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Debit cards. Credit cards. Prepaid cards. Apple pay. Google wallet. Paypal. Venmo. Bank transfers. Phone and mobile payments. Checks. Money orders. Has money taken on too many forms that the value of cash is diminishing? The idea that the next generation is losing the sense of what the true value of cash really is could very well be true. This theory is called financial abstraction, coined by Adam Carroll in a Tedx Talk.
This post originally was inspired by a Facebook post and I asked Heather if we could post it on my blog because I felt that the message was too important not to share! Read more about Heather’s way of teaching her daughter Ryley about budgeting to see if it also sparks unique ideas for you and your children to talk and learn more about budgeting together.
My brother recently sent me a YouTube video of a TEDx Talk about a man replacing his family’s Monopoly money with $10,000 cash to see if they would play the game differently using real money. Two out of the three children changed their game-winning strategies based on the new circumstances. His final point was simply that younger generations have no emotional connection to money, that it seems less real to them because technological advances have made physical cash-handling almost non-existent. Unfortunately, there are still very real consequences to functioning in life using what seems to be limitless “fake” money.
I remember one time when Ryley was small, she wanted something that I couldn’t afford, so I told her I didn’t have enough money. My beautiful innocent daughter replied in a very matter-of-fact way, “that’s ok, just use one of your cards!” That was the week I started taking her to make her own cash deposits into her bank account. Every birthday, holiday, or money-receiving opportunity following, we put some of it into her wallet for fun and some into her bank account. We discussed what types of big things she would like to save up for, and frequently used portions of her money in order to purchase them.
Years later, Ryley has now started babysitting for pay. We decided on a reasonable amount she would charge for her services, and some wiggle room for how much would still be worth working for if negotiations were required (aka her value). She keeps her cash and I have no stake in the money she earns. There was a high-priced item she wanted for Christmas but didn’t get, so I offered to cover a specific dollar amount against the total, and the rest would be her responsibility.
Realizing she has babysat enough evenings to purchase the item almost twice by now, I asked why we hadn’t gone to get it yet. Ryley then had to review her spending (fun foods at lunchtime instead of the free meal, movie snacks on a night out with friends, etc.) and acknowledge the importance of budgeting versus spending. We had to wait one more weekend to re-save enough money, then went to Best Buy.
It was on sale! Instead of the usual $99.95, the Sprocket price tag boasted $69.95. Great for us, since money saved means more in the pocket, or in this case the ability to purchase things that compliment the large item. I gave Ryley the option of keeping the difference, but pointed out that she might want more of the photo paper while it was also on sale (only 6.99 for 20 pieces), and she would still be spending less than the original amount. At the counter, she decided the warranty was a wise investment this time. Out the door with receipt in hand, Ryley wondered at the final cost versus the sale sign. Tax, warranty, add-on item purchase... it all adds up! And now she is left with the remaining money to begin saving for the next “want.”
About a month ago, I almost got her one of those kid-friendly credit cards. It would have been so convenient to me now that I’m not constantly carrying restaurant tips and don’t often have cash to hand her when she needs it. But there’s plenty of time for convenience in the future. First I need to help her learn the value of the actual money that comes and goes, especially since it rarely feels real anymore. I love being able to scan my Apple Watch at Starbucks or Venmo a hired musician as soon as the paper check I had to wait for clears. But I’m not doing Ryley any favors if I don’t help her learn how to be responsible for her choices. Same goes with household responsibilities, cooking from scratch, time management, commitments to others, etc.
That’s what parenting is about! I could throw her at the world at 18 and hope she doesn’t have to learn everything the hard way, become someone else’s unknowing burden, or even end up my responsibility again. Or I can attempt to build a foundation of independence and show her steps toward becoming a successful adult. Yes, she’ll still make mistakes (and boy do I constantly make them too!), but it’s still better than the alternative. Our kids need us to be their parents. They learn how to live, love, and help others by watching us. Let’s give them the best chance we can at having a bright, fruitful future in which they benefit society in some way. I’m cheering you on, yay parents, we got this! Now excuse me while I go order from postmates because I’m way too tired to cook tonight. . .
This post contains affiliate links. See full disclosure here.
I get it! Much of our lives are on the go and it just feels easier to use plastic to pay for purchases! But, if you are not tracking your budget on a line item detail, you may forget that you swiped that card earlier to pay for your purchase! This can get very habitual and is also very tempting! I see the same things in the store fronts, and think how cute it would look if I had that exact same purse, or dress, or outfit. Unfortunately, getting into debt for a purse that will make us feel good in the moment, may not make us feel good in the long run. In this blog post I share with you my experience of increasing my credit score in hopes that it will help inform you of what decisions you need to take in order to also increase your credit score.
