How do I manage my credit cards

Budgets and debt go hand in hand when your talking about the long term effects of paying too much interest over time because it also affects the growth of your savings balances.

Consolidation is key 

There are many cards out there competing for your wallet space and its time you took notice on how much power the consumer really has when deciding what type of card they are going to carry and what type of perks and benefits they are going to offer. I only know of one credit card that there is a zero balance transfer fee any amount you consolidate into it barring any existing debt with the institution. The Chase Slate credit card is by far the best cards out there to get a good handle on your balances and the interest deferral for 15 months is a nice perk to boot [take it while it lasts].

Sometimes this option isn’t available, but if you followed the other steps in my blog regarding  minimalism you are on the right track because patience is truly key to success and it all begins with a strategic consolidation effort. You can also find out which card has the lowest interest rate but that’s pointless because they take on usually a 5% balance transfer fee.

Minimalism isn’t about minimum payments

This is true for your credit cards! we don’t make the minimum payments here. What we do is maximize the payments to cards we strategically want to pay off and that means pushing for maximum payment to the credits we choose to rid the balance. You can focus on one card and apply the minimum payments to other cards in an effort to pay down one as quickly as possible and move on to the next

The debt dependence mountain

This is the hardest climb down you will have to ever experience, I know it can be tough stop depending on your credit cards to maintain your lifestyle but you need to stop and need really cut those cards up or stash them somewhere out of reach. The best way to do this is cold turkey because if you notice on those credit card statements. You make payments, but you usually end up spending the equal amount of the payment or more!

This isn’t an overnight climb down but a long journey you have to take before you get down this mountain but by the time you do, you will feel lighter and more money in your pocket (picking it off the trees). The first step is creating that budget we discussed and also looking at making realistic goals to make that celebrity status you have been living non-existent.

 

Are you paying too much for your debt?

One of our biggest enemies in life is our debt whether it is recurring bills, credit cards and our loans. In a world where instant gratification is now an expectation and not a privilege, these debts are beginning to exploit that expectation and charge you a hefty price for it too. You might ask yourself why I classified recurring debt under this particular section. Well, it’s because we are underutilizing the services we are often provided and therefore overpaying on bills we can reduce or completely eradicate.

You Wouldn’t Leave Money On The Table 

You’re burning through cash without realizing the potential in managing your debt effectively to completely alter your wealth, well-being, and cash-flow. It’s important to look at any type of bill and say to yourself what is the maximum value I can reach for all the dollars spent. It’s easier said than done of course because you have to look at all your bills and figure out what types of perks, incentives, t.v shows, programs, or whatever is available to you. Now, you don’t have to go as far as me and read the disclaimer and call every 1 (800) number to find out the exact specifications, but just know a little bit about the products you use and how they work will give you an advantage over the company and over your debt. Strictly, your recurring bills should be put on a rewards credit card that earns you some cashback as these are fixed expenses that you must pay anyway and should be earning ‘free’ points on these purchases, but it should be done AFTER you have demolished the debt.

Those Bags Under Your Eyes Are Because Of Interest

Have you found yourself staying up late expecting your check to be direct deposited into your back account to make sure your bills go out on time? This isn’t how life should be for anybody. I hate the word interest. Its debilitating, chronic disease that takes the money out of your pocket and into someone else’s, I’m going to show you how you can quickly tackle debt based on how I’ve shown a lot of my good friends how to eliminate their debt strategically while not having to sacrifice to much of their own social life.

Step 1: Track your spending as much as possible

Thanks to advances in technology we can easily track our daily, monthly, and yearly spending habits through bank statements, loan statements, and reward summaries on our purchases. This is an important first step because wondering where your money is going starts by itemizing where your money is going on a monthly basis. Each person may have a different expenses based on their own life stage and its necessary to put in every cent you spend into tracking it. It can be as vague or complex as you like but first we need to be aware of how much we are spending. For instance, my friends and I found out how much exactly we were spending on food a month. I didn’t spend more than $100 whereas they were above the $800 range!

Step 2: Define what discretionary income you can allocate to your debt

This part is easy to calculate because its taking into consideration taxes and mandatory payments leaving you with the discretionary spending balance. So, you add up all the minimum payments on your debt and monthly bills this will give you an accurate indicator of how much money you actually can put towards the debts. Just because you are paying more on some cards than others doesn’t mean its an effective strategy.

Step 3: Find out how much interest your paying on each card or loan

This is the critical stage and where a lot of people trip up and where most of our strategies are going to be most at play. Some say pay your biggest debts, some say start with your smallest, and some in the middle. From a dollar savings perspective the higher the interest rate the higher probability you’re going to want to pay down that first because its technically hurting you the most

  1. I personally feel we should have small wins to keep ourselves inspired and motivated. I don’t see the point at winning 1 battle when there is a credit card war going on. Pay down the debts that you can see is having the balance go down. I noticed that keeps people inspired to continue this good pay
  2. Pay down the debt with the highest interest first
  3. Pay down the debt with the lowest balances

Its important to compound your payments once you finish paying on debt off. So, if you finished paying down one credit card. Apply the same payment to another card and so on.

