Live Debt Free

Pay off debt. Save. Give. Live your mission.

  • Blog
  • Contact Us
  • Credit Scores
  • Spending
  • Investing
  • Earn Money

Useful Tips To Get Your Credit Card Spending Under Control

02.17.2011 by Guest Author //

Useful Tips to Get Your Credit Card Spending Under ControlNote:  This is a guest article from Timothy Ng.  Matt’s advice on controlling credit card spending is to not use them at all and choose instead to simply save money and use debit cards.  That said, many people do use credit cards and can benefit from the advice Timothy gives below.  God bless.

Unfortunately, most Americans have some sort of credit card debt. Credit cards are just so easy to use and the debt really adds up quickly, especially as interest rates rise. Credit card companies are not on your side. Their programs are certainly not designed to help you save appropriately and spend wisely.

As a credit card consumer, it is up to you to understand how credit works and how the credit card companies make money off of giving you credit cards. This may sound like common sense, and that’s because it is common sense. Most people know how credit card debt builds up, but it is the lesser known and hidden features of credit cards that get the average consumer into trouble. What you don’t know can hurt you.

Think About How You Spend

The best way to get your credit card spending under control is condition yourself to think wisely about how you manage your cards. First off, don’t let debt blindside you. It is so easy to swipe your card and worry about paying it off later, but if you don’t see how much you are spending each day, then the true amount can really blindside you. So in your mind you probably spent $50 this past week on groceries, but in reality it was closer to $100. By the end of the month, all these little ‘miscalculations’ in your brain add up to serious credit card debt. Avoid this by keeping a close eye on your credit card spending. Look at your account balance every two days. This will help keep you from accidentally spending too much because you know how much you have spent in just the last two days.

Next, take a hard look at your debt. Figure out how much of your monthly income goes towards paying off your credit card debt. If the percent is higher than 15%, then you have a really serious problem with spending too much money. This kind of spending may require professional help. Also, are you paying off the debt on your cards or are you paying only the minimum amount? If you are not paying off the full balance of your credit card each month, then odds are you are losing a lot of money to interest fees. This is how credit card companies sneak up on you. Your monthly spending should not require that you use a large portion of debt to get by. If you are using credit cards as more than just a convenience and credit building tool, then you need to take a hard look at how and when you spend money. You make have to cut some spending out of your budget or figure out how to add more income to your budget.

Pay Stuff Back

Not only do you have to pay the money back to the company by the end of each month, you need to condition your brain to think of credit cards as ‘loan cards’. You have to remember that you are only borrowing this money for a month and then it has to be paid back. If you are not paying the money back within thirty days, you are spending more money than the original amount you borrowed. This is always bad, as it causes your debt to grow and grow.

Smart credit card users have fewer credit cards and keep a close eye on each of these cards. They don’t use their cards for many purchases, but instead set up cards for purchasing gas or groceries or specific monthly expenses. They don’t consider credit cards to be a tool for buying clothes or DVDs. At least not on a regular basis.

Watch Out For Rewards

Credit card rewards are great. Getting free airline flights because you used a credit card is awesome. But again, it is necessary that you pay close attention to if these points are really worth it. If you have to buy more stuff each month in order to earn points, are the points worth all this extra cash by the end? Or did you just buy really expensive plane tickets? Also, if you are losing money in interest because you haven’t paid off the complete balance this month, then those reward savings just flew out the window. Rewards can be great, but make sure you are the one being rewarded, not the credit card companies.

The Benefits Of Using Your Credit Card Less

Developing a habit of using less credit cards in your everyday life can have many positive benefits. Credit cards are very useful for making large purchases, paying off an unexpected bill and developing a positive line of credit, but too many credit cards added to too much credit card use will negatively affect your life. Make your life simple by reducing the amount that you use your credit card. This will reduce the likelihood of identity theft, will make tracking your financial situation a lot easier, will reduce the amount of your hard earned money lost to hidden fees and penalties and will let you see what your monthly spending habits really look like. This will translate into less debt incurring on your card and you will have a better record of paying off this debt.

