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 firstname.lastname@example.org. 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!
The past two posts we have talked a lot about budgeting. If you have not read those, I would encourage you to go back and read them first as they provide the basis for this one. Visit them by clicking the links: Budgeting Part 1 and Budgeting Part 2. This post will be on the more practical side of things. Follow along, and you’ll be budgeting in no time!
Now that we have gotten this far in the blog, it’s time to share with you a basic budget template so that you can fill it in and carry it with you (electronically, of course). But, first, I want to walk through a bit more in depth of how to budget year-over-year.
First, once a baseline budget has been established, then it is good to go through it each month and line up what you have anticipated in your spending compared to what was actually spent. It is important and necessary to fine tune your budget by monitoring it each month because sometimes charges do not come through as we have anticipated. This can get a little tricky, especially if you have not listed all of your spending in your baseline budget. My rule of thumb here is to reevaluate your baseline budget every 3 months, until you feel you are at a point where you can trust your baseline budget against your actual spending.
Secondly, after the baseline budget has been compared against actual spending, then we can fine tune which line items where you might want to see savings. For example, you may think that your grocery line should be a total of $200 per month per person, but when it comes down to it you might be spending a little more than that. This would definitely be an area to keep an eye on. You will also want to keep your eye on frivolous spending associated with clothing, dining out, entertainment and miscellaneous amenities. These line items can quickly add up and have the ability to thwart any specific savings goals you have in mind.
Thirdly, after you have narrowed down areas of savings, then it is time to start considering future goals. Next month, will you increase your savings by 3%? Are you planning to buy a car in the future? Do you have plans to purchase a home? What will that look like as far as your budget is concerned? Did you take that into consideration already, or do you need to create a new budget line to accommodate for these goals? Once you are able to answer these questions, then it is time to download this template, and get to work! Let me know your progress as you go, I would love to hear your feedback in the comments below!
If you are stuck with any one of the questions above, or in the previous posts, because you feel like you have no money to create a functional budget, then it may be time to consider adding in a side hustle. Do you need to make more money outside of your normal 9 to 5 job? A lot of people are starting to realize the benefits of the side hustle and are flocking to jobs, like driving for Uber and Lyft. According to this podcast, if you do drive for Uber you are likely to get paid around $20 per hour. A side hustle can be a great added benefit to your life, especially if you have some spare time during the week. In the next series of blogs we will focus more on the side hustle…
So stick around!
How To Save To Your Google Drive:
Sign-in to your Gmail account.
Click this link.
Click File > Make a copy…
Rename your template however you like and save to "My Drive" folder.
Start typing in your budget template!
Photo credit by Katie Horning, follow her @gallivant.go.delight on Instagram
Interested in learning more about balancing your checkbook? Click here.
For this blog post I am focusing on 2 things: savings and credit card debt. With these being hot topics, I feel we need to explore them a little bit more. When I started writing this entry, I hoped to cover more topics. However, as I wrote I realized I had more to say on these two topics than I originally thought! I am not saying I have everything all together, but my life experiences have taught me a good deal. I feel like we could all use this opportunity to share and grow with each other. Let me know in the comments section if this is helpful information, or if you have another strategy for building savings or getting out of debt that you would like to share!
My rule of thumb is to consistently put money away into savings. That is the bottom line. The amount of money does not matter as long as it is being done on a consistent regular basis. Start small! $5 this week, maybe $10 next week… Or $25 this month, and $30 next month. Do not set yourself up for failure by having savings goals that are too large. The point is to create a habit of saving money. Set a goal that by the end of the year you will have saved $100 without touching it! Then, backtrack… If you think it is going to be hard to put money away this month set a goal to do $20 next month. If you set aside $10 a month, you will have surpassed your initial goal. See? It is not that hard! Once you accomplish a small goal, then you will feel encouraged to set your goal just a little bit higher next month or next year!
I realize debt is a very real thing for a lot of people. It is hard to shake. It is carried over from prior years, and sometimes we defer it and defer it and it becomes an even bigger hurdle to move past. The thought of it seems daunting and sometimes it seems easier to ignore. To which I say, do not ignore it!
Here's an exercise (Yes, I'm giving you homework on my blog!): For those who have credit card debt, look at the past 3 credit card statements and write down how much you have been charged in interest. Then add those 3 together and multiply the total times 4. That figure is an estimate of how much you will pay in interest in one year. This will not be a fun reality to face. But, I guarantee you that once you put pen to paper you will realize the amount of your burden, and how that burden is not worth carrying into another year. Start making strides NOW to pay it off.
These harsh realities are usually not taught in school but learned once we enter the real world. So, after you graduate high school and go into college and receive a credit card offer, and that offer looks really good to you, you may be thinking, “Hey, why not?! I could use this!”. I realize that there are some parents out there that are very good about training their high schoolers and college aged kids how to face the reality of these responsibilities. However, some parents might not even know how to best navigate these issues themselves, perhaps no one taught them either. Instead of looking at a credit card thinking, “I have $1,500 to spend”, the owner of that credit card needs to look at it as an obligation, something that needs to get paid back by the end of the statement cycle.
I know what I am proposing may seem challenging, especially when you already feel overwhelmed by the amount of expenses you are responsible for in any given month. The key is to prioritize. When I mention the word “prioritize” I am not talking about paying the rent and utilities first over going out to eat, although that is a very good practice! When I talk about prioritizing in your budget, I mean identify what you are paying for on a monthly or consistent basis that is simply not needed.
*Let's be real with each other here.* Do you have credit card debt and have a monthly subscription to a music service? When I say prioritize I mean get rid of the monthly subscription to the music service as a means of minimizing and eliminating things that are unnecessary. Instead put that extra $10 into your savings account each month and listen to the free version of Pandora. Other examples could be clothing, shoes, purses, electronics, the list really goes on. When it comes down to it, the stuff we have today can, and will, last us if we take proper care of it. So I encourage you to take a hard look at your purchases, and only buy the items you really need. Okay, maybe I lost some of you there because you are tethered to your electronics, and always feel like you need the best of the best. Or maybe that is your conscience seeping thru to you wanting to ignore the voice of reason . . .
Now, if your credit card debt has snowballed into an amount that is too large for you and your salary to swallow, then schedule your consultation with me immediately. Confidentially, we will see if you and I can figure out a plan to handle the payment or if you should go with a debt consolidation company. Use this handy-dandy credit card payment calculator to see how long it will take you to pay off your debt. Click here to use it.
At this point, you may be thinking… “Why even use credit cards to get yourself into trouble?”. When used appropriately credit cards can be a useful tool. Having a credit card can help build your credit and give you bonus points to get a bunch of *FREE* things. However, if you already know you are abusive with your credit cards, until you can create a healthy habit, use cash for your everyday purchases.
My thoughts on numbers, spreadsheets, money, spending, forecasting, budgeting, and everything in between. Read on!
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