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Why I’ll NEVER Cut Up My Credit Cards

Why I’ll NEVER Cut Up My Credit Cards

    It’s been just over two years since I got my first credit card. I now have three and I’m never looking back. Ah, credit cards. How do I love thee? Let me count the ways:

    ·         Credit cards track my spending. The problem with withdrawing money from an ATM and paying for everything in cash is that you often struggle to remember exactly where your money went. With credit cards, I can review the statements every month and reconcile each line item to my Quicken records to make sure even a few bucks here and there are properly accounted for. I couldn’t do that with cash.

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    ·         Credit cards boost my credit score. As a college graduate with no student loan, no car repayments, and no mortgage, credit cards have helped me ‘get into the system’ and build a strong credit profile. By using them wisely, I’ve already qualified for lower rates that I can take advantage of when I eventually buy a house. If it weren’t for credit cards, I’d pretty much be off the financial grid.

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    ·         Credit cards give me awesome rewards. Each of my credit cards rewards me in a very useful way. One gives me up to 33% off food. Another lets me earn interest on any positive balance at a rate banks would only offer if I locked in a far higher amount for a far longer time. But my favourite is a 90% discount on my monthly membership to an amazing gym. This includes free wireless internet, not to mention unlimited classes like yoga and FUN’k off (don’t ask), for just $7 a month! When’s the last time cash treated you so well?

    At this point, you might be feeling uncomfortable. Heck, you might be downright appalled. But please put down the pitchfork and step away from the comments. Allow me to offer some clarification before you write me off as yet another 25-year old on the road to disaster and destitution:

    ·         I am NOT advocating excess spending. Most people avoid credit cards because they’re too much of a temptation to overspend. Given that the key to wealth is to spend less than you earn, this makes perfect sense. Credit cards should NEVER be used to spend money on things you can’t afford. In other words, NEVER buy on credit what you can’t already buy using cash. Period. I’ve never been a particularly extravagant person, which is why I actually like the fact that I’ve had the same pair of All Stars for about five years. My credit cards are only used for things I can already afford (mostly things I have to buy anyway), which is why the charges only amount to around 25% of my income every month. Nothing gets charged that cannot be paid.

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    ·         I am NOT advocating getting into debt. Another reason people avoid using credit cards is because they fear debt. This makes sense too. Debt. It’s a horrible word that conjures up images of shackles and a burdened life. But not all debt needs to be portrayed so negatively. One of the key things I learned at Rich Dad Coaching (and wrote about in The Beauty of Debt) is the distinction between good debt and bad dad. Good debt, like that used by Robert Kiyosaki to buy investment properties or that used by Bill Bartmann to become one of the 25 richest people in America, puts money in your pocket. Yes, credit card debt is bad debt, but it won’t cost you a cent as long as you ALWAYS pay the balance off in full (and can negotiate waived annual fees). This means your cash can stay in the bank longer (earning interest as it does so) and only be used to pay off the debt when the due date arrives. In some cases, that can be as far as 55 days away. Score!

    ·         I am NOT advocating getting credit cards purely for rewards. Too many people have been tempted by the promise of low rates and other amazing benefits only to find that they were temporary offers at best. Before settling on a card, make sure you do proper research and read the fine print. Since interest rates only matter if you have existing debt that you’re trying to consolidate, you have total freedom to find a card that works for your situation. Your best bet is to find one that rewards you for purchases at stores you already use all the time and/or rewards you with benefits you can actually take advantage of. Perhaps you’ll get lucky and score a free European trip!

    In conclusion, I hope it’s clear that credit cards are not the homewreckers everyone paints them out to be. If you already have a good dose of financial discipline (control your expenses by spending less than you earn) and use them with wise self-control (pay off the FULL balance every single month), they can be a really great part of your overall plan. But if you don’t and won’t, then burn this post immediately (figuratively, of course) and stick to what you know.

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    What do you think? Have any of you had good success with credit cards to help me build my case? Would you share your story in the comments, pretty please?