Focus On Your Spending

You will want to teach yourself how to focus on your spending habits each month, in an effort to condition yourself to think about using credit cards the correct way. For a lot of people, having  something visual to look at everyday can really help them to condition their brains to focus on their spending. By breaking down how you spend money on your credit cards each week, you will notice which purchases were useful and which were, maybe less useful. The goal is to teach yourself not to spend money that you don’t have. By doing so, you can specifically choose which purchases you want to put on your card each month and you will already have a plan for paying these charges off by the end of the month.

Timothy Ng is a personal finance writer, and has a real passion for encouraging people to compare credit cards to ensure they get the best deal. Check out his comprehensive guide to low interest credit cards where he provides an in-depth overview and analysis, to help you find a better deal.

Categories // Debt, Money Management Tags // credit cards, Debt, Spending

Vacation Planning – Better memories are not bought with more dollars!

03.12.2010 by Robert Espe //

Vacation on a Shoe String

“Better memories are not bought with more dollars!” – Robert Espe

Here at DFA we are always looking for new ways to cut back spending and save money. I know that lots of readers will probably go on vacation this year, and because vacations can cost so much, they are a great opportunity to save money. I am in fact, on vacation as I write this, so it seemed appropriate to discuss. This week I will present a strategy focusing on three key areas people should target to save money while still have an enjoyable vacation.

Back when I was younger (and poorer) following this strategy allowed me to plan a honeymoon for $300, and celebrate our first anniversary without breaking the bank. I may have more money now, but I still use this strategy to get the most bang for my buck while vacationing.

Vacation destinations

I know this article is about how to save money while actually ON vacation, but I would like to start by pointing out that the best way to save on vacations is not to go at all. Travel is expensive, and has gotten much more expensive in the last few years. For some people, it may be necessary to acknowledge that they just can not afford to take a vacation this year. However, that is too short for much of an article, and most people WILL plan to take a vacation no matter how hard I try to convince them it is an unnecessary luxury, so here are some thoughts about where you could go.

When choosing a destination, remember that closer is usually cheaper. For some reason, most people unconsciously believe they have to go somewhere else to have a good time. However, the more I travel, the more people I meet who think the places I used to live sound worth visiting. If you live in an area that bases ANY of its economy on seasonal tourism, chances are there is plenty of stuff worth seeing right in your back yard that you have never taken time to visit. This is especially true with some areas more than others… especially if there is a ton of tourism around your home. I have read that the average tourist in Chicago visits more in two weeks than one of its residents get around to seeing in their first year. If you feel you TRULY live in the middle of nowhere and there is absolutely nothing to see, I still think you could find some place new to visit a lot closer than you think. The difference in cost between a 2-3 hour drive to a locale near your home and plane tickets is considerable so give it some thought.

Fortunately, you don’t have to find these spots on your own. Every town that feels it is worth visiting already has an organization dedicated to helping people like you decide to come visit them. Hop on the Internet, and look up the Chamber of Commerce for your own town, and other nearby places you’ve never visited. They do a good job of making your own backyard look like a travel brochure, and may have some ideas on things to do you have never thought of before. Plus they have info on places to stay, eat, and shop while you are there. I did this in my own town, and the local chamber helped me find new things to do and see even after living there for 20 years.

Save on food

We all need to eat.. but eating is much more expensive once you are away from your kitchen, and since it often represents at least half the cost of a trip it is a great place to save.

First I would point out that while eating out is fun, nothing says you are not allowed to visit a grocery store while on vacation. While you may not be able to create the same type of meals you can with a full kitchen, eating simple meals even once a day on your trip could save you some big bucks. This is especially true the longer your trip is, and the more people you have with you. When travelling by car, I always keep a good cooler in the trunk, and I also look for a hotel that has at least a small refrigerator in the rooms. This not only allows me to keep groceries cool, but provides a place to store leftovers from when you do eat out, since most restaurants serve way more food than one person can eat. Speaking of hotels, I always choose one that serves breakfast, and on this trip am staying at a Marriot that serves dinner as well – 4 days a week. Depending on the number of persons you travel with, free meals may offset the more expensive room.

