Looking for three personal finance tips that don’t involve shredding your credit cards, vowing to never spend money on entertainment again, and eating cat food?
1) Consolidate spending onto one good credit card with solid cash back rewards or air miles. I recommend the Blue Cash Everyday Card from American Express for cash back and the Capital One Venture Rewards credit card for those who prefer earning air miles. Both cards currently offer lucrative sign-up bonuses as well. Compare them here.
Treat this new credit card as you would a debit card; by this, I mean that you spend ONLY money that you have available in your savings or checking account, and pay off the balance in full each month before the due date. This way, you earn miles or cash back, and never pay even a penny in interest charges.
Credit cards are simply a tool. Just as a knife can be misused in the wrong hands, it also has many legitimate uses. Once you have gotten in the habit of using your new card, stop using any “gimmick” credit cards you might still have in your wallet — even though some personal finance gurus may disagree with me, I HATE most store-branded credit cards. Sure, you might get 15% off the next time you are at the department store buying jeans, but these cards tend to have very high interest rates, excessive late fees and penalties, and less than state-of-the-art online account management features.
2) Track EVERYTHING. I recommend signing up for Mint.com (it’s free) and allowing their program to access your credit card activity, bank accounts, and other financial accounts. Their iPhone app is beautifully simple, and Mint provides a near real-time snapshot of where you are spending your money (restaurants, entertainment, travel, etc.), warns you when you get hit with any kind of bank fee, and provides a useful — if at times painful — view of how much you have in your deposit and investment accounts versus your current outstanding debts.
Now that I follow the “one credit card” and “track everything” principles, there is total accountability in my life: I know where I am spending every single penny. I know where I could cut back or reduce spending, if necessary. And I have good records for business and tax purposes. I don’t miss cash much at all (although I always carry some, because some chic bars and restaurants do not accept plastic of any kind).
3) Remain immune to “false prosperity” lures. What am I talking about here? Unnecessary upgrades and cost increases that don’t actually add much: why pay more for “business” broadband Internet, when your current broadband plan is half the price and already fast? Why pay more for “priority boarding” when you book your flight? Sure, you may get to board the plane a few moments before the rest of us, but the plane doesn’t move until we are all on-board, and we all end up at the destination at precisely the same time. False prosperity. Meanwhile, I paid $50 less for my ticket than you did — money I can spend elsewhere.
Disclosures: We’re a credit card promotions site, and as such we maintain financial relationships with numerous banks and financial institutions, including the offers and cards mentioned or featured herein. This article originally appeared in slightly different form on Credit Card Outlaw‘s personal finance vertical.
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