & Not Paying the Full Balance of those New Expenses
If you are using your card for new expenses and not entirely paying off the balance of those new expenses, it would be better to not track the monthly expenses at all and instead to only track the payments as a “debt payment” when you pay for the past charges. While this will not give you a fully accurate picture of your individualized spending, it will make your tracking much easier as the dashboard is not designed to carry your debt. We suggest using this as one more motivation to stop using credit cards for purchases you do not have the cash to pay for!
**NOTE: It's advisable to STOP using any credit cards that have an existing balance. Every time you make a new purchase on a card with an existing balance, you reset the interest to those new purchases, prolonging and compounding your interest charges. Ideally, stop using credit cards and switch to debit cards. This instills new habits, reduces the overspending that is proven to occur with credit cards (psychology) and makes it more clean to track debt payment. If this doesn’t feel like an option you're going to pursue - can you start with a clean credit card for current purchases, with the intention of making sure it's paid off every month? Alternately, you may want to switch to using your debit card for all new purchases until you can rebuild trust with yourself around new spending habits that do not result in accrued debt. Additional lesson on how the interest accrues on revolving + new debt is in our How to Pay Down Credit Card Debt Course.