Card Sharks: How to avoid credit card missteps

Credit cards, for those who have them and struggle mightily with them, can be summed up in one very simple word.

Evil.

The other end of the financial spectrum views credit cards for what they are: emergency funds or a line of credit that can be manipulated and used to get a higher credit score, when you know exactly how to navigate one.

That means opening a card, using it, and paying off the balance in full (or close to it) as soon as the bill comes. The other side of the coin is filled with a bevy on mistakes that, when made, are not only going to kill your credit score and ability to borrow money but make saving that much more difficult since you’ll be saddled with more bills to pay, some of which can cost in upward of a minimum payment.

The biggest mistake most make when it comes to credit cards is using them too often for the wrong reasons. Credit cards can be used to order something online when you don’t want to give your debit card out or if, again, you’re trying to build credit.

These cards were never designed to be used to charge vacations, for down payments on a vehicle, pay bills or buy groceries. If you can’t afford to hit the beach, you don’t go. If you can’t pay your bills or buy food with your money, then your budget needs reworked and thought through a few more times.

You also can’t be credit card happy and lapsing in the same breath. Opening too many credit cards or lines of credit at once only is going to serve to destroy your score and the overall picture painted by creditors of you when you apply for loans that matter, such as a home or car. The lapse part comes with your propensity for making payments past the due date. If there is one simple, commonly agreed upon principle of credit and credit cards that would be to always pay on time, even if it is just the minimum.

At the very least, the minimum payment shows that consistency and responsibility creditors absolutely need to see when they even consider you for a loan, and your credit score will reflect just how good or bad you are at being able to make payments on time.

Credit cards don’t always have to have such a bad wrap. They can be useful when the person behind the plastic card knows exactly the pitfalls and how to avoid them.

Game On: How to play catch up with your savings

Have you ever felt like, money wise, that with every passing day and dollar not saved that you’re constantly playing a game of catch up with your savings account?

What makes matters even worse is the constant barrage of expertise and opinion that states you should be converting income into savings at a rate of 5 to 10 percent with each paycheck, making sure that “nest egg” stays nice and warm (and untouched) heading toward retirement or, specifically, if something happens that you need cash up front to fix (i.e. medical expenses, home repair, etc.)

But if you aren’t saving, there must be a reason why.

And your job is to find it, correct it and start saving now, rather than later. Don’t get bogged down in the fact that you aren’t where you need to be but instead about where you want to end up when it’s all said and done and your golden years are upon you.

Playing catch up sounds daunting but it doesn’t have to be if you exercise a few budgeting maneuvers and adjust your income in the process. Income adjustment means simply that you look for ways to increase your stream of money coming into the household. Some do this with a convenient part time job or perhaps starting to sell items that you no longer need.

When you’re friend who makes less than you all of a sudden tells you that he or she paid for new furniture just on odds and ends from the basement, your ears should perk up immediately.

In addition to addressing your income, you also want to budget by taking two “wants” off the list. Incidentally, a want is something you don’t need to live, such as a $300 per month personal trainer tab or trips to and from the salon to get the works (nails, massage, pedicure, facial, etc.).

Yes, no one is going to argue that these things are fun and, at times, necessarily when stress hits an all time high, but you have to limit them to the point where you’re not spending hundreds of dollars per month in lieu of saving that cash.

That doesn’t mean you can’t ever have a massage or treat yourself to something but instead those buying impulses should be tempered for special occasions or extremely sporadic. Some have eliminated them all together and watched as saving $200 or $300 per month on “wants” turns into about $5,000 at the end of a calendar year.

Imagine how you’d feel if you had that kind of money waiting for you after 12 months of playing catch up. Not only would you have that savings account well on its way to being built but also you’ll be in the process of learning how to save, and that is more valuable than any purchase.

Worry Warned: How to finally stop being concerned with money

So don’t let the headline fool you. You should always concern yourself with money, but not in the way you might think.

When you talk about paying attention to money, that means having a budget, making sure you know what your expenses are and always try to lessen them any chance you get, so that you can save money for unexpected expenses and retirement.

That overview is what you should be “concerned” with, not so much the constant worrying you have when it comes to the almighty dollar.

Worrying about money isn’t new to the general public. You have plenty of individuals doing anything from paying bills without a budget to living beyond your means and not really understanding what the problem is.

How exactly do you stop concerning yourself with money in a way where your spending and saving is almost on auto pilot?