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    Last Updated on April 28, 2020

    9 Millionaire Success Habits That Will Inspire Your Life

    9 Millionaire Success Habits That Will Inspire Your Life

    As technology evolves and information becomes more accessible, it has also become more challenging to define success. A lot of people are trapped in the rat race while trying to discover the actual formula for success.

    You could become overwhelmed with what tools, techniques or philosophies to imbibe while trying to get tips over the internet. At every click and turn, there are ‘how-tos and quick-fix’ on how to become successful overnight. You will find several courses, articles, videos and books on how to achieve financial success.

    But what if I tell you it doesn’t have to be complicated as people made it out to be? What if you could achieve success by merely following these 9 millionaire success habits?

    1. Read for Personal Development

    A daily habit I have discovered millionaires share in common is reading. For instance, if you are an entrepreneur, you need to read to become an efficient leader and a productive business owner. Reading helps you to grow and learn without going to a business school.

    A research conducted by Thomas Crowley indicates about 85% of self-made millionaires read at least two or more books each month. [1] Warren Buffett is one of these examples. He spends 80% of his day reading. In the early days of his investment career, he would read 600 to 1000 pages in a single day.

    While millionaires sometimes read for pleasure, they also learn to improve themselves. They read topics on leadership, how-tos, self-help, biographies, lifehacks and also follow current events.

    Here’re some recommendations for you: 25 Best Self Improvement Books to Read No Matter How Old You Are

    2. Establish Multiple Sources of Income

    Another success habit I noticed about successful people is that they don’t depend on a single income source. Every millionaire possesses multiple sources of income. This helps them to manage economic challenges and also make more money.

    They are passive income addicts. They earn interests from loans, rental income from real estate, royalties from intellectual properties, dividends from investments. They also launch a side business or run a website or sell information products.

    How income is made either passively or actively is what separates the successful from the wannabes. They are always learning ways to build multiple streams of income.

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    3. Live on a Stipulated Monthly Budget

    An average millionaire does not believe in luck and jackpot. They take the time to understand cash flow-income and expenses. Based on this, they establish a monthly budget and religiously stick to it.

    The essence of the budget is to minimize unnecessary expenses. This will help you gain complete control of your financial life. Budgeting helps you to avoid overspending to achieve your financial goals. Here’re some tips to help you stuck to your budget: 32 Hacks for Sticking to Your Budget

    4. Manage and Maximize Money

    The most significant education for a millionaire is financial intelligence. Nobody attains financial freedom without gaining financial intelligence. This is the more reason millionaire, regardless of their income, keep their knowledge about tax strategies updated.

    They always seek to reduce their tax bills. One approach they employ is by living or incorporating their business in states with no income tax.

    Do you know that about 60 companies paid $0 legally in the 2018 tax year? Some of these companies that ‘avoided'(note: not evaded) federal income tax include Chevron, Amazon, Halliburton, General Motors, Delta. Their US income was totaled at $79 billion with an effective tax rate of -5%.

    What’s the deal? They got a tax refund.

    How do they accomplish these?

    An ITEP report indicated that they have the culture of throwing huge sums at tax experts who assist them in discovering creative, as well as convoluted means of paying little tax as much as possible.[2]

    5. Avoid Debt

    Another habit that separates the millionaires from the rest of the world is how they manage debt.

    They don’t live an extravagant lifestyle; instead, they only buy what they need and can pay for. They do not book hotels and flights by using their credit cards to pay for them.

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    They are conscious of the interest rates even when they use credits cards or take loans. If possible, they try to pay with cash because of its zero percent interest rate.

    6. Set Daily Goals

    It does not matter if they are setting up a business, a career, or financial projections; they have the success habit of setting short term goals. They plan daily and weekly goals to generate momentum in achieving their long-term goals.

    Ensure you prioritize when setting daily goals. This will help you to achieve the most important to-dos on your list.

    Setting priorities will help you to focus on highly rewarding activities. If you desire financial freedom, it is wise to pursue activities that earn you thousands of dollars rather than hundreds of dollars.

