Tag Archives: credit card

Using Your Credit Card to Manage Your Finances

Before I begin, only someone who is wise enough not to get into debt can use this method and if that person figures he is getting over their head, he should pay by cash, check or debit card. However, the wise money manager can use this method to manage his finances.

True, you may need cash and loans for big items. For instance, tollbooths and some dollar stores do not take credit cards, and neither does it look good to put your name and your credit card number in the collection plate at Church, but for most purchase, you can depend on your Master Card or Visa.

First, this will only work if your credit card carries no annual balance, has a cash-back, or points system. You must be able to pay your balance off every month and not even carry over one cent and think of your credit card as a debit card with a bonus. After so many points, you get a trip, an Mp3 player, new sheets, or whatever.

It also helps if you have a high interest savings account that you will transfer into your checking account and then after that, placing the amount you spent onto your credit card account. If you got one of those credit card insurance, it would be best to put the money on the statement before you use the card, and after a time, you will be able to estimate how much you will need.

Now many checking accounts do not carry interest unless they run into thousands of dollars, and many businesses prefer either credit or debit cards. With debit cards, the money comes out of your bank account almost instantly, whereas with credit cards, you get a little leeway.

Before you use this, you have to make sure you know what your spending habits are, because if you put almost everything on credit, and pay off each month, you cannot have surprises. So, the first thing you should do is to figure out what you cannot put on credit, the purchases you make at the Dollar Store, the odds and ends you pay cash for, and the surprises such as group wedding gifts, showers, et cetera, also anything that you cannot use your card. After this, figure out your annual payments or anything that costs considerably much. For these, you will have to deposit money into your high interest savings account and then when you have enough, you withdraw the money into your regular savings or checking account, charge the item, and then you are so many points to your goal.

After this, you make a list of what you spend each month, and then you are all set. You can now use your credit card as a debit card with no worry.

Budgeting Tips for Students

After graduation I took a trip with my friends. The trip was immense fun but it wasn’t fun when I did the expenses. When I sat down to settle the trip bills, I knew I had to be stricter with my finances. Here’s a plan I made for myself and it has continued to help me to stay on track. I hope it helps recent graduates like me.

Make a budget for variable expenses: We all have expenses that are fixed- rent and bills. But expenses such as food, laundry and other personal expenses can change. Set a budget for such variable expenses.

Track your expenses, ALWAYS: if you don’t know how much amounts to your variable expenses, track them for previous months. You are sure to come to an average amount. Then set a ceiling for how much you should spend on them and stick to this number rigidly. Don’t give up tracking. Always track your expenses.

Avoid swiping your credit card for lesser amounts: pay by cash or use your debit card to pay for smaller amounts. Smaller amounts like the 10s and 20s amount to quiet a big number on your bill. It feels good to get them out of your way when you pay by cash.

Start cooking at home, because that is much cheaper than eating out every day. And it can save you a lot of money.

Avoid eating out as much as possible. Need I say again that it can save?

Say no: you don’t need to always catch that flick with your friend or go out every weekend for dinner. It is difficult to say no but your friends will understand.

Pause before you shop: Before you are ready to swipe your card, ask yourself if you really need the item you are buying. Can you do without it? If the answer to this question is ‘yes’ you know what to do. Few days back I was in BJs doing grocery shopping. I picked up a lovely winter jacket which was costing only $30. I was tempted to buy it. I roamed the entire store with it in my cart knowing I shouldn’t buy it. Eventually I put it down and bought only the required groceries.

It can be difficult to curb yourself from shopping in the beginning. But after you see the difference it makes it isn’t that difficult. All the best!