Tuesday, August 01, 2006

Managing Your Finance

One of the best things that I have experienced here in the US is the ability to borrow money. At age 20, I had my first credit card from this prominent store at 34th Street. They gave me a whopping $100.00 credit line. For a kid who never experienced credit, this was great. People giving me credit for the mere fact that applied for it.

Credit cards can be good if you know how to use them. It would be great if we can live without the plastic, but why suppress convenience if we can master that art of credit cards?

Since my first job as a training consultant back in 2001, my accountant gave me this great tip, in order for you not to worry about receipts, charge it all to you credit card but always keep a separate card for "work" and for "business". Ever since, I would charge my travel tickets to lunches to sometimes my latte at Starbucks. This worked for me since I pay off my bills that end of every billing cycle. Viola, no finance charges.

After moving to a new apartment in 2004, there is no way that you can't charge stuff on your card. From the new shelves to groceries swiping that card is fast yet scary. But I am happy to report that as of February 2006, I am down to two credit cards. I don't owe to much money, but I am targeting that by the end of the year, I would be debt free. This is good, especially since I am saving money for future investments.

So what is the trick that I used? First understand how your credit cards work. Does it employ Average Daily Balance or the Two Cycle Average Daily Balance. Check out the simplest explanation I found online at StudentPlatinum.com. Second, pay off more than the minimum. You can't just be paying for interest right? Third, minimize the use of the plastic. You know those change that you accumulate in your glass jar at home? Use them for your morning coffee or your afternoon pick me up soda (better yet, make use of the free coffee at work!).

It is not easy, but the rewards for diligence and smart moves will definitely pay off.


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