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These Things Might Be Behind Your Expenses

These Things Might Be Behind Your Expenses

Whatever you may believe, making money in today’s world is always possible with a little dedication. With a little bit of ingenuity and hard labor, anybody can earn enough to afford the basic essentials in life. Making money is not the problem — keeping it is where things get a bit tricky.

Have you ever noticed that your pleasantly impressive paycheck thaws into meager scraps mere days after you receive it, and you haven’t the slightest idea where those dollars go? If the answer is yes, this article is for you. Let’s take a look at what causes your expenses to grow and how to improve the situation.

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1. You Don’t Use Discounts

There are saving enthusiasts who claim that systematic use of loyalty cards, promotional events, coupons, and periodic discounts can save you thousands of dollars every year. You may find entire manuals on how to do this online. While these guides can be completely legit, keeping track of promotions and cutting coupons may be tiresome and time-consuming. An interesting alternative is the Slimcard — a card that can be used instead of all loyalty cards, in any country, for any transaction.

2. Your Business Doesn’t Have A Financial Plan

If you run a business, a lot of your expenses may be boiled down to inefficiencies and poor organization. There is, unfortunately, no quick and easy solution to this problem. The answer is to create an effective financial business plan on your own or hire a specialist to do it in your stead. Once you do it, you will be amazed at how you managed to get any profit out of your business at all before.

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3. You Buy Things You Don’t Really Need

Let’s be honest: we all buy a lot of unnecessary things — things we don’t need or things no sane individual may ever need. Sometimes we buy something because we feel we absolutely must have it right away, but soon it gathers dust somewhere in the farthest confines of the attic.

How to distinguish the things you need from the things you will be embarrassed to have in your possession a couple of years later? A good rule of the thumb is to give yourself time to think every time you encounter something you crave to buy. Don’t buy something on an impulse. Give yourself three days and if you still want it, well, go ahead. But, more often than not, this time is more than enough to let the impulse fade and move on.

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4. You Lend Money

Old Polonius knew what he was talking about when he advised his hot-headed son against both borrowing and lending money — neither is good for you. When you lend money, even to a good friend and seemingly reliable person, you have no guarantee you’ll ever see this money again. A borrower may request more money later or tell others about how easy it is to get cash from you. This may lead to more lending and, eventually, spoil your relationships with other people.

5. You Lack General Financial Literacy

However jarring the idea may be, it’s important to consider that your problem may be rooted in the fact that you simply don’t understand some very basic and fundamental things about how money works. If words like interest rates, inflation, return on investment, and so on mean little to nothing to you, it may be an extremely good idea to get some basic financial education as soon as possible. You won’t believe how much more sense the world starts to make when you understand how money actually works.

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These are some very basic but still very important things that may cause your expenses to be unnecessarily high. Take a good look at them and ask yourself if any of these things relate to your situation.

Featured photo credit: 401(K) 2012 via flickr.com

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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