Archives For budget

When should you close a credit card?

Corey —  October 15, 2012

Credit cards can be a good thing, or they can be very bad for a person. If you’re looking to build your credit score, then you probably look forward to doing well with your credit card.  However, if you find that you have many spending temptations, then credit cards are probably not the best thing in your life.

I personally have 3 credit cards. I pay them off every month (I’ve never carried a balance) and I use them mainly for credit card rewards. I earn a decent amount and right now I have around $200 in credit card reward points saved up for Christmas presents that I plan on buying.

Most of my friends have no credit cards. When I tell them that I have 3, they usually think I’m crazy and that I must be in major debt. There is a correct way to use a credit card! Anyways, how do you know whether you should have any credit cards though? Maybe you should even close one?

A lot of people have credit cards for many different reasons. The cash flow from month to month is nice to have, the credit card rewards can add up nicely, and you can build your credit. However, many people are scared to close their credit card because they are afraid that they will destroy their credit score.

Your credit score is important in certain situations, but if you don’t know how to properly manage your credit card or credit cards, then closing them might be a better idea for the moment for you.

Reasons why you might want to close your credit card:

1. You can’t control yourself.

Do you see your credit card as free money? The other day my friend told me how she only had a $400 limit on her credit card, BUT that she could still go out to eat because she still had around $50 left to use on it. This makes no sense of me! She also said that she’s only been paying the minimum payment since she’s gotten it because she thought that was helping her credit score.

If you see yourself going to mall just because you have credit left on your card to use, then credit cards may not be good for you. Credit on your credit card is not something that you should just be spending and racking up just because it is there and available for you.

2. You don’t want to rely on credit.

One of my friends pays for everything with cash and refuses to have credit cards. While I wish I could say that this is the way that I live, some people actually DO (of course) pay for everything with cash so that they aren’t forced to rely on money that they don’t actually have.

Be Careful.

There are things to keep in mind if you do decide to close your credit cards. The effect of closing a credit card on your credit score can vary greatly. It all depends on your credit score now, how long you’ve had the specific card and your credit limits.

Maybe just hiding your card from yourself is a better idea, so that you can keep that long standing card that you’ve had. Freezing your credit card (such as putting it in ice in your freezer) may not be a good idea because the credit card company may close your account because of inactivity.

Also, if you close an account that had a high limit, this can affect your utilization ratio. If your ratio becomes too high, then this will negatively affect your credit.

Have you ever closed a credit card? Why?

In Miscellaneous , , ,
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10 Ways to Save on Holiday Travel

Corey —  October 8, 2012

I’m sure you have all noticed that holiday stuff is everywhere now. Halloween stuff has been on the shelves for quite some time, and Christmas and winter items are starting to come out as well. It seems like just yesterday it was summer and 100 degrees out.

Traveling during the holidays can kill your budget, so there are many things to think about.

Below are ways to save on your holiday travel:

1. Think about your travel dates.

Can you be flexible with your traveling dates at all? Flying a couple of days before Thanksgiving and leaving a couple of days after will be very expensive, and also very busy at the airport. If it is possible, then try arriving or leaving the day of the holiday. Yes, this isn’t always ideal, but if it is possible, then it should be though about.

In general, days matter also. However, not when it comes to Thanksgiving though as these days I’m about to list are prime Thanksgiving traveling days. Flying on different days can also save you. Flying in on a Tuesday and leaving on a Saturday will save you much more money then leaving or coming back from your destination on Friday or Saturday.

Leaving at different times of the day can cost differently as well. Taking a 6am flight or an 11pm flight will most likely cost less than taking a flight during a more normal time.

2. Buy now.

Prices will most likely only go up from now until the holidays. There will be the occasional super sale on airfare, but would you want to risk that and possibly paying double if the sale never comes?

3. Use different airports.

Flying into airports that aren’t as busy can save you a lot of money. Farther airports might also be closer to your destination, so don’t always rule them out.

However, there are other factors to think about when doing this. How much will the additional cost is gas or a taxi cost? Can you use public transportation from this airport location?

 4. Use a Rewards Card.

If you can get any extra money back, then why not? If you already have a travel or rewards card, then look into the details to see how you can get the most money back.

