Friday, August 26, 2011

How to Use Your Credit Card Wisely

Use of Credit Card 
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A lot of people are having problem how to manage their credit card, especially in today's economy. Credit cards are very useful and very convenient in today's era. It can help us out during unwanted situation, like when you ran out of cash in a grocery; instead of going out to withdraw money at an ATM (Automated Teller Machine) just use your credit card. You can also use it in your hospital bill, fast food chain, buying a gadget and a lot more. But the thing is we need to learn to use them correctly to avoid ourselves from drowning in debt. 

Temptation of using Credit card  

Credit cards shall only be used to buy necessities and shall not be tempted to buy things that are out of your budget. I've seen a lot of new credit card users are having fun using their credit card for a reason that he or she has a big amount of credit limit, but end up struggling to pay their debt. Nevertheless, with some discipline and determination, we can avoid and control the temptation of using your credit card unwisely. The following tips are based on my experience and other peoples experience, it will help you learn to manage and take advantage of your credit cards. You can follow these tips and protect yourself from drowning to debt.

 Tips on How to Use Your Credit Card 

1)      Don't use more than 25-30% of your available credit line. Always keep in mind that your card is like real cash and budget that amount.

2)       Make it a habit to check your balance often. Every time your statement arrives, go ahead and double-check it. Be sure that there is no unknown purchase in your statement. If this happens report it immediately to your credit card provider.

   Take time to read your contract and make sure that there are no added services or features that may be charged to you.

4)       Prevent yourself not to go over your credit limit. If this happens, you will be out of control of your finances.

5)       Don't throw away your credit card receipts of your purchases. In this way you can easily prove that there is an error in your statement, if you've been overcharged.

6)       Take advantage of the promos and freebies that your provider offers. Like if you purchase a certain amount using your credit card you get a free coffee or burger. 

7)      Always pay the full amount that you used every month, think that you are just borrowing money that needs to be paid immediately. Don't borrow money more than you can afford or else, it will lead you to the credit card debt pit. In this way you can also avoid paying interest rates of your unpaid bills.

8)       Don't use another credit card to pay off another one. It is a bad move; you are putting yourself into trouble. Don't make a loan to pay your credit card, for me it is just the same thing. If your salary is not enough to pay your debt; the best thing to do is to look for an added source of income or sideline to have extra money to pay that debt.
9) Also ask your provider to waive the annual fee of your credit card, a lot of credit card users don't know that annual fee can be reversed (For Philippines only, I am not sure in other country). Some credit card providers instantly grant the request and some require you to avail one of their products or services before approving your reversal request, this is much better than paying charges getting nothing.

Thursday, August 18, 2011

Make Your own Money Jar

What is a Money Jar?
Have you ever wonder why you don’t have any savings or any investment? Even though you had worked in your company for a long time, you still not contented with what you have.  It doesn’t matter how big or how small is your monthly salary; it’s how you manage it. You can start managing your money with the help of Money Jar. This concept is a very old-fashioned way of storing some extra cash or coins in our pocket which we usually ignore, but with the help of Money Jar; you will notice the importance of that coin in your pocket. Money Jar is popularized by T Harv Eker’s author of the book, “Secrets of the Millionaire Mind.” If you haven’t read it, you should grab one and understand it.

How to Make a Money Jar?

Having a Money Jar doesn’t require you to buy it, remember every penny count. All you have to do is to look around at your house and look for some empty cans, empty candy jars or Plastic container. 

I usually used a plastic container, in this way you can also help our environment to lessen those plastic materials that usually blocks the sewerage and flood ways that causes water pollution. We are hitting two birds at the same time; we help our environment and save money. 
Cut an entry point in any part of the container, but I usually cut at the bottom and make sure that the coin fits on it. 

For final touches, put a Money Jar label on it or design it as you like; as long that it motivates you to place something on it every day or every time you got home and you have some coins in your pocket. Why? When you place money in your Money Jar daily, you will keep your attention on growing your money. It also practices yourself to learn the new Habit of Managing your Money.

What is the Purpose of Money jar?

Now, ask yourself what is your purpose in having a Money Jar. Saving money is not enough if you don’t know where to use it. It is like having a bow and arrow without a target or goal. So, set some goals!

Here are the Basic Purposes of Money Jar: 

1.        Necessity Account 

 This account is for managing your daily expenses and bills. This would include things like your rent, mortgage, utilities, bills, taxes, food, clothes, etc. Basically it includes anything that you need to live, the necessities.

2.        Financial Freedom Account 

This is for your investment. This jar is your ticket to financial freedom. The money that you put into this jar is used for investments and building your passive income streams. Never spend this money. The only time you would spend this money is once you become financially free. Even then you would only spend the returns on your investment. Never spend the principal or else you'll get bankrupt!

3.       3. Education Account 

Money in this jar is intended to further your education and personal growth. An investment in yourself is a fantastic way to use your money. You are your most important asset. Never forget this. I have used education money to buy books, CD's, attending courses or anything else that has educational value.

4.       Long Term Saving for Spending Account 

The money in this jar is for the bigger nice to have purchases. This is for your long term spending like car maintenance, laptop, furniture and gadgets.

5.        Play Account 

This is my most wanted account. Play money is spent every month on purchases you wouldn't normally make. The purpose of this jar is to cherish you. You could buy a high-priced bottle of wine at dinner, get a massage in a health spa or go on a weekend getaway. Play can be anything your heart wishes. 

6.        Give Account 

The money in this account is for charity. You can use this account to help other people or to give to family and friends on birthdays, special occasions and holidays. Money is not everything you can also give away your time instead of giving money. Help your family, friends or neighbors in their household chores or volunteer in your community. I remember the movie “Pay it Forward” if you help other people don’t let them pay you back; teach them to pay it forward.