I thought a way for you to get to know me and a way for me possibly share some high-level personal finance ideas would be for me to crack open my wallet and share what is inside.
First of all I have my driver’s license, proof of both medical and auto insurance, a few of my business cards and those of others and some coupons for a car wash place I need to use up.
More in the financial nuts & bolts of it all, I probably have too many credit cards. However, my credit score is over 800 and there is a method to my madness. The cards on the left side of my wallet are all for my personal use and are set up to be downloaded to my personal Quicken account, which I do daily. The cards on the right side of my wallet are all for my business’s use and are setup to download into my QuickBooks business accounting program.
Being a business owner it is important to keep my personal and business spending quite delineated. Having cards specifically dedicated to each use helps. Having them all setup to download into my respective personal spending and business software saves me a lot of data input time.
A few big picture thoughts
- NEVER run a balance on your cards EVER. Pay off your credit card IN FULL every month. If you do have a credit card balance, it’s time to eat peanut butter sandwiches, wear what you’ve got, and stay away from the vacay. In this instance “Just do it” means “No New Nikes.” Even the best credit card rates are usurious in nearly all circumstance. Keep in mind advertised low rates are often teaser rates to suck you in and get you to run up a balance for higher rates down the road.
- ALWAYS get something out of the card. I get United Frequent Flyer miles and great foreign exchange rates out of two cards. Five percent cash back from Target from one card and 5% cash back from Amazon on another. Four percent cash back on gas from my Costco Chase card. Dig around find which Air Miles programs work best for you. This guy is good: http://onemileatatime.boardingarea.com/.
- Put it ALL on the card. What? First of all, you have no credit card balances since you ate peanut butter sandwiches all last year. Believe me I know. I’ve done it. Putting more on the credit card gets you more cash back or other benefits. Tie your cards to your spending tracking software and you will have a better sense of how much you spend. In addition, you will have various forms of purchase protection. Last year I took four people to Hawaii using miles I had got on my credit card and the rental car that got a bit banged up when we went beyond the paved road was all covered by my Visa’s extended rental car insurance coverage.
- Put automatic payments on your credit card and NOT your bank account. I like to control my checking account balance. Having automatic payments take money out when they want bugs me. I’d rather have those payments hit the credit card where I can review them when I want, and better yet, pay them when I want as long as it is before the credit card’s due date. This can push out when you have make the payment sometimes beyond a month. Plus you get cash back, miles, or whatever benefit you have researched works best for you.
That’s it. Out of habit, I pay off my credit card balance in full right when I get the statement. That seems to improve your credit score for some reason. Cash? I usually keep the cash in my wallet pretty tight. Although I always have cash on hand. Don’t me a lame cashless cheapskate when out with friends.
One final thought is once you get the cards that work for you, be selective about canceling cards and switching to new ones. I am not saying don’t ever do it. I am saying be selective and intermittent. This is especially true when looking to borrow money for a car or home. Having a few credit cards with a long credit history boosts the score. Recently opened cards can push it down. Just be judicious and timely.
Some more personal financial thoughts down the road.