Joker

How about a magic trick?

 

Well this isn’t really magic. BUUT it is a good little trick I use for budgeting money. A quick word of warning however, this is not an ideal strategy for everyone. It all depends on your financial situation and if you have the same pyschological feelings towards credit cards that I do.

 

When spreadsheets fail

Sometimes I fail with spreadsheets. Let’s face it budgeting is about as fun as watching concrete dry. Collecting receipts to me is like collecting sea shells. Not my thing. Don’t get me wrong, I try to do this. Keeping a log of my spending is important to me because it builds such strong knowledge of where my money goes. There are times however when that band wagon hits a bump in it’s rickety roads and I fall off. But my method also helps me to sprint ahead and catch up to that wagon. My expenses are still being tracked without needing receipts. Certain cash purchases get lost, but I can still write them down as a miscellaneous purchases from the amount of cash I have left over. I’m not much of a personal finance app guy. I have a mint.com account and it does work beautifully, but hands on old school spreadsheets stick better for me.

 

There’s a little joker in my pocket that intimidates me

There are certain feelings I have towards my visa that I am grateful to have. Feelings that have really helped make my strategy work so well. I am very cautious with my credit card. It’s also my primary way of spending.

jon-stewart-huh

 huh!?

You heard that right. My credit card is my primary means of spending. But why is that if I’m so cautious with it? Because I am cautious with it.

Cautious with credit card = Cautious with spending

My credit card limit is quite low, and I’ve always rejected the idea of even raising it. I like it that way. A lower limit makes it easier to pay it off. I have heard numerous horror stories of people with maxed out limits in the thousands of dollars. Maybe once have I came close to my credit limit, even though it’s so small. The higher the amount the credit climbs, the scarier it gets. And that’s part of my trick. It’s quite simple really.

 

Here’s what I do:

Paycheque comes in. Credit card get’s paid off. I withdraw a small amount of cash, for things like an occasional beer with friends, pricey Starbucks Americanos and the like. The remaining balance goes right into my savings. Certain fixed expenses are allotted for as well as my automatic contributions to TD’s E-Series index funds. Then I continue to gander through my day to day, being really awesome. I use my credit card for majority of my purchases. Rinse and repeat. But, LIKE I SAID Cautious with credit card = cautious with spending. Psychologically I am forced to be very responsible with my visa. We all know what the Jokers magic trick is in The Dark Knight. To me messing up with my credit would be like getting that pencil in my eye. Having that in mind helps me immensely. A big plus to this strategy is the great credit I have built over the years. *Flexes financial bicep* I have also gained quite a few points over time doing this. Have I ever had to pay interest on my credit card? Not even once. For myself this is a great strategy.

This has worked so well for me and I continue to use it. Like I was saying, it won’t work for everyone. I know people who are terrible with credit cards on top of their spending already. I do not have debt. If you have a substantial amount it does not make sense to add to it. Credit cards can work wonders for budgeting as I have shown. If your not careful with them however, they may come back to bite you. So please practice this technique with caution!

 

FF$!

-Jason

 

 

 

2 Responses to A little magic trick for budgeting money

  1. 1. I have very high credit card limits and I raise it (on both cards) because I never carry a balance.

    Haven’t done it in all the years I’ve ever owned a credit card. My only debt was $60,000 for school.

    I also find it handy to have a high balance because I travel a lot and I need to book hotels, flights and so on for myself and BF, which adds up into the thousands if we go for months at a time.’

    2. Get a Starbucks card for free drinks.

    Go to the store and load up on a Starbucks gift card and register it online to your name. Once you get onto their Gold program (30 drinks in a year), every 15 Starbucks drinks/things you buy (no matter which ones, even regular coffee) you get a free Reward drink. Plus you get a free birthday drink each year.

    • 1. Very good point. I’m sure you have benefits with your cards that go towards those hotels and flights as well. Let’s also assume someone has been saving for a large purchase such as a new TV for their home. They have been socking away money into a savings account to buy one and finally reached the amount. They have the money to outright purchase it, but why not buy it with their credit card and then pay it right off? They’ll gain points that can be used for flights and other goods. Some credit cards also offer warranty protection that exceeds the manufacturers as well. I think credit cards are very powerful for those who are RESPONSIBLE. There is nothing wrong with larger limits, I am sure to raise mine in the future but for now it works where it’s at.

      2. Much appreciated! I actually don’t have a Starbucks gift card, but I will be using one from now on. Thanks

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