Thursday, July 3, 2008

Guest Post ---- Your Credit Cards Can Save You Money

Below is a great post from fellow personal finance blogger Miranda who edits for if you enjoy her post be sure to check out Destroy Debt.

It seems counterintuitive that a personal finance writer would advocate the use of credit cards, but that's what I do -- provided that you can use your credit card responsibly and pay it off every month. Just like so much else in this life, credit cards themselves aren't evil. But using them in a way that is detrimental can result in a great deal of trouble. But if you use them the right way, your credit cards can actually save you money.

Choosing the right rewards

First of all, don't just choose any card with any old rewards program. You need to find a rewards program that works well for you -- offering you the rewards that you will actually use. Compare offers and decide what will benefit you the most. Whether you want travel points, cash or consumer goods, you need to pick a rewards program that will provide you with what you need.

Be warned: Too many different cards, with too many different rewards, can dilute the effectiveness of your rewards program. Instead, choose no more than three that you want to work on.

Create a plan for building credit card rewards that can save you money

Any financial planning tool -- including credit cards -- requires, well, a plan. You need to decide how you are going to amass rewards. However, the key here is to only spend money on things you would buy anyway. Here is an example of how I spend my money, and which credit cards I use to pay for them:

  • Capital One No Hassle card: All grocery store purchases, gas and recurring bills. Receive miles that I can redeem for airfare or other travel. Last year: Free round trip ticket to New York to visit my husband's family. This year: Free round-trip ticket to Phoenix, AZ to see my grandfather. Planning to use the rest of the points for car rental and for hotel while taking a mini-vacation within the trip to New York.
  • Upromise card: All online purchases. Percentage of purchases goes into an account that is in turn invested into a tax-preferred 529 college savings plan for our son.
  • Cash back card: Large consumer purchases. Once the reward is $10, a check is sent. Almost every time we make a large purchase (computer, TV, sofa, etc.) we get a check in the mail. That check immediately goes into our emergency fund -- which is a high yield savings account. It's not the only money we put in there, but it gives the fund a periodic boost.

Retirement is our most important goal, but we find that we can work toward our next most important goals (defraying travel costs to see family and helping our son pay for college) without having to spend extra money.

Warnings when using credit cards in this manner

It is important to take heed. Without a plan, you can quickly fall into the trap of not paying off your credit cards each month, and entering the cycle of debt (and the attendant interest). Here are some things to remember when using credit cards to save you money:

  • Once you start paying interest, the value of your rewards is eroded and can even be destroyed. So pay off your credit cards each month.
  • Make sure that you have the money before you buy something. That way you will be able to pay off the credit card at the end of the month.
  • Be aware that going over you limit or paying late can mean being locked out of your rewards. You won't be able to access them until you are back under your limit, or you've made your payment (and paid your late fees).
  • Late fees and over the limit fees can erode the value of your rewards.

If you plan carefully and use your credit cards in a constructive manner, you will find that your credit card companies are paying you -- instead of you paying them.

Miranda Marquit edits information on debt consolidation for

Tuesday, July 1, 2008

Net Worth Update --- Looks Like the Stock Market Is Starting to Impact Me

Its July 1st which means that the 4th of July Holiday is right around the corner. It also means its time for me to update my net worth. Below is my new update.

Updated 7/1/08 Change from Previous Update Updated 5/30/08
Total Net Worth $105,413.65 $559.93 $104,853.72
Net Worth Comprised of
Retirement Savings: $29,881.15 $321.37 $29,559.78
401k $23,932.15 $361.08 $23,571.07
Roth IRA $5,949.00 -$39.71 $5,988.71
House Down Payment/CD's: $57,401.89 $157.06 $57,244.83
Future Car Savings $5,458.48 $157.76 $5,300.72
Emergency Fund/Money Market: $11,435.17 $227.89 $11,207.28
"Cash"/Checking: $1,236.96 -$304.15 $1,541.11

At first I was really concerned that I'd only increase my net worth by less than $560 because that's much less than my typical $2,000. There's two main reasons for this less than normal net worth increase, the first is that my Money Market decreased because I paid for part of my vacation that I'm taking in July the other main reason that my net worth decreased is that despite contributions of over $1700 to my retirement accounts they only increased by $321. I guess the current stock market and economy is finally taking its toll on me.

Monday, June 30, 2008

Monday's Money Funny

No Monday Funny this week. With the project from Hell and my worse than normal hours (that unfortunately will last the duration of this project) I've not been keeping as abreast of financial news as I like to and sadly didn't open a paper, magazine or website last week.

If you're fortunate enough to keep up with the news give me a shout if you find any good Money Funnies.

Sunday, June 29, 2008

Weekend Round Up

Its been an exciting week around in the PF Bloggers World this past week. A few highlights include:

Living Almost Large
explains all about IRA's.
Penelope @ Our Fourpence Worth gave tips on how to Resist the Urge to Slurge.
Master Your Card's Kristy gave a great test to determine if you're smarter than a 5th Grader when it comes to Credit Cards. (I love that TV show!)
Ashley from Wide Open Wallet shared a great story about a play it forward for coupons. Such a great idea.
Girls Just Wanna have Fund's Ginger shared tips on saving money when Vacationing.
And Seb from Pinching Copper wrote another great letter to Mr. Bernake.

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