Money Walks

Last week I had briefly talked about how you shouldn’t cancel any credit cards before applying for a loan and that brought me to write up a general post on credit cards.

You may already have a credit card, but if you don’t I can almost guarantee you that there will be many opportunities to get one once you step foot on campus. There are many credit companies who set up tables on college campuses to encourage students to sign up for their credit cards. They even offer neat gifts like T-shirts, water bottles, key chains, pens, mugs, etc. in exchange for having you fill out an application. It all sure sound easy and tempting but you want to think twice before you do it.

Just like loans, credit cards can help you build a positive credit report. Having a nice credit history can help you in many ways like receiving private loans, buying a car, renting an apartment, even helping you get a job. There are tons of advantages of having a credit card but in return, it can also affect you negatively if you misuse it.

Like most things, there are advantages and disadvantages to credit cards. Knowing some of these can help you decide if you do or do not want to use credit cards.

Here are some advantages for credit cards.

• Credit cards are becoming more and more widely used
• Great way to keep track of your expenses
• Helps in times of emergencies
• Reduces the need to carry cash or checks
• Helps build responsibility and independence
• Helps to improve credit score
• Credit card offers rewards
• Protection of purchase
• and obviously, its very convenient

Onto the Disadvantages…

• Easy use = easily in debt
• Credit cards not paid on time can have negative effect on credit score
• Credit cards can be confusing and stressful
• Have complicated terms and conditions
• Allows you to build up more debt than you can handle
• Can have high interest rates and fees

Credit cards can make life a lot easier and be a great tool, but if they aren’t used wisely they can become a huge financial burden. We live in a society of “I want” culture and a “I want it now” one at that. Credit cards is definitely something that will always be growing more and more in demand and only when we start to learn how to manage our finances and how to save money will we ever get rid of the burden that associates with debt.

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The last thing you want to do is to cancel your credit card(s) right before applying for any types of loans, this is a bad idea. Canceling your card can affects your credit score negatively. When you have a lower credit score, that will result in higher interest rates and also may increase your fees. It doesn’t hurt for the account to stay open but it can hurt if you close it.

Instead of closing your account just leave it open, it doesn’t hurt. If you’re never going to use that credit card again, pay off the credit card or transfer your balance to a card with a lower interest rate and cut it up. You can cancel the credit card once you’ve decided that you’re not going to be needing a loan anytime soon.

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Yes, I’m really excited to announce that I have completely paid off my credit card as of this past weekend. I have wrote many posts about my credit card situation and it has been an ultimate goal for a while now. I am finally glad to announce that my long journey has finally reached an end.

For those who do not know, I originally had a credit card debt of about $9,000.00 as of last year May. Over this past year I have been trying really hard to fight temptation to not buy anything that I don’t need and only worrying about paying off this debt.

So now that it’s finally paid off, what’s my next goal? What am I now going to do since my debt has finally been paid off? It’s simple. Save, save and save. Invest, invest, and invest. That is going to be my next goal. Over this past year, paying off my debt has definitely been a great learning experience and through the process I’ve learned to budget effectively and to live frugally.

Now my main goal is to save up for my down payment for my first home. I plan on purchasing my first home in about 3-4 years from now, so I have plenty of time to start saving. I live in Maryland and houses here are quite expensive. If I want to save for a 20% down payment, I’m going to need about $70,000. That’s going to be my next 4 year goal.

Having this credit card debt paid off has relieved a lot of stress off my back and now I’m ready to continue my financial journey.

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Welcome to the 13th edition of the Carnival of Money Stories! This week we had a little over 30 great article submissions, however since majority of the submissions did not have a personal story or experience behind it, I had to omit most of it. Remember guys, Carnival of Money Stories is strictly dedicated to articles with some kind of personal story and/or experience involving finance so if your article did not have either or, then it was not included in the carnival. For awesome articles that does not fit the Money Stories, there is the Carnival of Personal Finance.

