Don’t Pay With Cash Unless You Have To

Do you pay with cash or swipe a card?  Some will swear that paying with cash can save you money.  After all, you’re only spending what you have on hand.  This is definitely true, but that doesn’t mean cash is king.

Why We Don’t Pay With Cash

For our spending purposes, we rarely pay with cash.  The only times we do is when we have no other choice.   We don’t think paying with cash is necessarily a bad idea.  It just seems that using a card works better and offers us a few more advantages.  Here are a few.

Credit Card Rewards

We do most of our spending on three different cards. They all provide different rewards.  We pick the card we use in order to maximize our rewards.

credit card rewards
Reward credit cards can give you freebies.
  • Costco Cash Back Visa Card.  We use this card primarily for gas, restaurants, travel, and Costco shopping.  The reason is simple.  It provides 1% for all spending, but provides between 2-4% cash back on all of those categories.
  • American Express Blue Everyday Card. This is the card we use mostly for grocery shopping.  Same deal as the Costco card, in that it gives 1% on everything, but for grocery shopping you get 3%.  With our family of four that includes two very fast growing children, that extra amount adds up.
  • Southwest Visa Card.  Most of our other spending goes on our Southwest card.  This gives you one mile per dollar spent.  I’ve done the math, and at least last time I checked, the standard ‘cost’ of a flight using miles works out to be about 20% cheaper than paying in cash. We took an anniversary trip to Cancun a couple of years ago with no cost whatsoever.

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Spring Clean Your Finances With 5 Easy Steps

Spring has been pretty much absent here in Michigan.  Last weekend we had an ice storm.  Temperatures have been about eight degrees below average for the month.  Snow showers and accumulations are still a regular occurrence.  Still, spring has to come sometime, right?   We’re still hoping.  But, even if the weather isn’t cooperating, spring is still on the calendar.  Now’s a perfect time to spring clean your finances.  Here are a few easy tips to get started.

Calculate Your Net Worth

We calculate our net worth every month, so this is easy.  But if you don’t do this regularly, now’s the perfect time.  Net worth is an easy calculation.  Simply add up all of your assets.  Then add up all of your debts.  Subtract debts from assets and that is your net worth!

Compare Net Worth To Last Year If Possible

Hopefully you know your net worth from last year, in which case you can do a comparison.  If you’re doing things right, the number is higher. If so, celebrate.  Keeping regular comparison points along the way will help show you how things are going.

If you don’t have last year’s number handy, don’t fret.  Simply mark down this year’s and do the comparison next year.  It’s never too late to get started!

Run A Credit Report

You get three free credit reports per year, one from each of the major bureaus.  Now is a perfect time to run one of your free reports.  Ideally, run one report every four months, rotating between the three.

When you get your report, look through it line by line.  Make sure you recognize every account and that the balances make sense.  This will summarize what you owe and what you can potentially borrow.  It also helps to make sure nobody has opened any credit in your name unknowingly.  Plus, you can make sure there’s nothing that’s been forgotten about.

Check On Goals And Revise Them (Or Make New Ones)

If you’re like me, you set some financial goals at the beginning of the year.  Now’s a great time to check on those and see how you’re doing.  If any revisions are necessary, make them now.  Or, if you didn’t set any goals back in January, why not set some now?  It’s never too late.  Plus, you have eight months to get things done!

Clean Up Your Tax Documents

Tax season is behind us, and unless you filed an extension, your taxes should now be filed.  Now’s the time to make sure your tax records are in order.  You need the last seven years of records in the event of an audit.  Make sure you have all of those in one place and that they’re safely locked away.  We keep ours in a fireproof safe.

If you still want to keep your records beyond seven years, I absolutely think that’s a great idea.  But, make sure that you have the last seven years worth at hand.

What Spring Cleaning Do You Do?

It’s your turn.  What spring cleaning activities do you do for your finances?  Let me know in the comments below.

How To Build Credit History And Why It’s Important

I remember a story from when I was kid about a great aunt of mine.  She and my late uncle had paid cash for everything in their lives.  When they needed a new car, they wrote a check for the full amount.  When it was time for a house, it was paid for.  This was very responsible, but there came a time when my aunt wanted to build credit and she couldn’t.  She was over 70 years old at the time and had no credit history!  Yikes.  Ever since then, I have understood that it’s important to build credit.  So how do you build credit history?  And why?  Here are a few simple answers.

