Now I will talk exclusively about how I found the best use of my credit cards and other ways to maximize how you can stretch that dollar. First things first. You need to have a plan on how to get yourself out of debt. That is number one I will talk about that later on in following blogs. I honestly can say I do not have credit card debt. I have a mortgage right now and plan on having it paid in full within the next few years.
I was not always this way. I had credit card debt that made me not want to open my statements. I had money going out everywhere all the time. I cannot tell you how close I was to just packing it all up and moving to start all over again. I was not in a position to move. I decided it was time to get serious. The only difference between me and a person who is successful is what? I am one for research. I went to the library. (Free books, DVD’s, internet, music, newspapers, magazines you name it). I started to read every book I could find on finance, prosperity, positive thinking and successful people. The one thing in common is the desire to be a success. So what did success mean to me. I started to write down my goals, dreams and aspirations. I did not care about how they would work out I just knew they would.
I decided I needed to take action. In all the books I had read and individuals I had interviewed, one thing they had in common. Know where your money is going. So I decided to put on my big girl pants and get serious. How bad could it be. I would take responsibility for my spending and see where I could trim back the fat and begin my way to being prosperous and out of credit card debt. What a shock! I was spending more than I made. It was no wonder I was drowning in debt. So I wrote down all of it. Mortgage, phone, gas,heating oil, electric, cable, internet, cell phone, car insurance, medical insurance, life insurance, homeowners insurance, water, property taxes, food, clothes, gasoline, car repairs, vacation, dinners out, movies, etc.. The list went on and on.My head dropped. There was no way I was ever going to get out of this mountain of pain.
So after I had two cups of coffee and lots of pacing around I decided to stop whining. I created this and I was powerful enough to get my life back in order. That is right. I was going to do this on my own. I just did not understand how money works and with all the research I did I was going to make it work for me.
One of the first things I did was this. I stepped back from my life and said it was good. No one showed me really how to work a budget before. My parents never took the time to really explain how to take charge in this part of life. Basically, no one seems to discuss personal finances with their children. It’s the last taboo it seems.
So, I decided if credit cards got me into this, credit cards will get me out of this. As I was looking at my credit cards I was thinking how to make them disappear. I saw one credit card had an introductory rate of 1.5% for a year with a free transfer. So I gave it a shot. I decided that I would transfer the large amount into something I could work with. That went well. I was paying my credit card weekly. Yes weekly. I put myself on a strict budget. Little by little I took that giant and like David with Goliath I threw my small stone and the giant fell down. Budget here is the key. I was home at the time and on disability and decided I needed to look carefully at my finances and see where all my money is going.
With a little creative math I gave myself 36 months to wipe out my debt. I transferred money from one credit card to the other for around three years. Always read the fine print in these deals. If you wait until the last month you will be responsible for all the fees and they pile up. So this takes you really keeping track of how you are doing this. I realized that it was important to really put them in the freezer for now and just use cash. It was really hard. Not buying much for three years. However, I dropped certain “must have’s because I deserve it” out of my life. It was not a prison sentence. It was PAROLE! 36 month of my time well spent.
However, if you have a home think twice about a home equity loan. They are a tax write off. That is the good part of a loan. You need to be disciplined if you are going to use your home equity loan to pay off debt. My home equity loan is at 2.5% that is much better than a credit card at 9.9% any day. Use the same method of paying weekly and you will find that paying $50 a week times 3 years is $7800 paid off your debt. $60 a week times 3 years is $9360 paid off your debt.$75 a week times three years is $11,700 paid off your debt. $100 a week times 3 years is $15,600 paid off your debt.
Inversely use the same method for savings. It works very well. 3 year increments work for me.So back to the credit cards. I then realized. I miss traveling. Those who know me I love to travel. So you can either get a job that provides you with the perk. If not you have to make it work for yourself.
Using credit cards to make it work for you. Well it takes a bit of investment. Nothing in life is free. One thing that is free are the airlines who offer programs for loyalty. I belong to Continental Airlines, United Airlines, and Virgin Airlines loyalty programs. They work for me. I also have a major hotel chain loyalty program. They are all free to join. If it’s free it’s for me.Think Library folks. It is free internet etc..
I also look carefully at which credit cards offer the best bang for the buck. To me that translates into free airline tickets, free baggage,priority seating, and use of their clubs at the airport. I use the Presidents Club in the airports when I fly. They have free food and drinks. Plenty of comfortable seating. Free internet and magazines.It is a good place to relax before the flight. Some of the clubs have showers, lockers,and use of a business area if you need to fax information. Private office away from home.
Some of these credit cards cost for a yearly enrollment. However, it will pay for itself. For example. The Chase Presidential Plus Credit card offers 35000 points plus 5000 bonus points after a year. If you pay your bills with the credit card you will get one point for every dollar you spend. The key here is to pay everything off at the end of the month so you do not get on the carousel of debt again. For example to travel anywhere in the US including Alaska it takes 25000 points for a round trip ticket. Plus you can stay in the Presidents Club Lounge and have two free bags. The two free bags includes 2 bags per person up to four (4) in your party. So if you buy tickets for all four of your friends or family you get airline points for the tickets, plus double points if you fly Continental Airlines. You save them money by not having to pay for bags and you can invite them to the club with you. Of course they have to pay you back for the tickets. That goes without saying. You also get points for airline miles.
Hypothetically let’s make up a flight. Book a flight to Spain the miles you will be awarded as points will equal 9000. They base points on airline miles. You buy your ticket with your credit card $1000. So you are awarded 1000 points plus a bonus of another 1000 points because you used your loyalty credit card. You have accumulated 11,000 points for this trip.
Now if you pay for your monthly bills with your credit card you will be awarded however many points you pay . Monthly let’s say you spend $2500 in rent, mortgage, food, gas, electric, cable, internet, cell phone, repairs, clothes, coffee, etc..you will receive 2500 points. Times 12 months equals 30,000 points for the year . You have to link your credit card to your loyalty program it’s very important. Shop Rite has a program with One Pass which is Continental’s loyalty program. Technically you have accumulated 96000 points in one year. 96000 points you could use 60000 points for one round trip ticket to Europe. The cost $61 for processing fees. Or have two round trip tickets to Hawaii 40000 points each plus a processing fee or three round trip tickets to the US and the Caribbean 25000 points each.
The more miles you fly the closer you get to Elite status. I have made it there and there are more perks. I am upgraded to first class with my companion even though I pay economy fares. Big savings there. I am allowed free bulk head which have the more room as part of the perk.
Well that is the beginning I have more to share. So over the years I have really learned to save, budget, use credit wisely and there is much more. From buying appliances, finding the right mortgage and anything to do with life. You deserve the best life ever. Remember that. Write me and let me know what you think. Subscribe to this blog and I hope you learned something today. Stay Rich in spirit and Rich in heart. Become financially independent.