While my 20s are gone, I still look back on them fondly. But when I take a closer look at my finances I think, what the hell was I doing? Riddled with debt, credit cards maxed out, making the minimum payment on my student loans. And I had the audacity to move to one of the highest cost of living states in the U.S. Yes, I was bold and brave for sure. If I could give my younger self some financial advice as an older, wiser, and out of debt 30-something-year old, it would be the following list of things.
Get a budgeting system going. Any type. A spreadsheet, a budget provided by your banking app, a list of your expenses and debts. Start somewhere and build from there. Having the awareness of your own personal checks and balances is the start to making a change in the right direction. Before my budgeting days, I was on the wrong side of things. I knew I was living paycheck to paycheck but what I didn’t realize is that I was supplementing my income with credit cards. This was creating a mound of debt and interest. Even though I thought I was doing a good job tackling my credit cards.
My budget was the catalyst I needed to make a change. Making a budget not only helped me realize that I was in the red, but I realized I was compounding it by not tracking my spending or income. Once I got that picture, I was able to start my course correction.
Give every dollar you earn a purpose.
If you have a purpose for a dollar then you won’t go spending it all willy nilly. After I took a long hard look at my budget, I decided to put my income to work. I gave every dollar I was making a purpose. To tackle my current expenses, tackle my crippling debt, or treat myself a little. I calculated how much money would be going toward my expenses, like my rent, car note, and utilities and set that aside. Next I calculated how much I wanted to designate for my debt payments and budgeted for that. Then whatever was leftover was for me to feed my personal obsessions.
Use a credit card to your advantage
I have two credit cards. I’m not here to tell you credit cards are evil. “Don’t sign up for credit cards.” No, I’m here to tell you to use the cards to your advantage. My credit card has two purposes. The first is as another safety net for the unsuspected. For example, If I am swiping my card and someone gets the info, the fraudsters are stealing from VISA and not from me. The second is bonuses!
While I am not one of those bloggers or YouTubers that are cashing in on bonus points, I do know how to get a little something back. I use my money to pay bills or buy groceries anyway, so when I use my credit card on these planned expenses, I am also getting the cash back or bonus points that come with the card. For example, when my family planned a trip to Disneyland and Universal this July, I volunteered myself as tribute to purchase tickets for everyone. I already had this money waiting to be used, but since I used my cash rewards card, I got a cool $93 bucks back! That’s money I received for something I already had budgeted and had the money to pay for by debit or straight from my account but I used my card and got bonus points instead.
Commit to one card.
I mentioned I have two cards. But I made a commitment to one. The other one lays dormant right now, open (without annual fees) but keeping my credit history alive.
When I first started budgeting I was using my Delta Gold Card. I was working for a company that had me traveling fairly often, at least once a month. The bonus miles I earned from traveling for work turned into free flights and upgrades for me to use on my personal adventures. It made sense to me at the time.
Now, I am committed to my BofA Cash Rewards card. I’m not traveling as much, and I am very much nesting. I basically live at Crate and Barrel and Sur La Table finding more things for my apartment. I like maximizing the cash back I receive and choosing to treat myself by getting a discount on things I’m purchasing anyway.
If you want to learn more about cash rewards click this link. Visit bank of americas website to see what cash reward options make sense for you! There are also bonus rewards that you can add to your account, to get more cash back on top of the card offer. The bonus offers are for many of the products or places that I am shopping anyway. Making this a win-win for me.
Give yourself an allowance Now that I am out of debt, I give myself a decent amount of change to have fun with. I call it my allowance. My allowance is cash money that I can use that hasn’t been given a purpose. When I randomly want coffee, or a friend invites me to brunch, I use my allowance in cash for this.
On payday I make it a habit to stroll over to the bank and pull out my allowance in cold hard cash for the weekend. This helps in two ways. One, I can tangibly see how much money I have. For me, cards can feel frivolous. There is no visible depletion that happens as I use a card. But when I am depleting my cash reserve this is something I can see and feel. It also helps me stay in control, even if this is just fun money.
These are some simple tips but they have helped me get a hold of my financial life. After implementing these habits, I’ve been able to ditch my debt and save more money than I have ever had in my whole life. I hope this helps you too!
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