One of the best things that my dad taught me with this credit card is: you only use it when you HAVE the money. I think people get so caught up with the fact that you are able to pay it at a later date, and start taking more and more advantage of that. This is when you run into trouble. I have had a lot of friends that have gotten into a lot of debt because they were getting things they wanted and not paying for it right away. Before they knew it, they were in over their head with debt. Since I received that card with my dad, around I think 14-16 years old, I have only got one other credit card. I got a "Macy's" card when I bought something expensive and wanted the discount. (Those deals for signing up for credit cards are traps!) However, I paid it off that day, right there with the cashier, and cut up the card the second I got home. Those cards have high interest rates. This is how I look at it : I have a credit card. I do not need numerous ones to do the exact same thing. I can pay all my bills from my bank account online, and don't need to go to individual sites to pay different amounts off. I just think with an outside card, there are too many risks. I can pay all at one time with my bank's credit card. So, I stick with just that. A credit card to me was to build credit. That is all. It was not to be used as an "IOU." I believe it is a huge reason I continue to stay out of debt and have great credit. Because I used it for exactly what it was, a "credit" card.. building credit.
Understanding how to use a credit card can help with debt, but saving takes strategy. Keep track of all your bills. If you know rent is X amount, and utilities is an average of Y amount. Then add those together and make sure that amount is set back in your check. I get paid every two weeks, so the last weekend of the month check, I usually take out that amount right away and pay everything off asap. Then I will know what money I have to work with. Mid-month check, I figure in how much money I am willing to set aside for my Savings Account. Usually I try to save at least 5-10% of my check.
You need to know where your money is going. It takes awhile to get in the habit of saving and realizing the little ways that you can save. For instance, my main reason for spending is FOOD. I am not much of a "going-out" type of girl, it is on occasion. With two jobs, shopping doesn't happen near as much as I wished it would ;). So, my spending goes mostly towards getting food on the go. Every morning, I was spending $4.50 a day on Starbucks. This equals $22.50 a week, $90 a month. Of course, this amount is if I would go EVERY single day, but I was going pretty close to that. I decided to knock out that cost; I decided to give it up for Lent. It was hard at first to get used to but with not spending that money, I was able to at least put $90 dollars in savings a month. That amount in a year would be saving $1080. I would save over a thousand dollars in a year, just by giving up my Starbucks. Not to mention, it was healthier for me not to have that every morning - Win-Win situation. I realized the amount of money I was spending on food. Grocery is definitely a smart option because it will be cheaper long term if you make food at home and not buy out. This is something I am trying to get better at. My point with all this is to express that you need to know where your money is going. You need to decide if you NEED the money to go there or you WANT it to. What could be taken out of your spending? You probably have something like my Starbucks; something you could get rid of and save the money instead.
There are things that I have went over with finances that I think are important in list form:
1. Use your credit card only when you HAVE the money. Do not assume that you will have enough money to pay it off when the amount is due. Put something on your credit card with confidence that you can pay it off that day if need be. If you don't have the full amount, only use in emergency. A credit card should be used to build credit.
2. Know how to live within your means. What does your living cost? What bills are necessary and come in each month? Can you get on a schedule with your checks where one can go entirely to bills because you have money left over from your last check to live on?
3. Take a look at your bank statement. Highlight what you believe was unnecessary purchases. Just by highlighting them, you are making yourself more aware of the money you did not need to spend. This will hopefully change the way you look at purchases...asking yourself, do I need this or do I want it?
4. Pick at least one thing that you can take off your daily/weekly/monthly purchases. This could be netflix... coffee... a membership... anything. Something that you could take out of your purchases, and still survive without. If you don't think you can permanently take something out, then pick one thing each month you can take away. Then, take the money you spent on that purchase, and save it.
In addition, here is an easy saving strategy. Spare change seems to be everywhere. People drop change everywhere. Remember everything adds up. Put a bowl/piggy bank in your bedroom...every time you come across change... put it in there. Every month, cash out the money in it... you will be surprised at what you can save with just loose change.
I will leave you with this... Saving means making sacrifices. Money that would have been spent somewhere else, now needs to be saved. Whatever you are saving for, remember that each time you want to buy something else. There are things you can give up in order to gain something else.
Have a great Wednesday Y'all !
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