“So tell me, Gordon, when does it all end, huh? How many yachts can you water ski behind? How much is enough?” Bud Fox, Wall Street (1987)As you can tell, I’m a big fan of that movie. In fact, this is the second column I’ve started off with a Wall Street quote. Here’s the first one. Bud Fox does ask a valid question, though. How much is enough? Additionally, how do you know when you’ve acquired enough? We’ll see if I can answer those questions today. The first question — how much is enough? — is largely a matter of individual circumstances. I’ve got pals who have more than $1 million in credit card limits. To me, that’s amazing. Even if they charged $10,000 a month, they’d only be using 1% of their overall limits. One thing those limits do afford them is this: they will never have to worry about utilization issues (for FICO purposes). The average FICO high achiever uses 7% of his or her credit. These million-dollar-limit folks would have to use $70,000 to reach 7% utilization. Thus, these guys have the game beat here. Utilization, which accounts for 30% of the FICO score, will never be an issue. Still, how much is enough? Certainly, based on my needs, $1 million in available credit is too much for me. What’s more, I cannot imagine ever needing that much credit. But that’s me. For my pals, maybe they use quite a bit of their limits on a monthly basis. One thing they have in common is that they all have their own businesses. I imagine they run a lot of expenses through those cards. So, yeah, they might have what they need.I have my own rule of thumb. I try — and do — keep my utilization at 1% overall. If I spend $6,000 a month on my cards, I want to have $600,000 in available credit. If I spend $3,000 a month, then I want at least $300,000 in available credit. That’s how I can tell if I have enough. If I’m spending $5,000 a month, and have a $1 million in limits, I probably have too much credit. Still, that’s my rule. You’ll have to figure out your own. But that’s how I determine if I have enough credit.As for the second question — how can you tell if you’ve acquired enough? — I’ve figured that one out as well. By the way, I realize that both questions are similar. However, the questions have slightly different answers. The first question can be answered by defining how much you spend each month. The second question — for me at least — is determined by whether my goals have been met. Have I diversified my portfolio? I have. Do I have a card with each of the major banks? I do. Do I have a relationship with companies that are well known for customer service? I do but I am still pondering a Discover application. Discover, I’ve been told, is well known for top-notch customer service. Although it doesn’t issue the highest limits, it does handle customers in the way that I want to be treated. Given that situation, there’s a possibility that I may apply for a Discover card at some point in the future. How will I know if I’ve acquired enough credit? I’ll know that I have acquired enough when all of my goals have been met. If Discover fits within my plan, then I would submit to you that I have not yet acquired enough credit. I can tell you that I am very close, though. I’ve got cards with Nordstrom, American Express, and Merrill Lynch. Before I applied for these cards, I had great expectations for their customer-service departments. I have not been disappointed. I had fun with the title of this column but I really do believe you’ll know when you have enough credit. Assuming you have set goals for yourself, it should be pretty easy to spot. I have enough credit. My credit limits meet my needs. However, I still haven’t acquired enough. After I grab that Discover card — which should round out my portfolio — I imagine that I will have acquired enough as well. I’ve been eyeballing that Discover credit card advertisement on my site for a few weeks now. It’s probably just a matter of time before I finally pull the trigger. After I do pull the trigger, all of my goals will have been met. Clearly, Paul Gauguin’s painting (above) doesn’t rise to the level of porn. But if it did, I think we’d all realize it. As for my own situation, I think I’ve reached the end of the road. Indeed, I can see it. And I know it.
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