The Importance of Credit

There are a few good reasons to make sure you have a credit history.

  1. Future Need.  My aunt had no real need for credit.  I’m not even sure what the circumstances where that led her to find out she had no credit history.  In truth, she probably didn’t need it.  But, you never know when you might.  It’s good to have a credit history for the times you might need one.  Even if you don’t foresee such circumstances, they very well could be out there.  So, be prepared.
  2. Opportunity.  At the time that this happened with my aunt, rewards cards really weren’t a thing. But now they are.  Nowadays having credit history might set you up for opportunities to save money.  Having these opportunities available is key for you never know when they’ll pop up.
  3. Owning Your History.  Identify theft is a huge thing nowadays.  What if my aunt had her credit stolen?  Without a credit history, she might never have known!  Take control of your own credit history and then it’s yours to build and track.

How To Build Credit History

Building credit history doesn’t have to be complicated.  It can be done in a few easy steps.

  1. Open a credit card.  This is pretty basic.  Open a card in your name.
  2. Set a small credit limit.  When you are starting off, make sure to get a small limit.  If you haven’t used credit cards before, don’t get overwhelmed.
  3. Use the card occasionally.  Having a card will start credit history, but using the card is even more important. That’s where you’ll start getting judged on how well you use your available credit.
  4. Pay immediately.  Use the card in place of cash.  Don’t make extra purchases with your card.  Instead, just make purchases you would have anyways.  All you need to change is how you pay for your purchase.  When you choose this method, pay the card immediately.  Using the card and paying it off will quickly build you to a great score.
  5. Track your credit.  Once you start building credit history, you’ll be able to track your credit.  Use one of the free annual checks.  Make sure that you are seeing only what you expect to see.

In the end, a solid credit history can only come after you take that first step toward building it.  A small step or two can go a long way toward building lifelong stability.

Readers, how did you start building credit?  What was your reason at the time to get started?  Any other tips?

2017 Can Be the Year You Earn Great Credit

If you don’t understand what personal credit is, you’re not alone. Your credit history is an important aspect of your life, but most people don’t fully comprehend what it is or what it does. That’s a shame, because you can learn what credit history is in about five minutes, and this information can guide you to a much better personal finance future. So don’t be scared of what you don’t know. Grab this bull by the horns and start taking control of your personal credit, even if for the very first time. This way you’ll know how to raise your credit scores & get the best interest rates in 2017.

Personal Credit History

First of all comes a basic definition.  Personal credit history is a record of all of the ways you’ve used borrowed money over the years. You may have borrowed more money than you think. Also, sometimes borrowed items can be represented in the form of money, as with a library book. Let’s say you borrowed a library book in 2005 but didn’t return it till 2007 when you found it under your sofa. It’s likely that the library kept a record of the lost book, and sent the account to collections after they couldn’t recover the book or the fees from you.

This un-returned library book would be recorded on your credit history as a number: the amount of money it would take to buy and process the book again for the library. That single item could bring down your credit score for as long as it remained on your credit history, which happens to be seven years.

The same thing could happen if you forgot to pay your utility bills for a month or two. Or if you charged as much money as possible on your credit cards (making it look like you have to borrow money to afford your life). Or if you requested multiple loans from multiple lenders during a single two month period last year. Each of these could be examples of irresponsible credit behavior.

Improve Your Credit

When you look at your credit history, you don’t have to guess about the items that give you bad personal credit; they’ll all be listed. If you want to improve your credit, you’ll have to get rid of them. You can do this by

  1.  Paying them.
  2. Disputing the negative items.  This causes the credit reporting agency to have to validate the item, which may work to your advantage
  3. Wait until the item disappears in seven years.

If you want to get better credit, and the benefits that come along with it, then you’ll have to do one or more of the above. Once the items disappear from your credit history, your credit score will go up.  You’ll then be able to get cheaper loans.  Plus you improve your chances of getting a better job or a more desirable place to live. Make 2017 the year you do these things, and you won’t regret it at all. It’s easier than you might think.

Is AmEx Customer Service Better Than Citi?

