On a recent trip to South America many things stood out, but the thing that was most staggering was not the adventure itself, but rather meeting people who had cashed in their 401K’s and those who were traveling across the country on credit. I also met those who were traveling across the country with the funds in their debit accounts, which gave me hope.
Traveling with your debit card
Understanding your cash flow, in and out, each month will help you with conscious spending. The use of your debit pulls funds that you have earned; the money is in your account and you are not borrowing on interest. With debit you are paying yourself and purchasing things that you want or need. Many people look at their bills and think “I work so hard for this money and still can not get the things I want” (hence the credit concerns that are currently effecting our national economy).
Allow “shift” to happen, shift your thoughts into the power of the money you have earned and the ability you have to pay your bills. Being grateful that you get to pay for electricity and water each month, being grateful that you get to pay your mortgage or rent. Shifting the thought that you have towards money allows the relationship to become positive and in turn may even increase the financial inflow that you have. Understanding the power that debit has as well as the power credit can have, when not abused, is a key component to financial well-being.
Traveling with your credit card
Is it all generational or cultural- this push for credit and purchases that we can not afford? Recently in Peru I met a couple riding across the country on their BMW motorbikes, they talked of withdrawing monies from the ATM from their card. The deeper the conversation went I realized they were talking about debit; they were using monies they had earned and saved because they had it…neither owned a credit card. They were Australian and the generalization to the country may be way off, but as an American in a debt riddled country it was an inspiration. The thought that life without credit could lead to 7 months traveling from coast to coast!
With the way our economy works, it is recommend to still have a credit card. The benefit of knowing that if you ever have an emergency–not the weekend sale at Macy’s–a true emergency you have a way to cover it yourself. Think of credit building in terms of G2 (G-squared), the 2 G’s that if placed on credit and paid off each month will help build your limit and increase your financial standing. Groceries and Gas. If you only use your credit card, outside of emergencies, on groceries and gas and pay it off before your interest accrues you will build your credit and if you pick the right card you will also earn rewards (trips, gift cards… even cash). Those rewards can even be placed back into your banking account thus creating the full circle of debit vs. credit.
Today’s post is brought to you by Danell Lynn, M. Ed. Photo courtesy of Wade Stubbs, Bergaliaboys.com
Christmas is a time for generosity and joy. But too often generosity turns into the desire to please those around us with gifts. Our children demand the latest toys and technological wonders or you simply want to give them what they want. Gift exchange means finding gifts for a host of family, friends and even co-workers. When you know what others are spending and what other children are receiving from their parents, it is difficult not to go all out with your own spending. However, giving gifts you cannot afford, hurts you and your family once those bills come due. Here are tips to help you avoid debt this and every Christmas.
- Realize you don’t have to give your children everything they want. That shiny “something” will soon be lost or broken. As for very young children, they’ll not even notice the toy that is in a nice, big box. They’ll play with the box. Give your children things they will enjoy for longer than a day. These do not have to cost a great deal of money. For example, craft a toy from a box for that little one to play in.
- Commit to staying out of debt. Make a list of everyone for which you purchase gifts. Figure out how much you can spend on gifts without going into debt. Do not be influenced by what others spend. Think in terms of meaningful gifts rather than cost. If the figures still don’t add up, consider what other Christmas expenses you can cut. These might include a fancy new outfit. It might mean cutting down on the amount spent on a holiday party.
- As soon as one Christmas is over, start a savings account for the next Christmas. Have money automatically added to the account every payday. You can also keep a Christmas jar at home and add extra change at the end of each day and the unexpected money received during the year.
- Keep the list of those for whom you purchase gifts at Christmas handy. During the year, buy gifts for the recipients and put them away to be wrapped and given at Christmas.
- For family, get together and agree to a “green” Christmas by either re-gifting, passing on an unused item to someone who would appreciate it, or by encouraging gift givers to make their gifts. Crafting can become a family affair and even become a tradition of giving gifts that may not be technically perfect, but are one-of-a-kind creations from the heart.
- Always pay cash. There is something about using a credit card that makes individuals spend more than intended. A credit card doesn’t seem like money, not even debit cards. Making a budget and using cash helps you process how much you are spending and how much you have left. This makes you more careful in how and on what you spend your money.
- While children should be given at least one special gift, as a family, you can choose to give of your time or money to charity instead of buying expensive gifts for one another.
You can avoid debt at Christmas with commitment and planning.
This article was written by Phill representing CompareLogbookLoans.co.uk – an independent financial website bringing together and comparing available logbook loans.
I recently discovered a service that gives you free access (no strings attached) to your credit score: Credit Karma. I first heard of Credit Karma at the Financial Blogger Conference this year. To be honest I’m not sure what took me so long. Unlike other ‘free credit report’ services out there Credit Karma does not sell your information or require a subscription. Instead they monetize similar to Mint through targeted offers.
Getting Started
Signing up for Credit Karma is fairly painless. It’s a three step process. First you create your account (login credentials), second you fill in the required personal information (name, birthdate, last four of social, etc.) and finally you confirm your identity by answering questions that may be on your credit. It took me about 4 minutes to sign up and get to my credit score.
The Good
What’s great about Credit Karma is that it not only gives you your credit score for free, it also gives you tools to help estimate your credit score based on certain scenarios. Let’s say you want to take out a new credit card or request a credit limit increase. Run that through their simulator to see how it might affect your credit score. This could also work if you were considering taking out a new loan, say for a car. Or if you are interested in closing down a credit card or line that you have. You can do it all and figure out how your credit score might change. I say might because it’s certainly not guaranteed. Oh and did I mention that Credit Karma is free?
The Bad
My biggest complaints with Credit Karma are 1) it’s a bit busy and somewhat difficult to navigate through the different screens and 2) the offers aren’t always relevant or useful. Neither of these complaints are a game-breaker, especially such a useful and completely free service.
The Bottom Line
If you aren’t already using Credit Karma what are you waiting for? It only takes a few minutes to sign up and is absolutely, completely, no-string-attached free. Seriously good work Credit Karma!
