If you are managing your money well, credit card usage can be a smart move - not only to build your credit score, but to make things available that you can make use of now, and can be paid out over time.
But tempering your spending with a good dose of financial management is even better. And now, the economy is forcing all of us to do just that: to manage our own personal economy with more wisdom.
There are some steps we can each take personally, that will also help our financial situation nationally.
Step 1 is to create a budget. Really get a handle on your income and your spending habits. Create a spreadsheet of all your monthly expenses, then carry around a little book and record every purchase. You may be amazed to find that the $2 cup of coffee daily adds up to $728/year. If you think you have no money left for large purchases or investments or vacations after your fixed expenses, you may be surprised to find that you do - but you're spending it on coffee you can make at home for about one tenth the cost. And then perhaps those little daily spending can be put elsewhere.
Create your own spending plan. If you were a business, you would be required to submit a balance sheet at the end of each month, to determine your financial status. So - treat yourself like a business. Keep track of your income and your spending and reconcile it each month. See where you can cut unnecessary spending...do you really need 300 cable TV channels?
There are so many military discounts available to you through so many vendors and manufacturers - maybe it pays to take advantage of some of these great products at cut-rate prices, just for the military.
Learn patience. If you can wait just a little while before buying the latest electronic gadget, chances are excellent the prices will come down.
Consider arranging automatic bill pay to avoid late fees - especially on fixed expenses like your mortgage, your car payment, and your credit cards. A history of late payments will negatively impact your credit score. And if you have a 0% credit card, you will lose that low interest rate with your first late payment - its not worth risking this valuable asset or your credit rating with late payments, ever.
Start using cash more often. It helps you to stay aware of how much money you're spending and you'll be training yourself to leverage your money better as well.
One of the single best pieces of advice I ever received was, in order to be rich, you have to feel rich. How can you feel rich when you're cutting corners? Easy. Take pride in what an excellent money manager you have become.
Wealthy people do indeed pride themselves on managing the details of their money. In a famous story about oil baron Rockefeller of Standard Oil of the 1880s, Rockfeller experimented with how many steel pins it took to seal a barrel of oil; he noticed they had been using about 30 rivets to seal each barrel, and he asked, would 29 do the job? How about 28? Then 27? When the barrel leaked, he realized he had found the precise number of rivets that would serve the purpose without wasting money - substantially less than 30, which, considering the volume of oil shipped, added up to significant dollars saved. The details count, for a lot.
These days, we all have a heightened awareness of our finances due to the current economic situation. But that is not a bad thing. It's good to take stock of your financial attitudes and actions - and most importantly to teach financial management to your children. For many families, discussing finances is taboo - but since children are not taught money management in school, it's up to you to make sure your own children are excellent money managers, just like you.
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