Stop And Learn To Live Within Your Means

Mon Nov 10, 2008, 12:54 PM | | Posted in Finances Savings



In my various posts, I have several times mentioned about how I and my family have lived without major debts. Well, the only debt we have is our monthly mortgage. I come from a poor family, an immigrant. I was raised in a financially conservative family. I was 23 when I came to the States. Well! I guess we had to be conservative. We did not have any means of living by credit. Everything was bought with cash. If we couldn’t afford it with cash, we just didn’t buy it. Period.

We use credit card a lot here in the U.S.

Almost for every thing we purchase, as low as a couple of dollars as long as the merchant is willing to accept it. I charge a gallon of milk that cost $2.99 in my neighborhood gas station with my MasterCard. Credit card is like fire. It can be good for you or can turn against you bad and I mean real bad, bad enough that you can lose everything you own down the road.

Pay the whole amount by the due date

So far, we have always paid the whole amount in a month by the due date. I got my first credit card in 1983. In 1984, I went to England to see my brother who was a student at the time in the city of Leicester, about 110 miles to the North of London. I stayed there for more than 3 weeks.

When I came back, I had missed one bill-payment cycle. In other words, I had missed paying my bill by the due date. When I received subsequent bill the next month, the company had charged me $39 late fee and $4.96 in finance charges. I called them and explained my situation. They were gracious enough to forgive the late fee. But I had to pay $4.96 in finance charges.

That’s when I decided that I would continue to use credit card, but use it wisely and to my advantage. That was the last time that I paid more than what I owed to them in any shape or form.

Select a credit card that pays you back

In the coming weeks and months, I would point you to different credit cards that pays you back 2%, 3% and even 5%.We have two credit cards: American Express and MasterCard. We use Amex for travel-related expenses, for example, gas and hotels. On gas, they used to give us 5% rebate but because of the economy, they have lowered it to 3%. MasterCard gives 2% on groceries and other purchases.

Today, when I looked at my credit card bill online, in the last 10 months, I have accumulated more than $300 as pay back from the credit company. For some, it’s only $300, but for us, it is free money in a sense that we use credit card any ways. If they rebate certain percent of our total purchase, so what’s wrong with that. I say nothing.

Moral of the story
We may not have everything we want, but we have everything we need. Remember what Mary Ellen Edmunds once said: “We buy things we don’t need, with money we don’t have, to impress people we don’t like.” Just think about it.

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• 4 Ways to manage your credit with responsibility and dedication
• Put Your Credit And Debit Cards To Work For You
• Do you need credit counseling? Test yourself
• The challenge of living within one’s means

Information contained herein is general in nature, and is provided for informational and educational purposes only. Past performance is no guarantee of future results. Talk to your financial adviser.

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