Last year, the Costco branded credit card switched from American Express to Citi.  Since we use ours to gather the maximum cash back rewards, we decided to carry both.  We opened an American Express card after the switch.  This is a great strategy for us.  When the switched was announced, we heard a lot of complaints about customer service.  Specifically, many said that American Express had good customer service, and that Citi did not.  I decided to give a spot test.  While this isn’t conclusive, I thought it’d be fun to share whether AmEx customer service came out ahead, behind or equal to Citi.

Traveling Notification

We were heading on vacation.  I always like to notify the credit card companies.  That way, the company won’t see us making a bunch of charges from an unusual location and disallow charges for potential fraud.  I couldn’t imagine it’d be fun to be on vacation and have your card come up declined.

Since we’ll probably be using both of these cards during our trip, I decided to call and notify both companies.

Honestly, the process and the experience was about equal.

Number

Both cards had the phone number for customer service on the back of the card.

Routing

Both cards pick up and ask what you’re calling about.  The voice recigniton systems used are very similar, if not actually the same software package.  They will try to get your request handled. I knew I’d want to speak to an agent so I told it ‘Customer Service’.  Both of them tried to convince me to provide more detail, but after repeating ‘Customer Service’ took me to the next step.

Verification

Both systems knew that I was calling from my primary number.  Citi only asked me to punch in the last four digits of my card.  American Express made me punch in my full card number as well as the last four digits of my social security number.

Helpfulness

Both of the calls were picked up right away.  Both of the agents were friendly.  They both knew exactly what I was calling to do when I explained it to them.  They both made sure to verify the dates and locations where I’d be making charges.  Both thanked me and wished us a good trip.

Follow Up

Citi actually sent me an e-mail verifying the conversation and the travel information.  I thought that was a nice touch.

Summary

In the end, both companies provided top notch service.  I know it was a simple request and it was only one, but both experiences made me happy to be a customer with their company.  That’s really what it’s all about, isn’t it?

Readers, have you had any really good or really awful experiences with a credit card company?  Please share your experiences in the comments below.  Thanks very much for reading!

Free Cash: Why We Use Cash Back Credit Cards

We use cash back credit cards for just about every purchase that we possibly can.  Why?  The answer is simple, because we earn free cash and it adds up to a good amount.  Below is how much cash we’ve earned in the last twelve months.

Costco Visa Card

This is our primary spending card.  It has the most rewards that we use.  We get 4% cash back on gas, 3% at restaurants, 2% at Costco, and 1% on everything else.

They issue a certificate once per year that you take into the store to cash.  This year we’ll be getting $281.88.

American Express Blue Everyday Card

When Costco switched from American Express to Visa, we took an offer to open one of these cards.  We primarily use this at grocery stores, as we get 3% cash back.  We do make other purchases on here as well.

Since we opened this last year, we’ve earned $159.32 in cash back.

In addition to this, American Express has the best ‘offers’ of any card I’ve seen.  In addition to the above, we’ve saved money on statement credits just for using American Express to pay our cell phone bill, visit a Mobil station, or even just to sign in to their online app.  Plus we got a big statement credit just for spending a certain amount on the card within 90 days.  Without looking, I’d say we got over $350 in statement credits on top of the cash back.

Citi Dividends Cards

These were the first cash back cards we ever opened, and I don’t think you can even get them as new members anymore.  But, for these (just like everything else) we get 1% cash back on everything, plus 5% on rotating categories that change every quarter.

We pretty much keep these because they’re our oldest cards, and having a card established for that long is good for our credit scores.  We’ll use this for camping reservations or other purchases that don’t give bonus money on any other card.

Between my card and my wife’s card, we have earned $125.41 over the past twelve months since we last cashed out.

Grand Total Earned From Cash Back Credit Cards

Adding all of that up, we have earned $566.81 in cash back just by using our cards.  We pay our cards off in full every month, so we aren’t paying a nickel in interest.  Nor do we pay an annual fee for any of these cards.  That’s basically us buying things or making purchases on things we’re going to anyways, and ending up with over $500.  That is a pretty good deal if you ask me.

In the past, we’ve used our cash back rewards cards to purchase electronics.  All of our flat screen TVs have been purchased with cash back rewards money.  We’ve also applied this toward a vacation in years we haven’t needed anything new.

Readers, do you use cash back reward cards?  Do you make sure to use them to your full advantage?  If so, what tricks or tips do you have?  Please let me know how things work for you in the comments below.