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A Quick Method to Save Thousands for A Down Payment

A Quick Method to Save Thousands for A Down Payment

I want to start by saying that everybody’s strategy is going to be very different – we all have things we cannot live without, for some it may be cable TV, an annual trip, a gym membership or something for your family. Additionally, not everyone has the same goals. You might be saving to purchase your dream car, or even simply provide for your household. With that being said, I believe that saving requires a balance, as I might crave that really nice dinner a lot more if I never go out, or do anything that costs. Treating yourself will have you less likely to cave and revert back to old spending habits.

Recently, I had this epiphany that I am now an adult. Yes, this sounds ridiculous considering I’m into my mid-twenties, but when I received pre-approval to buy a city home on the west coast, I felt it truly hit me like that time my sister actually crushed a water bottle onto my face out of anger (Fifteen years, and this memory is still real). I live in one of the most expensive cities in the world, and I am a millennial that is entirely self-funded. How on earth would I be able to secure this, right?

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I was having coffee with one of my friends, who also has been going through this process lately, and she asked me what my strategy was, and I am sharing it now in the event that it can inspire others to help achieve their goals, while still enjoying other areas of life, as anyone can adopt this method in some way, regardless of income and lifestyle.

If you happen to have a chequing and savings account, have your income deposited into the chequing, and take a good look at this number – how much of it do you REALLY need, and how much would you spend on extra little things? This will differ for everyone during different times in life, and perhaps if you try this, it may not look like you are really saving that much – however, even if you place as little as $100 in your savings each month, this will become $3,600 in three years, which is still helpful towards your objectives and something to be proud of.

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For me, I made a goal that I would take a certain percentage of my income each month, and transfer it into my savings account, which I then do not touch or withdraw from. This creates an “out of sight, out of mind” phenomenon that results in me having to make strategies more wisely with the rest. For example, I stopped buying breakfast on the way to work, I used my debt card more and my credit card much less, all the while thinking out my trivial expenditures more and remembering the value of a dollar. I evaluate my purchases more, yet I don’t feel as though I am limited or lacking in terms of what I am able to do or consume.

As a result, I was able to achieve my goal of being approved for a condo much sooner than expected, with about 25% ready – all the while, still partaking in events or occasional coffee outings. I didn’t feel stressed or burdened by this process at all because the budgeting had already been done for me – I didn’t avoid events and activities all together, I simply became more selective until my goals were met.

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Additionally, it felt good to see how much can be saved, especially since I used to have a habit of eating out for meals, instead of attempting to craft things. If it worked for me, it may work for you!

Featured photo credit: Binyamin Mellish via pexels.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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