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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 January 2, 2019

    How Personal Finance Software Helps You Get More Out of Your Money

    How Personal Finance Software Helps You Get More Out of Your Money

    Do you know what mental health experts point to as the biggest cause of stress in the United States today? If you said “money,” then ding, ding, we have a winner!

    Three out of four adults today report feeling stressed out about money at least part of the time. People are either worried about not having enough money or whether they’re putting the money they do have to use in the best possible way.

    Your money is either in charge of you or you’re in charge of it, there’s no middle ground. Using some type of personal finance software can help alleviate some of that money stress and better allow you to manage your money effectively. Without it, you may just be setting yourself up for constant financial worry. Life is already tough enough and there’s no need to make it more difficult by simply hoping your money issues will all work out in your favor. Hint: they won’t.

    This guide will help you to understand how personal finance software can better assist with both accomplishing long term financial goals and managing day-to-day aspects of life.

    Whether it’s tracking the savings plan for your child’s college fund or making sure you won’t be in the red with the month’s grocery budget, personal finance software keeps all this information in one convenient place.

    What Exactly is Personal Finance Software?

    Think of it like the dashboard in your car. You have a speedometer to tell you how fast you’re going, an odometer to tell you how far you’ve traveled, and then other gauges to tell you things like how much gas is in the tank and your engine temperature. Personal finance software is essentially the same thing for your money.

    When you install this software on your computer, tablet, or smartphone, it helps to track your money — how much is going in, how much is going out, and its growth. Most personal finance software programs will display your budget, spending, investments, bills, savings accounts, and even retirement plans, levels of debt, and credit score.

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    How It Leads to Financial Improvement

    It shouldn’t come as a surprise, but people who regularly monitor their finances end up wealthier than those who don’t. When you were a kid, keeping track of all of your money in a porcelain piggy bank was pretty easy. As we get older, though, our money becomes spread out across things like car payments, mortgages, retirement funds, taxes, and other investments and debts. All of these things make keeping track of our money a lot more complicated.

    Some types of personal finance software can help make things a little less complicated, setting you up to meet financial goals and taking away some of the stress associated with money.

    Even if you already have a Certified Financial Planner (CFP) some type of personal finance software can be of great benefit. Whereas CFPs focus on the big picture of your money, they don’t handle the day-to-day aspects that determine your overall financial health.

    It’s also not nearly as complicated as you might think and can take out a lot of the tedium that comes with doing everything on an Excel spreadsheet or with a pad and pencil.

    Types of Personal Finance Software

    When it comes to personal finance software, it generally fits into two categories: tax preparation and money management.

    Tax preparation software such as Turbo Tax and H&R Block’s software can help with everything from filing income taxes to IRS rules and regulations and even estate plans. Plus, there’s the benefit of filing online and getting your refund check a lot faster than if you were to mail off your forms after waiting in line at the post office.

    For the purpose of this article, however, will be focusing more on the personal finance software that aids with money management.

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    Money management personal finance software will help you to see the health of your cash flow, pay down debt, forecast for expenses and savings, track investments, pay bills, and do a host of other things that 30 years ago would have practically required a team of accountants.

    When to Use Personal Finance Software

    So far we’ve gone over what exactly personal finance software is and how it can be a benefit to your money. The next logical step in this whole equation is determining when it should be used and how is the best way to go about getting started using it.

    Below are four of the most common and practical ways to use personal finance software. If all or any of these apply to you and your money, then downloading some type of personal finance software is going to be a smart move.

    1. You Have Multiple Accounts

    There’s a good chance that when it comes to your money, it’s in more than one place. Sure, you probably have a checking account, but you may also have a savings account, money market account, and retirement accounts such as an IRA or 401k.

    If you’re like the average American, you probably have two to three credit cards as well. Fifty percent of Americans also don’t have loyalty to just one bank and spread their money across multiple banks.

    Rather than spending hours typing in every detail of every account you have into a spreadsheet, many programs allow you to easily import your account information. This will help to eliminate any mistakes and give you a bird’s eye view of everything at once.

    2. You Want to Automate Some or All of Your Payments

    Please don’t say that you’re still writing out paper checks and dropping each bill in the mailbox. While it’s noble that you’re doing your part to keep postal workers employed, we’re 18 years into the 21st century and you can literally pay every bill online now.

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    There’s no need to log into every account you have and type in your routing number either.

    With personal finance software you can schedule automatic payments and transfers between all of your imported accounts. Automatic transfers will help to make sure you have the necessary funds in the right account to ensure all bills are paid on the appropriate date. Late fees are annoying and do nothing but cost you money. It’s time that you said goodbye to them once and for all.

    3. You Need to Streamline Your Budget

    Perhaps the best feature of personal finance software is that it allows you track everything going in and out of your virtual wallet.

    Nearly every brand of personal finance software out there has easy-to-read graphs and charts that allow you track every cent you spend or earn, should you choose. You might be pretty amazed when you see just how much you spent on eating out last month or if you splurged a little more than you should have on Christmas gifts last year.

    Every successful business on the planet has a budget and using personal finance software can help you trim the fat on your spending in ways that affect your everyday life.

    4. You Have Specific Goals to Meet

    Maybe it’s paying off debt or saving for up something like a European vacation. Whatever your financial goal is, whether it’s long-term or short-term, personal finance software programs are one of the savviest ways to go about reaching those goals.

    You can do everything from set spending alerts to notify you when you’re over budget to automating what percentage of your paycheck goes to things like retirement investments. The personal finance software that you choose should show you exactly how close you are to hitting those goals at any given time.

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    How to Get Started

    From AceMoney to Mint and Quicken, there ’s no shortage of personal finance software apps out there. Many of these programs are free to download and will allow you to pay bills, invest, monitor your net worth and credit profile, and even get a loan with the swipe of a finger.

    Other programs may only offer you limited services and will require a one-time fee or subscription to unlock all that they offer. These fees can often vary from as little as two dollars to 50 bucks a month.

    It’s best to start off with the free version and then gauge whether you’re able to accomplish everything you’d like or if it’s worth exploring one of the paid options. Often times the subscription programs come with assistance from financial planning and investment experts — so that can be a real benefit.

    When deciding which personal finance software program to use, it’s also important to look at how many accounts you wish to monitor. Certain programs limit the number of accounts you can add. Be sure that if you have checking, credit card, and investment accounts to monitor, that you choose a service that can monitor them all.

    Finally, when looking around for the right personal finance software that meets your needs, make sure that you’re comfortable with the program’s interface. It shouldn’t be expected that you recognize every single feature instantly, but if the features don’t seem readable and manageable to you, then you’re not as likely to use it and get the full benefits.

    Final Thoughts

    Personal finance software can go a long way in helping you to take control of your money and meeting your financial goals. It’s important to note, however, that some focus more on budgeting and expense tracking while others prioritize investing portfolios and income taxes. Explore several different programs and read reviews to find the one that’s right for you.

    In this day and age, managing one’s personal finances in a secure manner that allows the user to have a real-time visual representation of their money is easier than ever before. With the numerous applications that are out there — both free and subscription-based — there’s no reason that every person can’t take control of their money and ensure they’re making smart money moves.

    Featured photo credit: rawpixel via unsplash.com

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