What’s Your Financial Panic Point?

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What’s your zero?

In other words, what’s the point at which you start to obsessively worry about your money and actively start looking for solutions? Is it when your account balance hits $1,000? $100? $10? $0?!?!!

Yeah, me too…..or at least it used to be $0. I used to feel super relaxed about our money as long as our bank balance wasn’t at or below $0. Of course, as soon as it would dip below the zero, my solution was to let our credit card debt accumulate.This crazy tolerance for zero kept us in a spiraling cycle of debt for years!

So when we paid off our debt (the most recent and final time), I added a crucial step to my financial plan….I reset my panic point. And I added new panic points that didn’t even exist before for our credit cards.

So now I have a tolerance for zero, but it’s our credit card balances that need to stay there.


 For better viewing: click on the YouTube icon in the bottom right hand corner of the video’s window.

 

How to Totally Simplify Your Cash Flow Tracking

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No doubt about it, budgeting and cash flow tracking are the most tedious parts of getting your finances in order. Tedious, but unfortunately, necessary. I simplify my tracking process by ignoring as much of my money as humanly possible.

What does that mean? It means I have a budget category called “already spent” that is comprised of all the monthly and annual bills that I can’t avoid. Mostly, it’s the bills that stay the same every month (i.e: mortgage, insurance, property taxes, annual vehicle registrations, etc.). I budget for them separately, using Excel (see my Excel video series for step-by-step instructions), and then I roll them all up into one category. The amount of money in that category is “already spent”, so the only money I need to actually track daily are the variable spending categories that are left (i.e: clothing, groceries, gas, entertainment, etc.).

I do put the hydro and heat expenses in the “already spent” category, even though they can fluctuate, but when I’m making my new budget each January, I pad them by about $100-$300 over what I spent in the last year to make sure that each pay period, enough is accumulating in my account to cover those payments.

I automate as many of those payments as possible and when the bills come in for the others, I just pay them and rest assured the money’s there to cover them.

Watch my newest Excel video to see how I use the “already spent” category.


For better viewing: click on the YouTube icon in the bottom right hand corner of the video’s window.

 

 

Make credit a rewarding experience

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There’s a lot of online buzz lately about using credit cards for the rewards. This is something I’ve been doing with success for a while and it’s a big part of my financial strategy. I use my credit card for every single purchase I make every day; large and small and earn about $1,200 a year in cash back rewards. That’s enough to over my entire Christmas shopping bill!

The danger, of course, is you run the risk of accumulating debt. The way to avoid this risk is 2-pronged. Obviously, the first part is, don’t just spend haphazardly. You need to stay within your budget even if you’re using your credit card.

The second part is to pay off the credit card promptly to avoid paying any interest (which would effectively defeat the purpose of using the card in the first place). There seems to be some debate about how often to make those payments. I pay mine daily. Sounds crazy, but it literally takes about 30 seconds of my day and this habit guarantees me:

  • Ultimate budgetary control: I immediately see what I or my husband has spent
  • I pay no interest: the purchases show up in about 2 to 3 business days so I pay them off before they accrue any interest
  • I can ignore the monthly bills: by checking the details of what we spend online daily and paying off new charges as soon as they appear, the monthly statement becomes moot
  • I catch any potential mistakes on my credit card statement immediately

If you try this strategy and find you can’t pay off the new purchases daily, then STOP using the credit card right away. Re-visit your budget. Something’s gone wrong. Take the time to fix whatever isn’t working on your budget (refer to video #2 in my Excel series) and then only use your card for things that are budgeted for.

So, which rewards will you choose? My American readers can use this awesome tool to see which card is best for them.


 For better viewing: click on the YouTube icon in the bottom right hand corner of the video’s window.


Credit cards; Friend or Foe?

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Are you frenemies with your credit cards? Do you act like BFF’s in public, taking them out with you, using them shamelessly, but privately you resent the Hell out of them? It’s just unhealthy, so this week we’re doing couple’s therapy for you and your card!

In a few simple steps you can learn to love your cards again:

  • Choose a card that has a reward that makes you happy.
  • Apply for and receive your new rewards card.
  • Use your card for every single purchase you make every day….BUT only for things that are in your budget (this is usually where your relationship goes all wrong).
  • Pay the card before any interest accrues on the purchase and watch the rewards pile up.

It is totally possible to maintain a healthy and downright lucrative relationship with your credit card!


For better viewing: click on the Youtube icon in the bottom right hand corner of the video’s window.