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The no-pants guide to spending, saving, and thriving in the real world.

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4 Ways to Change Your Life for the Better

Life, Parenting, Relationships

Everybody has bad days.   Everybody has horrible days.   That doesn’t matter.   The important thing is how you feel about your life as a whole.   What can you do to make your life more worth living?

1.  Get out of debt.   When you’ve got no debt to pay, you have more options and less risk.   If you’re paying $1500 just to service your debt, it will be $1500 harder if you lose your job.   If you’ve got no debt payments to make, the impact of losing an income stream is far less.    On top of that, you’ll have that much more money to do the things you love every month.

2.  Find something you love to do…and do it.    Everybody has to do things they hate.  For some, it’s cleaning up the cat’s litter box, for others, they die inside a little each time they punch a time clock.   Life isn’t all puppy dogs and ice cream, but it’s important to have a little ice cream in your life.  What do you love doing?   Is there anything you love that you can start doing?  Start a business, write a book, volunteer for a charity that matches your values, or grow the world’s largest pumpkin.  Whatever it is, it’s time to get started.

3.  Eliminate the things you hate.    Life’s too short to live with the things you hate.   If something is destroying the value of your life, get rid of it.   Now, I’m not suggesting you off your mother-in-law, but it may be worth ignoring the phone when her number shows up on the caller ID and skipping Sunday dinner with her.   If you hate your job, find another.   If you can’t find a way to eliminate what you hate, embrace it and learn to love it, or you will eventually hate more of your life than just the bit driving you crazy.

4.  Let the ones you love know you do.   Do your children know you love them?  Does your spouse?  Are you sure?   If a meteor fell on your head today, would your kids spend the rest of their lives wondering how you felt?   If your wife were in a car accident today, would there be anything you wish you would have said?   Now, today, this morning, this second is the right time to let your loved ones know you care.  Don’t wait.   If you haven’t made it a habit, it may feel awkward.   Get over it.  Your wife and kids will love you more knowing beyond doubt that you love them.    A tight bond with your family can’t be bought, it can’t be bribed, and it can’t be faked.  It is worth everything.

What’s one thing you could do today to make your life better?

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Pros and Cons of Cashback Credit Cards

Finance

English money
Image by Images_of_Money via Flickr

The news that the Bank of America is introducing a cashback credit card is of little surprise. The credit card industry is competitive and customers enjoy the thought of earning while they are spending!

There are both pros and cons of cashback credit cards however and they are not suitable for every circumstance. So, before committing to a card, consider the advantages and disadvantages.

Firstly, cashback cards can be financially profitable but this depends on whether you have the funds to make the repayments. If you are having difficulties with debt, these cards are probably not the most suitable.

The strategies for maximizing your benefits from cashback credit cards depend on making repayment deadlines. Prioritize cards that have a 0% APR introductory rate.

If you can make your repayments within this 0% interest rate, or on time each month, you will not incur any interest charges. It is important to be organized so that you always meet repayment dates.

Once the 0% APR has finished, cashback credit cards will often then revert to a high APR. If you cannot pay all your debt, these charges will mount up quickly.

If this is likely to happen to you, consider looking at alternative cards with a low but constant APR, so that you do not encounter such high charges while repaying your debt.

Cashback cards are not always the smartest move financially when it comes to outstanding debt. Although they may offer a 0% balance transfer, this is not always as simple as it sounds.

If you transfer an outstanding balance to a new card, even with a 0% APR introductory period, any repayments made will be charged against your newest purchases.

This means that it is more difficult to pay off the original balance transfer if you are also using the card to purchase new items and of course, it is very tempting to do so as you have the 0% APR available.

Be aware that if you do not pay the balance transfer amount by the end of the 0% period, you will then have to pay a much higher rate on this amount.

So you either need to be sure that you can pay off the balance transfer in full in addition to new purchases or consider using a separate card just for a balance transfer.

Although this may seem more work, it can potentially save you a great deal of money in interest charges. Remember any credit card is only worthwhile if it helps you manage your money.

Some cashback cards also have a minimum spend requirement and often this is paired with a specific time frame. Read all the criteria about the card before committing to it.

Otherwise, you could be charged for not reaching the minimum spend limit or not doing so within the required time frame. Consider these issues when choosing a card.

Cashback cards can be very useful and allow you to earn money while you are spending, but they need to be used with wisdom. Research your options to ensure you select the right card for you.

Post by MoneySupermarket.

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Mistakes Made

Finance, Life

St. Thomas Beach
Image by K. Sawyer via Flickr

My wife and I started dating when we were 19.   We married shortly thereafter, and–at 31–we have 3 kids.

Now, most of a decade into my career, with a dozen years of experience as both a husband and an adult, I think we make decent decisions.

When we were younger, though, we were dumb.   We didn’t think much past the “year” in “0% for a year”.  Our long-term financial planning was non-existent.  Heck, most of the time, our short-term financial planning usually consisted of a call to the bank to see if we had enough money to buy whatever we wanted at the moment or rushing to the bank to deposit the change we found in the couch, hoping to beat the last check we wrote.

We were never able to judge ourselves based on how happy we were.  It was always a matter of how we were doing in relation to someone else.   A relative–a close relative–is 10 years older than we are.    That means, naturally, that she had a 10-year headstart on us.   We saw the nice house, the nice cars, and the nice furniture and couldn’t help but compare it to our situation.   Their stuff was always shiny and new, while we were making repairs and ignoring rust.

That comparison always made responsible spending difficult.   We watched one friend upgrade her house twice in 2-3 years, while driving nice cars.   Why couldn’t we do that, too?