Well, the real trick is making sure that your budget isn’t just there, but also is updated to reflect changes in income, an added expenses or change in a line item, either more money needed or less. The ever evolving budget is something that only the really good money managers know and then do, rather than just writing on a piece of paper what they spend on the larger items or simply refuse to update and tweak as needed or is warranted.

This shows not only the ability to adapt but understanding exactly what your money situation is, and how to fix it. The real problem we find for those who can’t manage money is they don’t truly understand that a problem exists. You wouldn’t necessarily call it sticking your head in the sand, but you’d be hard pressed to see accountability when it comes to money, and that centers on worrying about having the latest and greatest products or keeping up with the rest of the world, when in actuality you can’t afford it.

And if you’re struggling debt wise, you have to address it, get it under control by any means necessary. That can start with consulting a financial planner, consolidating debt or finding some way to lower interest rates (even if it’s balance transfers that you know can be paid off during the special rate time period).

Saying or suggesting you’ll never worry about money is silly. That simply isn’t going to happen, but your concern should be that of how to continue to improve your standing, rather than wondering how you’re going to get from one money gaffe to another.

Pertinent Planning: Why smart decision can quell money concerns

If you’re not concerned about money, you should be.

In fact, the majority of people have more than just worries about money and their financial future: it is the kind of angst that keeps them up at night.

Granted, if you’re struggling financially and have a plethora of debt and can’t seem to get ahead, you’ll indeed worry on a consistent basis.

Those trepidations about money are just, since chances are your financial situation is a bit of a mess for a variety of reasons: budgeting, living beyond your means and not having everyone in the household on board with exactly how the plan should work to save money.

But quelling your issues when it comes to money centers on being able to get out in front of those concerns with the type of foresight that some of the better financial experts have and use to their advantage.

They don’t worry about money: they plan accordingly just in case it ever goes away.

And if you poll the average individual about what keeps them up at night money wise, they’ll tell you things such as losing their job or having some sort of major expense that they know they won’t be able to pay for or take care of on their own.

Other concerns include things like consumer fraud or having your identity compromised, but those aren’t things that are necessarily predicated on money decisions you make. If you have your identity stolen, and you’re totally safe on a secured web site, then sometimes bad luck follows.

This is more about those major medical bills, car repairs or home improvements that must be done, along with retirement and other money related decisions that you’re making all wrong and thus worrying about something (money) that you can regain control of on your own terms and at a moment’s notice.

For starters, budgeting is paramount in order to really start to be able to save. And budgeting isn’t defined with being able to know the amount of your car payment or mortgage and the due dates, but rather it goes far beyond that. Budgeting is about knowing all of your expenses, the ins and outs of what you’re buying, spending on and what should essentially be leftover.

Without those numbers on paper or a spreadsheet, you’re just guessing and hoping, both of which won’t get you very far financially.

No one can tell you that you won’t be worried about money: even the best at it are.

But you can mitigate some of those nightmarish financial thoughts by starting with the basics of budgeting and building out from there to rest soundly knowing you’re on the right path.

Running on Empty: Will you have enough money to see retirement through?

Do you want to make every last dollar saved for retirement actually last for your entire time you’re not working?

The answer, for everyone, should be a resounding “yes.” When polled, retirees (or ones on the cusp of doing so) say their biggest fear about retiring is simply running out of money and thus being forced back into the workforce to take on a job to cover expenses when they’re 70 plus years old.

Hello, early retirement (not really).

If you’re worried about running on empty financially as retirement comes closer or you’re in the midst of it (at least a few years in), some would argue that you didn’t do an adequate job of planning. While that has some truth to it, the argument also could be made that you might have a surprise expense here or there, as well.

So how do you make your money last or even grow as you get older and make your way safely and securely money wise through retirement?

What tends to fall by the wayside the fastest is actually having a budget beyond retirement. As much as you scrimped and saved and watched all of your dollar and everything made sense, why would you think it to be a good idea to let that disappear once you hang up your work clothes for good? Far too often, you’ll hear of people running out of money because they spend it as if there still is the same amount of income available as when they were working.

You have to adjust that budgeting process accordingly with what ever drop you have in your income and also allow your saved money to play into that. If you only have $60,000 to retire on and you made that amount of money per year when you worked, and nothing about your budget changes, you can see the major flaw in that plan.

Refinancing also can be a worthwhile option as well, even thought that word often is met by a lot of grimaces and groans. The idea that you can refinance means that you lower rates, consolidate debt and thus spend less per month without extending the payments to a degree that has you paying on a home, for example, until you’re 105 years old.