1. Stop Using Your Credit Cards
My very first piece of advice is to stop using your credit cards irresponsibly. I know, this sounds intuitive, right? But, nonetheless people still need to be reminded of the obvious. Experian, one of the largest credit reporting agencies, completed an annual State of Credit survey based on 2017 data in which it would appear that on the National level, not only does the average consumer think it is good for their credit score to carry a balance, but they also have about $6,375 in credit card debt with an average credit score of 675. In California the average credit card debt is $6,481 with an average credit score of 680.
Credit cards are just SOOOOOOOOO easy to use, trust me -- I speak from experience! There they are sitting in your wallet, waiting to be swiped on your next purchase. Therefore, your first step is to start creating a better relationship with your credit cards rather than an abusive one. Before each swipe of your credit card think twice about it, and ask yourself these questions:
2. Get A Better Interest Rate or Credit Card
The next thing you will need to do is to call your credit card company. When you call them, ask if they are able to provide an interest rate reduction on your larger credit card balances. If you have been a good steward, in that you have been paying on-time for a while now, they should be open to this idea. Also, let them know that you are working hard on paying down your card, but you need their help. The worst thing they can do is decline you -- and if they do, I have a suggestion I will explain in the next paragraph. While you are on the phone with them also make sure that the timing of when your payment is due actually works for your budget. Perhaps your bill is due towards the beginning of the month and that oftentimes can conflict with your rent or mortgage payment.
The following piece of advice should come with a disclaimer. Now, I do not want you to follow this advice if you are prone to abusing your credit cards. This next step includes finding a better credit card. Here’s what I mean by a “better” credit card; the company will allow you to transfer your balance from your highest interest credit card at a zero percent interest rate for the first year. Yes, I am saying to apply for a new credit card! Move your largest balances over, and create a plan to pay that large balance off in twelve months. This means that the plan you create to pay off your credit card balance over the next twelve months will not accrue interest charges, and the payment is going directly to the debt balance instead of the interest. Not only will this help alleviate the money you would spend on interest charges, but opening up a new line of credit responsibly looks very good on your credit report in the long run. In the short run, your credit will take a small dip.
The best part is there are already websites that allow you to monitor your credit report for FREE. PLUS, these services, like WalletHub or Quizzle, also make offers for credit cards that are doing exactly what I suggest. The process is fairly simple, easy, and smooth. Once you enter your information into their website, you can create a *free* account, and then they do an analysis of your credit and make suggestions based on spending trends, debt, and income. But, we must get one thing straight! This new credit card is not for shopping!
3. Stick To The Plan
Paying off a high balance credit card is hard work! It takes discipline and lots of saying “no” to events, and hangouts with friends. You will need to apply yourself very diligently. Part of personal finances is planning out specific aspects of your life that have dollar amounts attached to them. So, identifying those times where it might be hard for you to say no, is the first part of sticking to the plan.
Are there certain people in your life that are always wanting to go out? Whether that be out to dinner, to see a movie, or shopping; all of these activities have a cost associated with them. So, the next time someone invites you to go out, suggest a low-cost activity like going for a walk or to the library; maybe have a “bring your own lunch” picnic in the park. There are plenty of activities you can do to spend time with your friends and loved ones that does not require money! Once you start on the plan and get used to thinking outside the box for free, or cheap things to do, you will notice how it starts to become easier for you.
At this point it might be best if you start thinking in terms of where you see yourself in one year, in two years, in five years, and so on. Thinking of very specific life goals is also helpful in the scenario. Perhaps in two years you do not want to have any debt! So, make the strides now to pay off that debt.
4. Monitor Your Credit Report
Monitoring your credit report is so very important! It is good practice to always make sure that you read through your credit report the very first time you get it to ensure your names, addresses, and events listed are yours.
Then, you want to continue to monitor your credit report on a consistent basis. This will ensure the activity that happens on your report are in fact yours, but that you will notice trends on the data that is provided to you. If you do not use one of the free credit monitoring services, you can always check your report through annual credit report. You can do this at least three times per year for FREE. The key is to make sure you only use one of the credit reporting agencies (Equifax, Experian, or TransUnion) each time. See my previous blog post for more details on what makes up a credit score!
5. Celebrate Your Wins
Being on a budget is hard work! Do not forget to take some time to celebrate your wins in a frugal manner. Once you master your credit card or consumer debt, moving on to add new lines of credit is your next step, but we will not be talking about that here -- keep your eyes on the prize first!