Bad logic.

In one year, we put an addition on our house, got married, bought a brand-new pickup, and spent 10 days on a ship in the Caribbean.     We did that with a gross household income of about $40,000.  Before that summer, we didn’t have a mortgage.   Since that summer, we have had a car payment, a credit card payment, and a mortgage payment.

I can still smell the scorched plastic peeling off the sides of our well-used credit cards.   That year was when we figured out how everyone else affords all of the nice stuff: they bury themselves in debt.

The debt was never a big deal to us.   Yes, money was tight.  We always had more month than money, but we also had $50,000 in available credit on the cards and a $5000 credit line serving as our overdraft protection.   Since we never missed a payment, we thought we were doing well.  After all, you don’t have to be able to afford the debt, as long as you can afford the payment, right?

After that, we started putting the nice truck to work hauling home new furniture.   Who can go wrong with 0% for a year? Surely, I’d have a raise by the time that comes due.

The same time we paid off the truck, I got a raise.  It was a good raise.   There we were, a wallet full full of balance-laden credit cards, a mortgage that we could have done without, furniture we were still paying for years later, a freshly paid-for truck, and a small stack of new money.     That meant, of course, that we could “afford” a new car that came with a payment that was–coincidentally–equal to the raise.  No problem.

Six weeks later, I got laid off.

Two weeks into the layoff, we found out that we were no longer “trying” to have another baby, we were just waiting for 9 months.

I wish(wish!) that would have been a wake-up call, but that moment of clarity was still 18 months away.   The driving obsession to get out of debt was another 18 months away.   Unemployed and expecting brat #2, I still wasn’t ready to take a rational look at my finances.   That, however is a story for another day.    Today, is my day to share my biggest financial blunders, not my successes.

What financial mistakes have you made?

It’s My Fault So Stop Me Now

Finance

One of my biggest problems with maintaining a goal is follow-through.    Three weeks or six months into pursuing a goal, it becomes incredibly easy to rationalize setbacks.    If my back hurts, it’s easy to skip some sit-ups.  If a custom knife maker offers me a good deal, it’s easy to drop a significant part of my discretionary budget on a really nice knife.   The rationalizations come pouring in when I see a good deal on Amazon.   “I need to read that book” or  “I’ve been waiting for the move forever.”  The excuses don’t matter.  As long as they are coming in, I will eventually cave to my inner impulse demon.   How do I avoid that?

I try to make myself accountable to as many people as possible. At the beginning of the year, I posted my 30 Day Projects here, for the world to see.    I post updates on a regular basis.   Admitting my failure with the sit-ups was surprisingly difficult.   I made myself accountable and fell short.  That’s hard.  Thankfully, none of you came around with a sjambok to make me regret my slip-up.   When I was doing push-ups, my wife was more than willing to let me know when I slipped into bad form to try to squeeze out a few more before I collapsed.   I count on that.

I count on my wife to help me stay on the right path.  Eliminating our debt is easily the longest goal either of us have ever set for ourselves.   Mutual support and mutual accountability are our main methods to maintain that goal.   It is, after all, a marathon, not a sprint.   When I want to buy more cookware, she reminds me that we already have something to serve the purpose.    When she wants to buy the kids new jammies, I remind her that they have more than can fit in their dressers already.    Neither of us are afraid to tell the other to return bad purchases to the store if it’s not in our budget.  When we go shopping, we go through everything in the cart before we get to the checkout, to decide if we really need everything we picked up.   We support each other.

If I couldn’t make myself accountable to my wife, my family, my friends, and–last, but certainly not least–the three people reading this, I would fold in the face of my marshaled rationalizations and leave my goals in the oft-regretted gutter.   Thanks for that.

How do you keep yourself on track?

Update:  This post has been included in the Money Hackers Carnival.

Credit Cards: My Failed Experiment

Finance

Cash
Image by BlatantWorld.com via Flickr

Back in April, we went off the cash plan.

In the two years prior to that, we paid down about $40,ooo in debt by completely forgoing credit cards.    We went on a strict budget and all of our daily expenses–other than gas for the cars–was paid in cash.   The only other exception was anything bought on the internet.  Amazingly enough, Amazon doesn’t take cash.   When that happened, the amount we spent online was taken out of the cash supply and set in a box until we could get it back in the bank.

No other exceptions.

In April, we decided that we had changed our relationship with money and could–judiciously–move back to credit card use, to take advantage of the rewards.    We’d still use the same amount we had budgeted for groceries,  clothes, and everything else.   I set up an automatic payment for the budgeted amount, so we could use the card for our daily spending and the bank would automatically pay it off every month.   What could go wrong?

Ugh.

We are not predisposed to be able to use credit cards well.   It’s just not good for us.   Credit cards  just don’t feel like real money going out.    When we were using cash for everything, we could see when money was running low, and we’d adjust our spending to stretch it out as needed.   With plastic, it just became too easy to keep spending.

For the first couple of months, it was easy to overlook the problem.   We paid my son’s vision therapy on the credit card, to get a discount on the therapy and cash in on the rewards program.    That was around $4,000.  Combined with the regular spending, it took us a couple of months to get it all paid off and current.

This month, we’ve managed to overshoot our monthly budget by $500.    We’re only halfway through the month.

This weekend, we had a fairly unpleasant conversation about money.   In the end, we decided to go back to cash-only.   It works for us, in a way that credit cards don’t.   Credit cards were a failed experiment.  We’re going back to what works.

Have you ever had to switch from cash to credit cards and back?  How did that work out?