When you do eat out, consider drinking water with your meal. When most of us were growing up, drinks were a cheap part of eating out. These days it seems like a simple soda or lemonade will add $1.50-$3.00 to each persons bill. If that was for fresh, hand-squeezed lemonade, it might be worth it, but as it is usually the same syrup water you can get at the store for pennies on the dollar, I find it easy to pass. If I do buy something to drink, I always order the small size of something with free re-fills.

Be sure not to overlook dollar menus, or splitting entrees. Two dollar menu sandwiches are usually larger than their $4-$5 counterparts and since most entrees are too large for one person two people can split one, find room for desert, and still come out ahead.  I also find that on days where I am not very active, say I spend all day driving a car, or sitting in the hotel watching TV, I can skip lunch all together, without getting truly hungry. If I am not thinking about whether I really need to eat, I may spend more just because it is lunch time.

Shopping

Most people love to shop. I am blessed with a wife who is not a big shopper, but when we go on vacation, we still like to go out to stores and see what is out there. This is one area where the tourist industry can be a negative, because it seems like the more “touristy” an area is, the less likely it is to actually have anything worth buying. Regardless, it is still fun to browse through shops that are not available where you live, and for me, that is usually as far as it needs to go. Window shopping can be a great saver, you get the enjoyment of the shopping experience, and a day of walking around… without the expense. Now if you are thinking that you can’t go shopping without spending, here are some tricks to help.

First, and this applies to when you are at home as well, separate shopping from buying. When you are out browsing, decide in advance that no matter what you find in a store, you will not buy… at least not right then. Simply go into the store, look around, enjoy yourself, try things on, make a note of anything you want to buy, then leave.  Do this at all the stores you visit. At the end of the day, have a look at the list you made, and decide if there is anything on it worth going back to that store to buy. This eliminates impulse buying, and can save you bundles when you are surrounded by $26 T-shirts and other expensive nick-knacks you know you don’t need. Even if you decide to buy something, you will have had a chance to find the best deal.

Final Thoughts

The most important thing about any vacation are the memories of good times with family and friends, and better memories are not bought with more dollars. So pack the camera, and enjoy the time for what it is, a time to refresh and relax. You will be even more relaxed if you know that you will still have money in the bank when you return home. We would love to hear about any places you have visited that were off the beaten path, or any other creative ways you have found to save money while on vacation.

photo by epSos.de

Categories // Expenses, Spending Tags // food, save, Spending, travel, vacation

A Home Mortgage Means You Pay Double – Limited Income and Wise Spending

02.19.2010 by Robert Espe //

Home mortgage and home ownership

I came out strong enough against home mortgage in last weeks renting vs. mortgage article that I errantly gave some the impression I was opposed to home ownership; that could not be farther from the truth.  What I am opposed to is the home mortgage.  This is because a home mortgage will cost the average homeowner more than twice the asking price of their home over the life of the mortgage.  Some feel this is no big deal – as long as the monthly payment is manageable – and that quality of life issues outweigh concerns of being in debt.  My biggest concern is how much a home mortgage will steal from your future standard of living; which is true of most forms of debt although mortgages deserve special attention since they tend to be our largest debts.

Cash flow and earning potential

Most people think in terms of monthly cash flow because they pay their bills monthly – nothing wrong with that.  However, something many people fail to consider is the limit to how much money they can make in their lifetime.  This is especially true of young people – for whom retirement and cessation of work is a far off – who like to think they will make more money “some day” but may never actually see the growth they might first imagine.

For the most part what we choose to do for a living decides our wages and we can usually estimate those wage with some variation for job experience and cost of living.  Our earnings scale will be similar with others who share our occupation so using current wages and demographic data we can estimate what our income will be each year from now until we retire.

Annual income example

Let’s use me as an example.  I made about $50,000 this year.  I am on a pay scale that starts at about $40,000 but with hard work can quickly jump to about $80,000 over the next 5 years.  Then that is it.  In good years I might receive a cost of living adjustment (1.7% this year) and if I want more, I either have to have the aptitude for competitive management positions, or try to work as much overtime as I can (which has limits.)  If I wanted to make a heavy six figures, I probably should have done something else.  🙂  My little side hustle writing for DFA is nice, but it is not about to bump me over the $100,000 mark.  Even investing, as wonderful a tool as it is for preserving savings against inflation is not going to skyrocket me to new financial heights.

