The Philosophy of Saving

We live in a world where technology and culture allow, even demand instant gratification. We are a "now" society. If I can't remember who sings the song I just heard, I can google the title or a bit of the lyrics and I will be able to not only see who sings it, but often hear the song, and then buy it within seconds. And, as if credit cards weren't already a problem, soon everyone will be able to accept credit card payments with their smartphones. So, how can we possibly wait for anything in this world where everything is available to us now? Why should we?

Research has shown that the ability to delay gratification can lead to overall higher level success in school, careers, and relationships. This ability is also essential for anyone who hopes to save money, because if I buy every song I hear or search for, I will never make more money than I spend, so I will never save.

If you don't save, you have no cushion in case of an emergency, be it a medical emergency, a natural disaster, or an economic downturn. Those who don't save pass the burden of these emergencies on to their families and the government. Eventually, someone has to pay, and as Greece is showing us, governments can't pay for everything. It is irresponsible to always think that someone else should pay for us or bail us out when things go bad. If we have savings, we will be prepared when crises like that are upon us.

Saving money is more than an act; it's an attitude. You don't buy everything you want just because you want it, not even if you have the money. It's also not good to be a miser, but most people don't have that problem these days.

But even people who have the right attitude can have trouble saving. Money doesn't take care of itself. You have to take interest. If you don't watch yourself, you can very easily spend more money eating out than you do on your rent/mortgage. Saving money is difficult, and take practice. So don't fret if it doesn't come quickly or naturally, but keep at it, because there are few things as rewarding as providing for yourself, and having a safety cushion in case of emergencies. 


Credit: Image from virulentwordofmouse.wordpress.com

How to Handle Credit Cards

As of the end of 2008, US consumers had an average of 5.4 credit cards. At that time, Americans held $972.73 billion of credit card debt. The US population is approximately 304 million, so that's approximately $3200 of credit card debt per American, but many Americans (~23%) aren't even old enough to carry credit cards, some people simply don't want or need credit cards, and some people who have credit cards have no credit card debt at all. We should all be in one of these last two groups, and the goal of this post is to show how that is possible.

Who needs credit cards?

Not everyone needs to own or use a credit card. If you don't feel like you could control your spending with plastic in your pocket, or if past experience has proven that you can't, you may not be ready for a credit card yet. Having said that, I believe that credit cards can be very useful and can be good for most everyone.

Credit cards make tracking your expenses much easier, and free you from having to carry cash around with you. You can always have exact change. Many cards allow you to earn rewards. Wise use of credit cards can help improve your credit score, which is very important if you hope to buy a house at some point.

What card to get

There are way too many options, so here are some things to look for.

Interest Rate

This can be the least and most important aspect to look for. If you use your card correctly, you will never deal with the interest rate. However, you should be aware of the interest rate before you sign up for a credit card. Interest generally range from 12% - 18% APR.

Grace Period

The grace period is the amount of time you have to pay off the balance on your card before you begin to accrue interest. The average grace period is between 20 - 25 days. Generally, more time is better, but if you are paying attention, 20 days should be plenty of time to pay off your balance.

Membership fee

Avoid membership fees. In some cases, membership fees are a good idea, but I want to show how to use a credit card without paying a cent to the credit card companies. Why should you have to pay to spend money?

Get rewards

Even without paying a membership fee, you can get a credit card that will give you rewards like cash back. You usually get more rewards for purchases on things like groceries and gas (3-5%), and a smaller amount for other purchases (1-3%).

Check reviews

Some credit card companies are more ruthless and less friendly than others. Their current and former customers will let you know which type they are.

How to use a credit card

Don't use it as debt

If you have to get a loan to buy a TV, purse, or even candy bar, you are better off without it. Don't ever carry a balance that you can't pay off from your checking account that same day. I would say, don't even get close, but that's just my rule.

Pay off the whole balance every month

On top of the ridiculously high interest rates, if you don't pay off your entire balance, most cards have fees, and will charge you interest for the next month's balance, even if you do pay it off on time. Pay attention and make sure you pay that thing off before the grace period is up.

How to get out of credit card debt

Unfortunately, the only really good way to get out of credit card debt is to pay it off slowly, by consistently spending less than you make, and using much of the excess to pay down your debt. Most of the commercials that claim to help you reduce your debt are scams, so be careful. The best way to pay it off is to have a plan. There are several sites online that offer free debt reduction calculators to help you plan your monthly payments, so you can eliminate your debt. Some of the better tools I've found are at CNN Money's Calculator and powerpay.org. More to come on this subject later.

If you have any other tips about how to use credit cards or reduce credit card debt, please leave them in the comments.


Photo credit: forutnewatch.com

Budgets and Diets

In writing this blog, we hope no one thinks we know everything about money and finances. We mostly just want to be able to help anyone who is struggling in this area. I think it's only appropriate that our first post be about how to save money (this video is worth watching).

Saving money is a lot like dieting, but in reverse. If you burn more calories than you than you eat (or drink), you lose weight. If you make more money than you spend, you save money. That's a simple explanation, but that's really how it works. The problem that most of us have, is that we don't know how much money we are making, and how much money we are spending, until the bank statement comes (or we step on the scale, as the case may be). We don't intend to spend too much. It just seems to happen. In my opinion, the for failure in both budgeting and dieting (though I won't go into dieting here) is a failure to track.

Tracking can be time consuming and difficult. Fortunately for us, though, we have technology. We no longer have to save receipts and balance a checkbook. Here are a few tools and tips that I would suggest using to make tracking easier.

Online Banking. You don't have to wait for a monthly statement in the mail. You can check the status of your finances any time you want. Bank websites are secure, but I wouldn't suggest accessing them in public places like Starbucks, school, or the airport. Also, banking sites don't update in real time - there is generally at least a one day lag. But instead of going to each of your bank and credit card websites separately, wouldn't it be great if you could see all of your financial information in one place?

Mint.com - This is where technology really comes through. Mint.com, a free service, will track your incomes and expenses for you, and help you set up budgets for individual categories, like groceries or restaurants. When you sign up, mint will ask you for usernames and passwords for your online banking and credit card accounts. Mint is secure, and your information is safe with them. Mint will also offer ideas for how to save more money, by offering different car insurance, credit cards, or bank accounts. These may be good offers, but don't be too quick to switch. Other options for free online financial software are wesabe.com and myspendingplan.com.


These tools and ideas aren't enough alone to make sure you save money. But, this is a start. The more aware you are of what is coming in and what is going out, the better financial choices you will make. If you want to track your finances on your own, I suggest GNUcash, which is free, open-source accounting software. If you know how to do basic bookkeeping, this software will be pretty intuitive, and it's free.