Go Get Your New Car!

Your neighbor just bought the brand spanking latest car of his “dreams”.  How long did he dream of it, the thing just came out?   He will probably trade it in within three years for his upgraded “dream” ride.

You don’t need to do him one better. Forget about keeping up with the Joneses. They don’t pay your mortgage, car note or any other bill for that matter. Forget about impressing them because that is the real reason for keeping up.

Not saying you should trade-in your car for a bike, or drive your car until it becomes a rust bucket, but a new car every two or three years is a terrible financial move.

Buy certified pre-owned with factory backed warranty. This is like buying new, with the added benefit of saving thousands of dollars and ride it until you can ride it no more.  No plug here, just a little smarts!  .

Go ahead and buy that car.   Every summer while you are stuck in rush-hour traffic in your new car, dreaming about lounging in paradise; St Lucia, Cancun or Tenerife. I am there toes in the sand, refreshing beverage in hand, while you wish you could. It’s OK you are sitting in your NEW car.

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.