    7. Don’t Act Rich

    The goal is not to act rich but to be productive. Interestingly, Thomas Stanley buttressed in his book that for the most prestige brands of cars, about 86% percent are toys of the non-millionaires. While most believe that people with huge fortunes tend to drive exotic cars, in reality the largest consumers of pricey cars are aspiring millionaires.[3]

    According to findings by Experian Automotive Researchers, 61% of individuals who earn $250,000 or more rarely buy luxury brands. Instead, they buy Hondas, Toyotas, and Fords like the rest of the world. The reason is they are not ready to spend money on premium cars that tend to drop in value in a couple of years as it would cost money. Millionaires invest in assets that appreciate.[4]

    8. Own or Buy Businesses

    In Robert Kiyosaki’s cashflow quadrant, he divided how you earn income into four quadrants. The E and the S quadrants take the left position while the B and the I are on the right side. According to Robert, it is possible to be on all quadrants, but the millionaires are not.[5]

    • E stands for employee – they work for others
    • S stands for self-employed – they work for themselves
    • B stands for a Business owner- employees work for them (500 or more employees)
    • I stand for Investors – Money work for them like Warren Buffet.

    Your goal is to move from the left quadrant to the right quadrants where you own big businesses or make money work for you.

    It is possible to become financially successful by pursuing what you love. For instance, if you love writing, aspire to be the best seller. Wealth and passion work together.

    Check out How to Start a Small Business with Little to No Money for tips.

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    9. Avoid Get-Rich-Quick Scheme

    A millionaire holds patience as an essential virtue. It takes patience to become successful, not only in finance but in every aspect of life. While it is possible to become financially successful at an early age, most millionaires hit it at age 50. They live a moderate life, invest in their future and retire rich.

    Bonus: How to Develop the Millionaire Success Habits?

    Having learned these habits, the next question is,

    How can I develop the Millionaire Success habits?

    Here are six values you will need to develop:

    Establish Your Life Vision

    You need to be clear about what you want in life to set yourself for a life of success. Your vision has to go beyond becoming a millionaire to understanding why you want to become one. Any great entrepreneur you will ever find has a clear vision and an established mission.

    Understanding why you are doing what you do will drive you to become the kind of successful person you want to be.

    Make Your Passion a Profession

    When your passion becomes your profession, work becomes pleasurable. Loving what you do enables money to flow to you and through you.

    So what’s going to be? Wake up every morning by speaking positive words into your work, love what you do, and focus on the work that brings you joy.

    Take a look at this article and learn how to make it happen: 5 Steps To Turn Your Passion Into A Career

    Focus on Solution

    Focusing on the solution means establishing the problem that you or your business address. This will help you focus on the solutions when others are faced with challenges.

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    A millionaire has a mindset that is fixed on the solution. He or she knows there’s a way out, and that every problem is an opportunity in disguise.

    Improve your problem solving skills with these tips: 6 Effective Ways to Enhance Your Problem Solving Skills

    Develop Your Leadership Skills

    Leadership skills are an asset that is indispensable if you want to develop a millionaire success habit. The more you hone your leadership skills, the more you will attract leaders who share your values.

    Be Growth-Focused

    Millionaire entrepreneurs prioritize self-improvement. Here’s how to achieve it:

    • Get a coach. Coaching will impact your life, and you will achieve peak performance in life and business when you have a life coach.
    • Be coachable. It is not enough to have a coach; you must be coachable. Sometimes, you need feedback and counsel to reposition your life and business. A coach has the wisdom and experience to counsel you from a higher perspective. The more you receive feedback and work on yourself, the more you become better at what you do and who you are.

    Flip Your Thought Pattern From Acting To Being

    It is not enough to have a millionaire success habit, you must also become a person of positive influence. This is how you can become significant. Bill Gates is not only rich; he is changing lives in Africa and different parts of the world.

    If you want to become successful, you must first be and think like a successful person. This is how resources you need can flow into your life.

    Here’s a final thought from me:

    It is not enough to do something to have something; success is about being someone who possesses what is needed to take positive and inspired actions.

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    Featured photo credit: Austin Distel via unsplash.com

    Reference

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