I’ve known that credit cards can be good and evil at the same time depending on how you use them. Now, the point of this post is to point out the Love and Hate relationship I have with them.

The things I LOVE about credit cards:

1. REWARDS
   • Who doesn’t love a good reward? Credit card companies love to induce your spending by rewarding you with frequent flyer miles, points to buy things, and cashback!  Who doesn’t love getting rewards?
2. CHARGE NOW, PAY LATER
   • I’ll pay off this nice <INSERT LAVISH OBJECT HERE>with my credit card and pay the rest later.
3. CONVENIENT
   • I don’t have any cash on me and I have to drive far to get cash from the ATM, nor do I want to pay the ATM fees.  Here’s my credit card instead. **SWIPE**
4. AMOUNT OF CREDIT
   • WOW. I just got approved for $16,000 for my credit limit! **Evil Grin On Face** Time to splurge!
5. EASY TO TRACK
   • I can check what I’ve been spending online!

Things I HATE about credit cards:

1. INTEREST
   • I despise monthly interest, but credit card companies need to make sure you’re going to pay them back.
2. CAN HAVE MORE THAN ONE
   • If you have great credit, be prepared for credit card companies to harass you any way they can to have them sign up for more cards.
3. OVERSPEND
   • If you don’t keep track of your spending… you’ll end up drowning in debt.
4. SNAIL MAIL SPAM
   • “Transfer your balance now 0% until 2011!”, “Sign up for a new card, get 10,000 points!”  I’m not a fan paper mail, waste of paper in my opinion and it makes you more viable to ID theft if you don’t dispose of them properly.

I’m hating my credit cards right now! **shakes fist in anger**

As they say.. it takes time to heal these “financial” wounds.  Everyone has different ways of trying to pay down their debt, however I find Snowballing credit cards the most effective way of “healing” your debt than consolidating it.  I came across this awesome free Snowballing Tool to give you an idea of how it works.

I look at the same time frame now and I’ve spent $1k less!

Now this includes a raise in salary and putting more money into savings too, so I’ve probably saved a lot more than that.

Don’t you find it interesting when you go over your expenses and see how your spending habits are? It’s puzzling to see where you spend your money and ask yourself why and how did it end up there. Despite of being in a recession/depression (whatever you want to call it nowadays) you can still spend for the luxuries you enjoy! You just have to know how to save and spend wisely.

Well what do you mean spend for luxuries and still save?

I like to do a lot of things, which means I have to spend money to enjoy them. If you really want to do something, you do it.  So I wanted to save more money.  Sacrifices had to be made, but I can still have fun!

I’ve cut back on my “entertainment” and “hobby” expenses, which include going out to the club/bar ($40 a night) and snowboarding ($150 a trip). Since I’ve been cutting back on that, I’ve actually reallocated the money spent on those activities to either travel, put more into savings, or put it into my business.

I’ve also scaled back on eating out as well. I love to dine at fancy restaurants; can’t help it, it’s just something I like to do. Who wouldn’t love to dine on a steak and lobster meal every now and then or maybe have a fancy salad for lunch.  Yea.. I was feelin’ the pinch on this too. So I had to make some sacrifices on it as well..  make your own meals and eat in!  On the plus side, it teaches you how to be a better cook too!

Money saved from cutting back can go to doing more fun things or getting that “toy” you’ve sought after for sometime.

Now what do I do with all this extra money and maintain it?

This is where it gets fun… get an Online Savings account (or a regular one). Doesn’t matter with who you sign up with. Just find one you like, especially one with a good interest rate (it’s really low right now.. I know it sucks).  ING Direct gives you $25 if you sign up with them and if I refer you I get like $5 bucks, so if you’re interested just drop me your email address.

So what the heck do I with this thing after I sign up?

Put money into it of course!  I have mine setup to take $25 out of my checking account on a weekly basis.  I call this account my “fun” account; i’m putting $100 a month into savings. Big deal it’s just $100! Look at this way, $100/month equates to $1200/year! Of course it’s a big deal, when you’re going to splurge on a cool toy or do something “fun” just pull it out of this account.  This is so you’re not spending it once your paycheck comes in.  Pay yourself first!

Be realistic when setting up financial goals for yourself. I was pretty optimistic myself, but when you look at how the money grows it becomes substantial. Maybe I’ll try saving up for that trip to Australia or London next year…

Cheers!

So if you’re still reading on, it seems that you’re ready to buy a car?  First, I’d like to inform you to DO YOUR RESEARCH!

I emphasize research because if you plan it out carefully then you won’t rip yourself off in the long run. Research involves not only the car you’re going to buy, but also factor in the loan, monthly payments, insurance, maintenance, etc.  The loan is essential [and this is where your credit score comes into play] because you want to get the best rate on your vehicle, because that $40k car can easily become $60k with interest if you don’t pay attention.  The monthly payment on your vehicle is the focal point of your purchase [unless you decide to pay thing in cash], the higher the down payment the lower your payments will be.  Another thing you’ll have to factor in as part or your monthly payments are car insurance and maintenance.

When purchasing a car I hope that you find something reasonable within your means.  This means, don’t go trying to get that BMW M5 you’ve been salivating for years if you can’t afford the monthly payments on it.  Besides if you don’t make enough green, they probably won’t even talk to you.  I’d rather have you living in some kind of establishment rather than living out of your car and I find it quite sad when people actually do that.  Just find a car that fits your budget!  If you have the money to support it, then get your dream car.  Otherwise, stick with the affordable route.  Affordable, meaning, that your monthly car payments should NOT be taking up half of your paycheck, because it’ll be well over your debt-to-income ratio which obviously makes you a large liability to the creditors out there.

Car loans are very important that I emphasize RESEARCH again, because there are TONS of them available to you.  Some are good and some are bad, do the research so you don’t fall into any traps. I may be over exaggerating a tad, but car loans are easy to find.  However, not many will give a low rate.  Some may give you the average and some may give you higher.  You’re most likely to find a gem if you look hard enough and sometimes it’s probably around the corner at your local credit union.  Credit unions, from my experience, have given competitive or even the lowest interest rates available.  Why? Because they want your business! I highly recommend checking out the local credit unions in your area first, then work your other available options.

Car insurance, like car loans, are abundant.  You can find them pretty much anywhere.  You just have to look around for the best deal.  You’ll find a lot of insurance companies marketing on TV, billboards, radio, and the like.  Most of the larger companies have comparisons of competitors prices along with theirs.  So finding a car insurance policy isn’t too hard to do.  I suggest speaking with the insurance company to point out the best policy for your needs.