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My Credit Card Budget

by J. Money on Wednesday, December 3, 2008

i heart credit cards It’s reader mail time again, and it’s all about Credit Cards! You all know I love me some emails (and comments, twitterings, etc) so don’t be a stranger, my virtual door is always open :) And if the stars align, I’ll sometimes even blog about it! ooohh….

So yeah, today’s post is brought to you by a fellow Budgets are Sexy reader who wants some advice on the old “Pay everything with your credit card” idea. And guess what? That’s one of my specialties! I do this with my USAA Card :)

But before we start, you know i have to throw in a quick disclaimer here: Using your credit card like this is NOT for everyone, esp. those who aren’t good at managing their money. If you’ve got that on lock, then continue reading my friend ;)

Here’s what my dear reader asks:

“My question is this- I know folks like you swear by using your credit card for daily things, bills, etc and then paying it off each month. (by the way, neither myself or my bf have ANY credit card balances since we decided to buy our house this past year…) Anyways, I want to try this with this rewards card, but I\’m not sure how to go about it. I have online bill pay set up through my credit union for most household/regular bills and just worry about tripping up and getting screwed if I try to use this cc like you say you do. Help? Can you do a post about this, perhaps?”

Your wish is my command young lady ;) People use their credit card this way for a number of reasons, but the two main ones for ME are A) To help me budget & track my expenses easier, and B) To rack up a crazy amount of rewards! Plus, you’ll actually find yourself spending LESS since you see the amounts build week after week. Here are the 4 steps for Operation Credit Card:

1. Create a Credit Card Budget!

Since you wont’ be using debit cards, checks, or cash all that much now, you’ll have to make sure to have enough to pay off your c/c balance each month. VERY IMPORTANTE amigos. The first time i did it i just guestimated and came out $200 short. Not. Fun. Here’s a look into my own credit card budget to help get you started. Remember, it doesn’t have to be all that complicated…

2. Find a Credit Card w/ Cool Benefits.

Everyone has their own soft spot – free mileage, gas rewards, cash back, there’s a whole mess of them out there. Once you have a favorite, do a little research and check around for the best cards that focus on it. Pf Blogs, financial magazines, they’re all great for finding them.

3. Now, Use the Credit Card for Everything You Possibly can.

Cell phone bills, utilities, car insurance, life insurance, lunches, presents, tv/internet/phone, etc. Whenever it’s time to spend money, try using the credit card first. Unfortunately (or fortunately?) you can’t pay off ALL things like mortgages or car payments with it (well, you *can* but you’d have to use the cash xfer option which you NEVER want to do), but you can get pretty close.

4. Pay it off IN FULL Each Month!

Seriously, don’t forget this – it’s the most important part :) It may take a few months to get used to 100%, but it’ll be second nature soon after. It can actually be pretty fun too – each month you get to see how you compare to the previous month! woohoo! haha….

There’s a couple ways to pay here and stay out of trouble. I prefer using my bank’s online bill pay over automatic anything simply cuz i’m scared $hitless of overdrafting my checking account accidently. If you manually pay it each month, you’re more likely to stay on top of it! And if you’re worried about forgetting, well, that’s what we have Gmail/Outlook for! You can easily set up customized reminders and calendar events to help remind you every month. Plus, don’t forget you’ll still get the monthly credit card statements in the mail (or emailed) too.

And there you have it – the 4 steps to get in on Operation Credit Card! Again, it’s not for everyone, but it sure is for Rock Stars :) It’s all about maximizing the benefits baby!


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