Archive for May 2014

Three Reasons Why You Need a Credit Card

Credit Card

Credit CardMany people make the mistake of thinking that they don?t need a credit card. While credit cards have gotten plenty of people in trouble in the past (myself included), they are nothing to be afraid of when used responsibly and appropriately. In fact, I believe they can be one of the most valuable financial tools you have available to you as long as you understand what you are doing.

 

However, if you’re struggling with debt then you may want to consider other financial tools until you’re able to get your debt paid off. That said, the rules for using a credit card responsibly are pretty simple, and should be easy to follow:

  • Pay off your balance in full each and every month
  • Don?t purchase things you can?t otherwise afford
  • Your credit line is NOT the same thing as cash, so don?t treat it that way

As long as you are smart about your use of a credit card, there is no reason not to have one or two at your disposal. In fact, there are some very good reasons to have them in your wallet such as earning rewards though cards like the US Air?card. Here are three reasons why you should consider having a card of your own.

#1 ? You Need a Credit Card to Establish Good Credit

Using a credit card regularly, and then paying off the balance on time, is a great way to establish and improve your credit score. It will show future creditors that you are a worthy credit risk and that you have a history of paying your bills on time and in full.

If you don?t use a credit card at all, it’s possible you won?t look as desirable to creditors down the line ? even if you are responsible with your money. If you do run into this it’s possible that it could make it difficult to get a decent rate on a mortgage, to a car loan as well as other important purchases.

#2 ? For Use in an Emergency

If you have an expense come up that you are not expecting, having credit available to you might come in handy. I believe that having an emergency fund?is usually preferable, but it may be the case that something completely unexpected comes up and you need access to something immediately. This could be something like needing to purchase airline tickets due to a family emergency?to needing major car repairs. That said, if you don’t know where the cash is going to come from to care for said situation, using your credit card should be considered the last resort.

#3 ? Purchase Protection

Most credit cards include some purchase protections and guarantees that might be lacking on a regular debit card. These features will vary from card to card, so make sure to find out what your card offers when you sign up for the account. In a world where fraud and other identity crimes are a bigger and bigger problem, using a credit card can provide you a layer of protection from trouble.

No method is foolproof, of course, but you may find that you have more recourse with a credit account than you do when using debit. It can be somewhat easy to get a credit card if you have a decent credit score, so it generally makes sense to have one -?even if only on an emergency basis. As long as you understand all of the terms on your card, and you make your payments in a timely fashion, credit can be a valuable part of your financial life. This is also not to mention the other benefits you can reap from credit cards with things like rewards, like through the Barclycard Arrival, you can earn from your normal spending. 🙂

 

What are some other reasons why you think you need to have a credit card? Do you have an emergency fund, or do you use your credit card as your emergency fund?

 

Photo courtesy of: Images Money

Three Simple Ways to Save Money

Save Money

Save MoneyIt isn?t breaking news that you need to save money. That is one of the first financial lessons that everyone learns, yet it can be one of the hardest ones to follow. Extra money can be hard to come by for many, and it seems like every dollar that you make has already been spent in one way or another. Saving money, even when it is a goal that you are focused on, can be easier said than done at times.

However, it isn?t impossible. By using some simple techniques, and being disciplined about your habits, you can find some simple ways to save money and improve your financial situation. Most often, it is the simple tricks that are the most effective when trying to save money. You probably don?t have to make drastic changes to your lifestyle in order to start saving money. Rather, just pay attention to the details in your day to day life and make smart decisions.

To help you get started, consider using these three simple ways to save money and watch your bank account start to grow as a result.

Save Money by Having Dinner at Home

Dining out on a regular basis is one of the fastest ways to spend your money without really noticing it. Eating out is significantly more expensive than cooking dinner at home, and it is usually not as healthy, either. By making a habit of doing some weekly grocery shopping and preparing almost all of your meals at home, you can save quite a bit of money along the way. This is especially the case if you use coupons to save money?as well as stick to a meal plan.

Not a great cook? The internet is an excellent resource of cooking tips and recipes, most of which can be found for free. After just a little practice, you might find that you enjoy your own food more than restaurant meals ? and they will be cheaper as well. This doesn’t just have to be left to dinners only though, a 2013 study shows that Americans who eat out for lunch at least twice a week spend $1,000 per year.

If that is you, just imagine what you could do with an extra $1,000 per year. In my family that will pay for a vacation or by nearly 20% maxing out a Roth IRA. I’d much rather have the vacation or put extra money in my IRA as opposed to eating out for lunch, but that’s just me. 😉

Cut Out Unnecessary Monthly Expenses

Bills that come each month can start to be a drain on your bank account if you aren?t using the goods or service that those monthly expenses pay for. Common monthly bills that can be eliminated include gym memberships, newspaper subscriptions, expanded cable packages, rented storage space, and more.

That doesn?t necessarily mean that you should cut down all of these costs if you are actually getting your money?s worth. For example, if you use your gym on a regular basis, that is probably an expense that is worth keeping. However, if you only have a few items in your storage unit, you may be able to cut back on that and find a place around the house to store them ? or even better sell them off! I’d much rather sell something I’m not using and make a little money while at it as opposed to spending more to keep crap I don’t need.

Eliminate Interest When Possible

Spending money on interest is particularly painful because you get absolutely nothing in return for it. Some interest, like that on a mortgage or even a car loan, is somewhat unavoidable for many of us. However, credit card interest can often be avoided entirely, and you will do yourself a big favor if you do so.

Make an effort to pay off your high-interest credit cards first so you can stop paying interest on them ASAP. Not only will this help you in terms of paying?off debt quickly, but it will also give you more money to save for yourself in the future. When it comes down to it, when you’re in debt you’re only enslaving yourself to someone else. In the case of credit card debt, you’re simply financing things you want at rates that are astronomical. When it’s the case of a house, it can be argued that you’re getting something of value out of it. Beyond that, debt will generally serve you no good – especially if you’re looking to actually save money in the long run.

 

What are some other simple ways to save money? What is the strangest things you’ve done to save money?

 

Photo courtesy of: 401(k)2012

Welcome to the New Wise Dollar!

Wise Dollar

Wise DollarWelcome everyone to the new Wise Dollar! For those who had been following Wise Dollar, it was started by Jose back in early 2013 and through a set of various circumstances found himself with little time to manage the blog. Having run a blog myself for almost two years now, I can attest to how time consuming managing a blog can be.

That said, I suspected Jose was having problems with the time needed to manage the site and reached out to him as I didn’t want to see the good foundation he had started go away. Long story short, I’ve purchased the site from Jose and will be looking to continue what he started. 🙂 I plan to continue building much on what Jose had previously started here on the site.

Beyond that, I’ll be looking to share basics on how to be smart when managing your money…thus the name Wise Dollar! 😉 We’ll be covering such topics as:

  • Investing
  • Wise use of credit
  • How to avoid and/or pay off debt
  • Frugality
  • A little lifestyle to boot!

Joining me in this endeavor will be one of my favorite writers in the personal finance niche, Laurie from The Frugal Farmer?as she will be sharing her voice with us several times per month.?Most of the content on the site is admittedly a little old, but we will be adding some solid new content over the next few days and weeks that will hopefully bring you back for more. 🙂

Ok, now it’s shameless plug time. If you would consider following Wise Dollar on the following social platforms that would be much appreciated:

 

Til next time everyone and thanks for following our journey!