Retiring should be a time to put your mind and body at ease, and that includes what happens with your money. If you’re prepared to retire and have taken all the steps to do so expertly, that’s only the beginning as the budgeting and paying attention to your money isn’t about to let up as far as importance goes.

Off-Limits: Certain money habits are always bad ideas

Depending on who you talk to, money is greatly debated as far as what is smart, prudent and good and, of course, what you want to try to avoid.

But as much as we discuss, often time common ground eludes us on things like budgeting, paying off credit card bills and other money related issues.

There are, however, some money habits that we all can agree are bad news, no matter who you are or what perspective you take with them.

For starters, if you’re someone who pays for vacations, groceries or bills with your credit card, you’re living beyond your means and your budget needs a serious overhaul, without question. That type of behavior is not only going to put you in debt but it is a cry for help that your income is not what it needs to be.

And as long as we’re discussing credit cards, are you only paying the minimum on those? If that’s the case, you’re setting yourself up for a lifetime of debt. Instead of the minimum, why not follow the lead now being set forth by the card companies who have to tell you what amount will get you out of a debt faster, such as suggesting a $100 per month payment that will have the card paid off in three years rather than the minimum of $35 and 20 years of debt with one charge card?

Budgeting also is paramount, and if you’re one of the millions of individuals that has no budget and just earns and spends without a care in the world, you’re not doing yourself any favors as far as saving money is concerned. Budgeting is the lifeblood of saving, and without one that is true to your income, your expenses and all the little incidental buys you have throughout the course of a month or year, you’re only sabotaging your ability to save.

You’re also making it very hard to have a nest egg, savings account or emergency fund. Call it what you will but what it boils down to is you should have money in hand just in case something happens you’re not prepared for at this very moment. Otherwise, you’ll be begging, borrowing and only increasing your debt.

To go along with budgeting, you can’t overlook financial decisions you make with a budget in mind, such as spending more than 35 percent of your income on a home and thus becoming “house poor,” a term coined that suggests all of your income is being sucked up by your mortgage payment.

Money will always be a polarizing topic, but some money mistakes are blatant, obvious and so bad that the masses have no problem nodding in unison at them.

Tech-Savvy: How technology can help you save money

Do you fancy yourself as a smart, financially prudent individual? Do you have a budget, track what you spend and make sure you know what your expenses are versus your income?

If you answered “yes” to all of those questions, congratulations on being smart with money.

That isn’t to suggest, however, that you’ve reached your financial pinnacle as it relates to saving money, and in fact, you have just started.

You see a budget is more than just the basics, more than just the obvious expenses, and understanding that is going to really help you devise a budget that works, versus one that looks good on paper.

And you might not be quite as keen on those incidental expenses, and that can present a problem simply because you have expenses that aren’t tracked and thus can’t be identified. The only reason you know something is wrong is that you don’t have as much money leftover at the end of the month as you might think.

Enter the world of wonder that is technology.

As much as banking still centers on paper checks and hand made deposits, you can’t underscore just how much technology can really be an eye opener when it comes to how you spend your money beyond things such as your car payment, mortgage or other expenses you never overlook.

My forage into technology as it relates to banking started with what is called a virtual wallet, something that manages your money and, at first glance, is an elaborate, overblown ledger that is lot of colorful charts but also allow you to see where your money is going as almost the version of an adult picture book of banking.

What this showed was a penchant for overspending incidentally to the tune of nearly $900 at a well known, national convenient store famous for its made to order food and gas. The gas part is totally understood, but I was able to separate that from the actual purchases of anything from bottled water to iced tea, a cup of fruit on the go or a breakfast sandwich before work. Little did I know I was spending nearly my mortgage payment on that in just one month. Needless to say, I was appalled and realized that my previous budget that I thought was nearly perfect was hardly even worth the paper (or spread sheet) it was written (printed) on, and thus totally changed my perspective on how to budget.

That led to a better understanding of saving money and how I spend, thus creating a real plan to put money aside that actually works now.

Bad News: Debt is bad, but do we really understand why?

As much as the word “debt” carries with it a negative connotative meeting, the majority of the world, to the tune of 50 percent or greater, has at least $20,000 in unsecured debt. Sounds a little like a contraction?

If we know at the core of the money discussions that debt isn’t a good thing, why do so many people have it? Do we really realize that debt is bad, and do we assume that debt is a part of life, something no one can escape and thus we accept it for what it is, just as routine as brushing your teeth or showering?

The fact is debt is bad, and we all know it. But what tends to get in the way of that thinking is our wanting to buy what we can’t have, own what we don’t need or have the things that others do with the means to own it.