5. Looks at bidding websites.

If you’re booking a hotel, try bidding on websites such as Priceline. If you look at bidding tips websites, they can tell you what most people pay and what hotels you most likely are bidding on. I greatly recommend this so that you aren’t just shooting in the dark for a price and a hotel.

6. Use Airbnb or other home rental websites.

I have used Airbnb once before, and I got a great deal. Renting a place for a couple of days is most likely much cheaper than getting a room at a hotel.

7. Get the economy car.

If you need to rent a car, then try getting the economy car. It is most likely the cheapest and will get the best gas mileage. Also, see if your hotel will spring for the rental car cost, as some hotels do this nowadays.

8. Use public transportation.

If it is possible in the place that you are going to, then trying using their metro system. It will most likely be much cheaper, and you might possibly be able to get places faster since you will be avoiding traffic.

9. Use coupons on food.

Food on vacations can be a budget buster. Try looking for coupons or specials for the restaurant that you are about to go to. Also, eating during happy hour or during lunch time will be much cheaper than eating during dinner at most restaurants.

10. Cook at your place.

If you have a kitchen in your room, then cook! Go to the grocery store and stock up on foods that you will be eating.

How do you save on holiday travel?

In Budgeting , , ,
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Starting a Budget

Corey —  August 20, 2012

When someone says budget, there’s always someone out there who lets out a huge groan. But let me tell you, budgets are not always boring! If you have an end goal in mind, maybe it could even be fun to beat your goals.

A budget can help you save for different things in your life: a house, car, college, and so many other things. You can save more now, in order to have what you want later. Or you can track your budget in order to make sure that you are on the right track.

Now, I don’t specifically track each category in my budget (even though I probably should), but I do make sure that I’m spending the amount that I want/need to.

We don’t spend more than we bring in each month, and whenever we make a purchase, we think about how it’s going to affect our cash flow, money situation and so on. As long as we stay within our budgeted amount, I am happy.

When budgeting, there are many things to keep in mind, but after a while, it’ll all come very easily to you. Try not to feel too intimidated at first, as that is how it will probably feel to you if you have not budgeted before.

Steps:

Know your full income. Many people who receive their first check from their first job are shocked by the amount that they pay in taxes. Make sure that the budget you are calculating is after-tax, or you might have a big problem. Taxes eat up a big part of your income. I’ve always heard of stories of people who would buy a house, car, etc. without knowing exactly what their after-tax monthly income would be. They would just take their annual salary amount, divide it by 12 (which is another mistake because paychecks don’t easily divide like that) and buy everything off that salary.

Determine how much you want to spend. What’s your goal? Do you want to save the complete other half of your after-tax income, put 30% towards debt, or something else? Also determine how much you want to spend in each category. I’ve always heard to not spend more than 35% of your income on housing, but of course in some areas where cost of living is more expensive, this is not always possible. Right now, our housing (mortgage, property taxes, insurance, etc.) is around 15% of our after-tax income, it used to be much more though.

Be realistic. If you’re always spending 50% of your income (or some other amount) on restaurants, clothes or something else that can be considered a “want”, then do not allocate an unrealistic number such as 20% to your “fun money” budget. Be realistic about where you are spending, and then use each budget month as a way to improve your budget :)

Include entertainment in your budget. Having no “fun” money in your budget. Making a budget and saying that you will never do anything that will require money is most likely not very realistic. Include at least a little bit if you have room for it.

Check your budget once a month. See if anything needs to be adjusted (or maybe even lowered!). This is a big step when it comes to budgeting! You need to see and make sure if your budget is actually working for you. There will most likely always be something that needs to be adjusted, and maybe you can even find areas that you can decrease, or allocate to other areas.

 Why I budget:

  1. To feel financially secure. I make sure that I spend less than I bring in, and this is so that I feel in full control of my financial life and so that I feel less stressed. I want to be able to pay off my debt and retire early.
  2. Not to sound selfish, but I also budget so that I can buy what I want and feel a little less guilty when I buy things that I do want.
  3. To travel. I love to travel and by having a budget, I am able to do more of the fun things that I want to do.

  Why do you budget?

In Budgeting , , , ,
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