Rinse Wash Repeat

Understanding how much your paying to your creditors is the first step in becoming debt free. You have to consider living a minimalist lifestyle to dig yourself out of debt, but once you see the fruits of your labor there is nothing going to hold you back from making your financial security dreams come true.

Please feel free to comment below or message me, I love helping others figure out where, how, when, and why to start paying there debts off and living a manageable lifestyle.

Keep Life Simple

Does your lifestyle cost to much?

A common problem I’ve found once we establish a set our rules for saving money and create ourselves a budget. Is that after the point where you begin to feel comfortable again with your savings balances, debt, and cash flow, many of us began to quickly slack off and revert slowly back to our spending habits again.

It can be subtle when you begin to slowly creep back into the era of living pay-check to pay-check, but other times you tell yourself “I’m good this month, I can spend a little extra” or “I’m comfortable now. I don’t need to be so frugal with my money” and there is the problem. For many of us, its easy to back to living from hand to mouth because we have known it all our lives, but it is much harder to tell yourself “no, I have to keep going this is not enough” thinking like that really changes your behaviors and the core of the problem of living beyond your means.

Lifestyle over style

Once we recognize we are not saving, pay a debt off, or managing our cash flow. We can tackle the real beast: our lifestyles. I know how hard it is to see your neighbor pulling into the driveway with a brand new car or a co-worker buying the latest iPhone while you’re still stuck with that flip phone from the dinosaur era. Now really think about it for a second, your neighbor had to finance that car with probably very little down payment and will be charged interest for 5 or 6 years and your co-worker probably just wanted a new phone while he still had a perfectly good phone that could have lasted him a good two years more before it became truly obsolete.

The Buddy System 

I learned to overcome my lifestyle choices by finding a like-minded friend that also wanted to spend less and save more. We fed off each other on monthly successes by saving an excess of $1000 a month (at the minimum) on incomes ranging from $55,000-$65,000 because we became highly frugal about the way we wanted to spend our money. Instead of going out each and every day we would hang out at each other’s houses and smoke hookah, play cards, watch movies, play some Call of Duty, or just study together because we are both attending school and working full time.

Strategically making our lives busier resulted in going out less, less gas, and less needless spending helped us each achieve the yearly goals we established ourselves. Obviously, we both have different motives for spending I wanted to save a little emergency fund and he was looking to put a great down payment on a house.

We began mid-January and running right into the most expensive time of the year December.  I saved roughly $21250 whereas, he saved $26400 the best part about all of the massive savings is we were both able to take trips that did not affect our savings goals! I went to Dubai and Vietnam for a few weeks with a budget of $5k and did a smaller trip to Cancun which cost $1500 and that was the only major expenses we had for the year!

All in all, find a buddy to keep you accountable and on track with your savings target, or debt pay down schedule if that’s what you’re intending to do. Keep life simple.

3 Steps to Create a Simple Budget

Understanding standing your spending and saving is the first real step to getting yourself out of a deficit each month! Let’s face it a lot of our worries come from the fact we enjoy spending our money and spend very little time actually thinking about how hard we worked to earn it. When I first started to help my friend I made him get all his credit cards, bank, and loan statements in one massive pile to tackle the task of understanding where his money is going!

Step 1: Find out where all that money is going

Track Your Spending

This may sound easy, but don’t underestimate where all your money goes in a day because we usually earn a livable wage, but blow it quickly over the weekend or spending it on certain days when we lose sight on how much time we used up to get it! Remember that the most important thing is to consider every single purchase you have made. I want you to include every small payment and every penny in your calculation. Otherwise, we aren’t going to have the accuracy we want!

Step 2: Make a list of where your money goes

Categorize where you are spending 

Break down your expenses into blocks where you can easily find out where all your money goes in a month. You can make it as simple or as complicated as you like, but I want you to think that if you make the list more detailed and specific the greater the potential for you to truly find out where your money goes in a month and what you are spending on. Make it simple or complicated, but you will find out the most important thing of all. Are you spending more than you are earning

Step 3: Make it realistic and budget accordingly 

Build the Budget

Collecting all that raw data has really shown you where all your money is going and now its time to really build that budget that you can follow. Here is the trick, I don’t want you to go cold turkey on me. Build a realistic budget that you can create and reinforce a good habit of saving or paying down your debt. This is a marathon, not a sprint. Don’t squeeze every penny you earn into a budget that isn’t going to work. The best way to do it calculate your disposable income and take 10% of it as start and gradually increase it to some number that you are comfortable to put away without touching or feeling like your social life is in ruins because you went over budget and cant go out!

Keep Life Simple!

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