Debt gets in the way of having the things we want to have that matter, the kind of good debt we all want: buying a house, owning a car or being able to fund our education wants and needs. That type of debt is what would be considered a need, something that is going to either gain in value (house), allow us to be more efficient (car) or earn more money as we continue to learn (education).

Having debt or buying unnecessarily and not having a controlled, followed budget also keeps you from retiring on time (or early) and building a savings account in the event that something unforeseen happens, such as medical expenses, home repair or car issues that allow you to have the money on hand to fix or pay these, rather than borrow more money.

Probably the most daunting element of debt, and why we should think longer and harder about just how much it is a negative: stress. Debt and having it is extremely hard on your nerves, which in turn can cause ailments, medical issues and other relatable problems that you can draw back to when you’re fretting over how you’re going to pay your bills from one month to the next.

Yes, we know debt is bad, but yet we give it somewhat of a free pass. We take debt as a part of life we just have to cope with, rather than viewing it the way it should be, and that is as something we all should be striving to eliminate once and for all.

Retired Lament: Why you won’t be able to retire on time

For those who have retirement on the brain, you can tune out at this moment, because you’re undoubtedly well on your way to getting the funds set aside to call it quits on your terms. You have a retirement plan, and you’re following it to a tee, but sadly you’re in the minority for the most part when it comes to saving money for the day you stop working.

The rest of us have retirement on our minds, but hardly at the forefront. We want badly to have the right amount of money so we don’t have to work into our late 60s or early 70s. Our bad habits when it comes to money tend to hold us back, however.

For starters, you know retirement is important. That doesn’t keep you from spending money all too freely as a result, and you’re not so much concerned with the future as you are with present day and that means you might be inclined to buy too much house or a brand new car when a used when could save you thousands.

And then, you have those who just aren’t paying any attention to their retirement whatsoever. They don’t get involved in the company 401K, even if their employer employs a company match. If there’s nothing offered by the company, this group still doesn’t look into a retirement plan on their own or invest in an IRA to boot.

What often is overlooked when you aren’t able to save for retirement is the thought that you can’t put money aside because you have to much invested already: into debt, that is. Having too much debt means you’ll be paying on it for quite some time, and those monthly payments, particularly if you have more than just a few, are going to take away from money you could be saving and putting toward retirement.

Finally, you have to really take a long, hard look at your retirement and determine what is realistic to the point that you know when you can retire and how much you’ll need money saved wise to be able to live comfortably for more than just a few years. Often retirement numbers and goals get bloated due to the masses wanting to have a plethora of cash to travel or spend as they see fit, and don’t do it in a way that makes the most sense as far as how they’ve saved and spend for the 30 years they’ve been working.

Retiring will never be viewed under the same light as everyone, but discounting its importance is just plain silly.

Budget Believability: Do you really have budget you follow?

How many times have you written out a budget and felt really good about it, only to realize after a few months that you really aren’t paying much attention to it?
In fact, maybe that budget isn’t worth the paper its printed or written on, and at the end of the day, you still are losing money at the end of every month.

What you have written may not be what is coming to pass, quite frankly, in that your budget isn’t really working for you and is just there, doing very little to help you save money.

The real key to saving money and having a budget is paying attention to more than just the line items on it, but rather viewing a budget as an all encompassing entity that extends beyond utility bills, car payments and rent.

As much as financial experts and those adept at saving money will tell you to track every last cent you spend, that process really doesn’t do much by frustrate you and leave you questioning how someone does that and still manages to have a life, truthfully.

Instead, think about trends that you see as being issues or would be problems that are causing you to lose money in the long run, thus making saving nearly impossible. For instance, you may not think much of a movie or two being purchased through your cable company but three movies per week at nearly $7 each is costing you almost $100 per month. That trend means you’ll spend over $1200 per year on renting movies. Do you have that kind of extra money?

Furthermore, a $10 lunch bill every day seems harmless if not superbly convenient for you as far as not having to worry about packing a lunch. But that $10 means you’re spending $50 per week or $200 per month on just one meal per day. Think about the money you’re already spending on groceries and you realize you’re paying twice for food.

Incidentally, that lunch bill is costing you more than $2000 per year, hardly worth the convenience or that salad or soup you’re enjoying.

As much as you want to get super specific, the only time you want to dial down that closely is for the aforementioned purchases that come across as more trends than tedious watching. Budgeting can be done in a way that best fits the person, rather than trying to fit your square peg thoughts into the round hole of thinking that others tend to use.