As always, friends, I am here to help and support you on your personal finance and budgeting journey. You can always send me an email to schedule a free no-obligation 30 minute phone call to discuss your needs!
It is so good to receive feedback from so many different sources. I love hearing how my blog posts are helping you, and I love the questions that arise from them. Keep ‘em coming!
Recently, I have received a few inquiries with regards to credit card spending. It sounds to me like people are generally thinking about how they can be responsible with their credit cards. So, with that in mind, I am devoting this blog post to the proper use of credit cards.
First off, I would like to share a personal story. When I first went into college after high school, I did not have a lot of money nor resources. I was a lifeguard and swim instructor at the local YMCA, and that job did not pay very well. But, it was my joy at the time. When I received my first credit card offer in the mail I was ecstatic because I thought, “Hey, there's a free $1,500 available to me!”. It was never really explained to me in high-school what the credit card offer really meant nor what having an APR was all about. So, I signed up and went for it. I started to rack up debt on this very first credit card of mine. Once it hit its limit, that’s when I realized… Uh-oh… The minute I realized my folly, I immediately shredded the credit card and have not looked back!
Do not let this happen to you!
Even though there is a major warning that comes with every credit card, debt still happens to be a very real thing for a lot of people. I think we can get so focused on the here and now and not realize what this can mean a year or two or five down the line. We are entranced by sales, we are drawn in for the newest piece of technology, and then there are times where the unfortunate happens and we have to lean on that credit card to pull us through some tough financial situations. There has got to be some psychology out there on this . . . but for now -- let’s stick to the numbers.
In this fictitious scenario a beginning balance of $5,000 with an APR of 20% will take 5 years to pay off. This scenario assumes that you are charging $100 per month and paying off only $250 against the balance. The total amount of interest that is paid over time will be $2,359.09 during that time. I wanted to illustrate this with a graph so you can take a step back a minute to see what this does over the course of 5 years. My hope is that when you see the trends, you will be more adverse to collecting debt on a credit card.
Here is a pretty chart to show you the trending over time.
Here are some helpful do’s and don’ts for credit card spending:
Let me know in your comments below what helps you from spending more money than you have!
I love Seinfeld. I love his little jokes that he throws into his shows. “What’s the deal with lampshades?! I mean, if it’s a lamp why do you want shade??” He seems to be the only comedian who can cover a wide range of topics and still be VERY family friendly! I love how Seinfeld can take everyday concepts and poke it a little until it is funny! He even has a bit about checkbooks. Take a minute to listen to this funny bit it will make this balancing a checkbook blog post a little lighter!
At this point, you are probably thinking, “what’s the deal with balancing my checkbook??” It is not everyday you hear someone talking about balancing their checkbooks. It actually feels a little faux paus these days! I myself was curious to know what people out there were thinking, so I held an Instagram Stories poll. I asked “Do you balance your checkbook?”:
I do not think many of us are actually surprised by the results. (In fact, I also questioned that on Instagram Stories, and the majority said they were also not surprised!) But, it makes me wonder why people are not balancing their checkbooks. Perhaps one may think it is a waste of time. Perhaps some people do not know how to balance their checkbook. And, perhaps for some it is a little of both. Maybe you do not have the time to teach yourself how to balance your checkbook!?
My hope is that by the end of this blog post you will at least put a little more consideration on the importance of balancing your checkbook moving forward. Because, I am here to tell you that there is, in fact, value in knowing exactly where your money goes, and when!
Why is balancing a checkbook good?
Let’s say you are not balancing your checkbook and all of a sudden you realize your bank balance has dropped by a few hundred dollars. This may cause some of you to pause, and then move on without giving it a second thought. Maybe you thought it was your car payment going through? What if it was not, though? What if it was fraud on your account, and you did not notice it because you are not balancing your checkbook? The things people can do these days is incredible! I have had fraud on my account several times, and thank goodness the bank is on top of things and called me right away. But, what if the bank was not on top of things? AND I was also not balancing my checkbook… Perhaps those charges would have just gone through without anyone noticing.
There is value in balancing your checkbook, even beyond the fraud situation, for the simple reason of knowing exactly what is going on in your checking account. Being in charge and directing where your hard earned monies are going that is freeing! Imagine, not having to pay bank fees for overdraft charges because you forgot you wrote that check back in December and now all the money has been spent, and the vendor you wrote the check to is just now cashing it! Do not let these little things slip by!
Who should be balancing their checkbooks?