For this edition, I’ve decided to take the popular “Chicken Soup for the Soul” idea as my theme but instead filled with money stories with pictures. There is a total of 14 great stories and I put them each into their own perspective chapters or topics. In order to get to the story, just click on the picture. Anyway, without further delay, I present to you the Carnival of Money Stories #13 :Chicken Soup for the Financial Soul.

Chapter One: Real Estate

Trent from The Simple Dollar

Silicon Valley Blogger from The Digerati Life

Cap from Mint

Chapter Two: Customer Service

Mr Medicated Money from Medicated Money

Fire Finance from FireFinance

Chapter Three: Financial Mistakes

Bret from The Frugal Law Student

Mr Credit Card from Ask Mr Credit Card

Chapter Four: Credit Cards

FundZine

The Credit and Credit Card Blog

Matthew from Getting Green

Skilled Investor from The Skilled Investor Blog

Chapter Five: Career

Nina from QueerCents

FreeMoneyFinance

Chapter Six: Retirement

Stop Swimming

So that concluded this weeks Carnival of Money Stories. I want to thank all the contributors for their great work.

The next edition of Money Stories will be hosted Monday over at Frugal Law Student, don’t miss it! You can submit your money stories here.

Statistics show that the average American has over $8,000.00 in credit card debt. If you fall under that credit card debt range, then you’ve got some major cleaning up to do. There are millions of people who have come out of some heavy credit card debt, so now it’s your turn.

Follow these 5 steps to be on your way to being credit card debt free. 

1. First thing, you need to stop the credit card offers. You want to get away from all these tempting offers. You can actually force credit card bureaus to stop selling your information at 1-888-5-OPTOUT. Call the number to get the forms.
2. Reduce your interest rates. The average credit card interest rate goes for about 18%, which is really high. You want to be in the 7%-12% range. You can call your credit card provider and negotiate for a lower interest rate. If you have been a customer for a while, then it should be really easy to negotiate. 
3. Stop using your credit cards. If you’re trying to reduce your debt, the last thing you want to do is to keep adding to it. If you have a hard time not using your cards, then take them out of your wallet or purse and leave them at home. If those methods doesn’t work, you can even cut up your cards.
4. Always pay more than the minimum due amount. Credit card companies love it when you only pay the minimum amount because the balance is calculated based on a system so that they can extend your payment plan as long as possible to make optimal profit.
5. Consolidate your debt. Once you have reduce the interest rates of your cards, you want to combine your credit card debt into the card with the lowest interest rate.

Once you have stopped using your cards, reduced your interest rates, and have consolidated your debt, then you’re heading in the right direction for paying off your credit cards.

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So I managed to bring my credit card debt down to an even $4,000.00 just this past weekend. Paid off $1,404.22 out of the $5,404.22  which brought my total to an even $4,000.00 I plan on paying off a little more as soon as I receive my refund from my federal return. My goal is to bring it down to $3,000.00 by next week. It would be nice if I could have it completely paid off before summer starts but I doubt that will happen, simply because I am only working part time and spent money on worthless junk. However, this will not stop me form trying to get it down as much as possible. Here is a general idea on how I plan on getting it down as much as possible. Some of the stupid/unnecessary things I spend on includes:

1. Chinese food - This one is really stupid considering I have a meal plan on campus which is completely already paid for. I just need to throw out all my carry out menus from my room.
2. Starbucks - Ah, how I love coffee. This one is going to be a little hard to stop but I am going to try to cut down little by little. I go about 5-7 times a week. I love their new Dulce de Leche Latte. Such temptation makes this one quite tricky.
3. Random grocery shopping. Yes, I am truly a college student. I all I do is eat and study. Although I love the infamous Ramen Noodles, I tend to spend a little more on the hot pockets and frozen pizzas.
4. Car gas. Gas price is no joke. Especially since my car only takes premium fuel.
5. Pure junk. Stop carrying my cards and cash everywhere. Simple.

I think that if I am able to cut down on these 5 things I can save so much more. I’m going to set my target date for May 21st. Until then, I plan on keeping a record of how much I would of spent and instead saved.