Is Using Credit Cards a Sound Financial Strategy?

Credit card usage has become such a controversial topic that to recommend using one seems like bad financial advice. Many will tell you to not use them, to get rid of them altogether.

Using a credit card to buy things you can’t afford or don’t even need is certainly not smart. The interest charges will pile up over time-Why do you think minimum payments exist?

Stay within your budget and pay your bill in full, when due. Never run up or carry a balance, so if you can’t afford to pay the bill, you probably should not be buying it.

I have a rewards card that I use to make almost all of my purchases. If am going to make the purchase anyway, might as well get all the benefits possible. I do suggest taking advantage of the many perks credit cards offer.

I use my points to get things I would otherwise pay for. Cash might be king, but credit cards offer advantages otherwise unavailable. Some offer travel insurance, extended warranties, fraud protection and allow you to dispute billing errors and defective merchandise.

Some credit cards even offer travel and emergency assistance or other travel related features. Credit cards are one of tools used to build credit. Somewhat frequent purchases and a solid payment history help achieve a respectable credit score.

A higher credit score will help you qualify for lower interest rate on loans. The difference between a mortgage at 7% versus 3% is staggering. They also provide financial backup in case of an emergency, such as an unexpected healthcare cost, job loss or major auto repair.

A few things to keep in mind: Do not, under any circumstances miss a payment, you will be accessed with late fees and interest, increasing your debt load. These can add up and have a negative effect on your credit score.

 Review your monthly statements and keep track of your purchases. Report lost/stolen cards immediately.

The card issuers will make money from every single purchase you make. Merchant fees. The multiple charges to cardholders – annual, cash advance, balance transfer, late fees and interest payment .

Some even sell customer data to other businesses. Completely legal as data is anonymous and aggregated, meaning you out can not be singled out.

Some items to consider when choosing a credit card:

-Don’t get a card with annual fees. The benefits hardly ever offset the expense.

-Look for a low-interest rate. The plan is to pay in full, but life happens.

-Look for the rewards program. Some of the most common rewards include Cash back on purchases and airline miles that can be redeemed for trips.

Credit card issuers are betting that by offering perks you will buy more and end up carrying a balance therefore paying interest. Prove them wrong take advantage rewards programs.

 I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommend my children do when the time comes.

Stop Throwing Away Your Money

There are many ways we needlessly throw away our hard earned money. Sometimes we don’t even realize it. There are quite a few steps we can be taken to avoid this.

They may not seem like much, and are fairly simple, but over time you will see how the savings add up.

Forget the corner coffee shop with the expensive concoction you drink every morning, drop it. That one cup of coffee can set you back $4 If you buy one every weekday, you spend about $1,000 a year.

Make your own instead and add flavored creamer if you must.

Replace single-serve plastic water bottles with a reusable water bottle and eliminate unnecessary waste. A little earth friendly to boot.

Brown bag your lunch to work. Have home cooked meals more often and take leftovers the next day. I am not saying that you can’t eat out. I connect with my sons when we eat out but we can’t do it all the time.

I am all for using credit cards; the rewards often add up, but these need to be used wisely. Pay the bill in full when it is due. Never, ever carry a balance.

Find a card with a low interest rate and a good rewards program. Bottom line, you need to stop wasting money on credit card interest.

Use an ATM not belonging to your bank or in its network, you may be charged fees by both banks. This adds up to several dollars per transaction. Banks in my area charge $5 per transaction. My bank tacks on $2 to that; $7 for the convenience of using the closest one? Convenient for whom? Not worth the expense. Your bank is not close; Use your debit/check card instead.

There is a big movement to cut the cable. Me, I enjoy watching TV and will be not be joining the movement. I eliminated the premium channels, the ones that show you the same movie countless times a month. Stick to basic cable and if you don’t have to see tonight’s episode as it premieres, then you are a candidate for a streaming service.

The bad habits: the pack-a-day smoker, the 6 pack of beer every night. I am not the morality police but you should kick those unhealthy habits, your wallet and your health will both thank you.

Enjoy your beverage of choice, just do so in moderation. You are not going to strike it rich by following these steps but you can save a substantial amount. Can’t do them all? Start with one. The first step is usually the hardest.

Before you know it you will new ways to save. Do something productive with the money you just saved. Pay off your credit card, get an IRA, and pare down a loan.

Anything to be better off today than you was yesterday.There are many other steps that can be taken. These are but a few. Please share with others who may benefit.

I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommended my children do when the time comes.

Source: Stop Throwing Away Your Money

My Aha Moment, I Finally Saw The Retirement Light

The conversation that set me on the right path to retirement savings

One day I was talking with a co-worker about our upcoming family vacation plans. He boasted that his tax-refund would pay for his.  I wondered how, and cornered him into telling me how he managed to do it.

He went on to tell me about the “new” saving for retirement tool he found, the 401K.  Not new, but I wanted to know more, so I kept the insult to myself and allowed him to continue.

His tax burden the previous years had been huge so he adjusted his withholding tax to more closely mirror his total payment.

The key to his large refund was the fact that he maximized his contribution to his 401K thus lowering his taxable income.  I also contributed to mine but until that day, I contributed just enough to get the company match.

I instantly saw my mistake.  All that money went in the trash. Nothing to show for it, not experiences…nothing.  Made the necessary corrections.

Many people do not see the advantages a 401K presents both now and in the future. Hopefully you just did.  Know someone who can be helped. Get this to them.

I am not a financial advisor.  I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommended my children do when the time comes.

EMBRACING FRUGALITY FOR EASY RETIREMENT SAVINGS

 

People usually see frugality as a negative. That is because when we think of frugality, spending countless hours clipping coupons or some other mind numbing task is what comes to mind.   Not true.  Frugality is all about being economical, maximizing your dollars and finding less expensive ways to have the things you want without being wasteful and avoiding extravagance.

You don’t have to become a cheapskate. Not the same as being frugal.  Eating canned soup for dinner every night because you get them for less than two dollars is just cheap and unhealthy, not frugal.

I like to think of myself as frugal, but if I had to give up things that I enjoyed or cared about, I could not be.

I don’t clip coupons, use homemade cleaning products or cut open the tube to get to the last bit of toothpaste. There is money to be saved that way.  I prefer one-time actions that will continue to save time and time again. I replaced my regular light bulbs with more cost efficient LEDs.  I just lowered my utility bill.  The best frugal actions don’t add extra work.

First blog I ever wrote grew from a note to my kids about how easily we could save $25 a week. I used the morning cup of “coffee” their uncle buys as an example and suggested he make his at home.  Easy math when one cup equals $5.

Thing is he looks forward to that cup, needs it to get going and is not willing to give it up.  I used that cup of coffee as an example.  In reality if it is that important to you, keep it.

Eat a home cooked meal tonight and make enough to brown bag your lunch tomorrow.  Save on take-out tonight and tomorrow’s lunch. This action should save another $25.

Two simple actions, that if done only once a week, can save close to $1,500 a year. That is a decent individual retirement account (IRA).  After 30 years your IRA should be worth more than $163,000.  Not a bad return on a $45,000 investment spread out over 30 years.  What We Can All Learn From The Financial Independence Movement

Two easy frugal changes to get started saving or increasing your nest egg regardless of you plans.

I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommend my children do when the time comes.