I think it is key here to say who should actually balance a checkbook. I believe it should be anyone with a checking account. I know, you think I am crazy right now. But, seriously, if you have a checking account you should keep a list of all of the ins and outs that go down in that account. I would also say it is especially important for those who use their debit cards, and for those who also write checks (yes, checks still exist!).
When should you balance your checkbook?
My rule of thumb here is at the end of every month, at least. If you balance your checkbook at the end of the month it can be a retrospective as to how you spent your monies during the previous month, and how that lines up with your budget. That retrospective view hopes to inform and encourage the current month’s spending habits, because you can see what sort of life changes you need to make in order to line up expenses with your budget. I usually do this a couple of days before my paycheck arrives in my bank, that way I already know how I am spending my money before it even gets here. I find that this method helps me stay more accountable to not spending money I do not have nor spending it too freely.
How should you balance your checkbook?
It is really as simple as writing things down in the checkbook ledger the bank provides. It can also be as simple as carrying a notebook with you and writing things down. I am a huge proponent of Google docs (and writing things down, thanks Mom!) so, I keep my check ledger housed there, and then I am able to access it through my phone.
Here are a few rules of thumb for balancing your checkbook:
As an accounting professional, I consider myself a life long learner and interested in learning more about difference aspects that make our world turn. Especially in the recent budgeting series, I wanted to use this time to demonstrate a few ways of making money outside of the typical 9 to 5 job; AKA, the side hustle in a gig economy. In this next series we turn to individuals within my network who are proven to be successful in their side hustle.
First up, a former colleague of mine who graciously agreed to be interviewed: meet Velincia Ellis. Velincia has performed notaries for over ten years, and she shares a few experiences with us. But, first, what is a notary?? Google dictionary defines notary as: a person authorized to perform certain legal formalities, especially to draw up or certify contracts, deeds, and other documents for use in other jurisdictions.
Me: Would you please introduce yourself?
My name is Velincia Lee Ellis. I was born and raised in Los Angeles California. I have two military sons and a daughter with a LVN pursuing her RN bachelor's degree. I currently work at Southern California Public Radio (KPCC 89.3) as a Financial Analyst.
Me: What is it that you do for your side hustle?
I wear lots of hats now: Financial Analyst, Accounts Payable Supervisor, but the most fulfilling is being a Notary Public. I obtained my commission on April 2005 and it is rewarding to me. I love helping people with their legal documents and see the smiles on individual faces when I perform the notary.
Sometimes people get confused on what a Notary Public can do. I have come across people who’ve wanted me to travel with them to jail to have the inmate sign over his life to someone that does not have their best interest in mind. I have had people come to me with a bus pass with their picture on it to perform a notary. A man with his supposed grandmother who was in a rest home and had no identification and no Power of Attorney, and he thought that’s what I provided. He didn’t have proper identification either. And the best one yet; a lady wanted me to perform a notary for a Power of Attorney for her mom who had dementia. I explained that I could do that, but I would have to come and observe her first. She stated that her Mom would be okay if I came at that time, but she goes in and out of reality. Since I kept reiterating the observation, she never came back to me for a notary.
Me: How do you balance working your full-time job and your side hustle?
Well it is a great balance. I use my Gmail Calendar and an app called Wunderlist. I set appointments so it does not interfere with my regular job. The same goes for when I’m at home. I do not carry my Notary Journal with me everyday, so that is why I have to schedule my appointments. You have to be real cautious when you are using Public Transportation. Taking or stealing my journal is like hacking your bank account. Identities can be stolen.
Me: What is the process for a Notary to be filed?
People have to keep in mind the process for a completed Notary to be filed. I request the following documents at the time of notarization: Current California ID, or California Driver’s License.. California will let you perform a Notary with an expired ID, no more than 5 years. Additionally, one could use a current Passport.
I also let individuals know that you may be fingerprinted in my Notary Journal depending on the type of document which includes:
The Notary Journal is where I document the notary performed. It consists of the individual's identification, type of notary performed, date and time. If fingerprints are needed, those are included as well. It is always good to keep a Notary Journal just in case the courts or legal matters arise and they need the information provided in the notary journal. Remember that we are always commissioned by our said state, and no we are not lawyers.
Me: Would you please let the readers know how they can get in contact with you if they need a notary?
I am not mobile as I would like to be, but that is in the works. If you are in need of a Professional and understanding Notary Public you can reach me at email@example.com. My prices align with the State of California, and I do offer senior discounts, and veterans are free.
Me: Thank you so much for your time, Ve!
My thoughts on numbers, spreadsheets, money, spending, forecasting, budgeting, and everything in between. Read on!
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