Future wealth example

Using my salary and an example closer to the national average salary, I created a simple spreadsheet that shows projected salary with some cost of living adjustments after 30 years of work for me and average Joe.  Before taxes, I stand to earn around $3.3 million, and Joe will earn about $1.4 million.  That looks like a lot.  After some rough adjustments for taxes however, (and who knows what those will do in the future) I am left with $2.4 million, and Joe still has about $1.1 million.  More staggering, an average inflation rate of 3%/yr results in 100% inflation every 18 years (that’s a 50% loss.)  That means after 36 years I would have just under $620,000 and Joe $298,000 of today’s dollars.  These calculations include salary increases that outpace inflation, and have not yet factored in spending any money.

Consider income limitation with home mortgage

This analysis is far from exact.  There are many variables, and it is difficult to precisely value currency, investments, and income across time.  What I wanted to demonstrate is that none of us have unlimited supplies of money, and are therefore limited in the number of things we can buy in a lifetime.

Before entering into a home mortgage make sure you roughly consider how much money you stand to earn over the course of your life.

Because most of us cannot make significant changes to our income, we can better affect our future wealth and standard of living by limiting how much we buy and spend.   The more informed we are about our earning potential, the more apt we are to use our money wisely.  These considerations are especially important when making a large purchase such as a home.  With all the other things we do to save money and get good deals, it does not make sense to turn around and spend double the price tag on a house by using a home mortgage.  I mean, does it really make sense to rate chase for savings accounts only to end up spending twice the purchase price for our homes?  No, it doesn’t.  It makes mathematical sense to parlay our wants by saving for a few years… and paying cash – if at all possible.

Financial decisions always catch up with us

Whenever we overspend, at some point in time we will have to give something up to pay for it, even if that time doesn’t come for decades… it will come nonetheless.  Consider this a plea to take greater care when making purchases.  We work very hard to earn what we have so let’s make sure we spend as wisely as possible!

Categories // Debt, Mortgages, Savings, Spending Tags // Mortgages, Savings, Spending, wisdom

  • « Previous Page
  • 1
  • 2
  • 3
  • 4
  • 5
  • …
  • 7
  • Next Page »

Popular Posts

  • Understanding & Improving your Cash Flow
  • Credit Card Debt Reduction Handbook
  • Our Monthly Debt Reduction and Savings Statements
  • Pay off Credit Cards VS Build Emergency Fund Savings - Me VS Suze Orman
  • Credit Cards - Close 'em Shred 'em & Forget 'em!
  • More Reasons to Pay Off Credit Card Debt
  • Wise Use of Paid off Credit Cards? You Decide.
  • The Whole Armor of Personal Finance
  • One World Currency - New World Order
  • Debt Testimonials - Encouraging Success Stories!

Disclaimer

Content on Debt Free Adventure is for entertainment purposes only. Rates & offers from advertisers shown on this website may change without notice: please visit referenced sites for current information. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. We respect your privacy. Privacy policy.

Popular Posts

  • Lending Club - My Review of Social Lending
  • Understanding & Improving your Cash Flow
  • Credit Card Debt Reduction Handbook
  • Our Monthly Debt Reduction and Savings Statements
  • Pay off Credit Cards VS Build Emergency Fund Savings - Me VS Suze Orman
  • Credit Cards - Close 'em Shred 'em & Forget 'em!
  • More Reasons to Pay Off Credit Card Debt
  • Wise Use of Paid off Credit Cards? You Decide.
  • The Whole Armor of Personal Finance
  • One World Currency - New World Order
  • Debt Testimonials - Encouraging Success Stories!

Disclaimer

Content on Debt Free Adventure is for entertainment purposes only. Rates & offers from advertisers shown on this website may change without notice: please visit referenced sites for current information. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. We respect your privacy. Privacy policy.

Copyright © 2023 · Modern Studio Pro on Genesis Framework · WordPress · Log in