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7 Reasons You’re Unhappy With Your Financial Situation

7 Reasons You’re Unhappy With Your Financial Situation

Christmas spending got you down? Don’t fret. Follow these tips to stop spending on the things that don’t matter and you’ll right your financial situation sooner than you can say ‘cash back’.

Spending On Things You Don’t Need

My girlfriend loves “luxury.” Before we started dating, she always used to take cabs, dry clean her clothes, and spend too much money at the bar. My parsimonious ways have helped her change those habits. Now we walk or take public transportation, dry clean only our finer clothing, and if we do decide to go to a bar, we try to have one drink (and rarely is it a top-shelf liquor).

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Spending on Many Poor-Quality Things Instead of The Good Stuff

The old saying ‘buy good, have good’ still rings true. I remind myself of this when clothes shopping, especially. It’s much better to dress in the European manner of owning a smaller, but more classic and expensive wardrobe than in the American tradition of having a closet full of clothes that were once fashionable and which we no longer enjoy wearing. The same goes for shoes—it may make you feel good to wear new clothes while they’re still new, but unless you love that shirt, it’s not worth buying.

Spending Too Much On Dining Out

I love to eat out too, but I try not to do it more than a couple of times a week. Cooking at home always saves money, especially if you’re cooking for more than one person at a time. If you are cooking only for yourself, try to cook twice as much and bring your leftovers to the office for lunch.

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Spending Instead of Saving

You need to save a little bit from every paycheck, whether you plan to spend it on a rainy day or a 401k. Too often we don’t diversify our savings, so that all of our money goes into the short-term (for savings between six months and two years) without focusing on the mid-term (three to five years) or the long-term (ten years plus). Different kinds of investments, such as savings accounts, mutual funds, and government bonds can help you spread your assets wisely.

Spending On What Doesn’t Mean Much To You

Consider what you love to spend money on most of all. Is it travel? Electronics? Giving gifts? Whatever it is, set aside money for it, and sacrifice your other expensive priorities. It may take a month or so to get used to, but once you start spending on what you want, instead of what you’re used to, it will make for more savings. Plus, these new habits will dissuade you from impulse buying and help you value what you are saving for when you finally do buy it.

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Spending Money When You Don’t Have It

If you really want to improve your financial situation, get rid of your credit card debt. Unless you’re charging to change your own life or fulfill a dream you’ve always had, do not spend more money than you make. And if you are going to charge large amounts in order to achieve something you’ve long desired, make sure you are prepared for the future lifestyle sacrifices this will require.

Spending Time Worrying About How Much Other People Spend

People have different agendas and different life plans. Maybe your friends are making more money than you are. But before jealousy rears its ugly head, consider that maybe they won’t make as much as you will in the future. We all have different paths in life, so don’t focus on what your friends have.

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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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