Every $dollar I save is 25 cents for retirement, 25 cents for investing, 50 cents for business capital.
I got into trouble with credit cards when I was in college. I used them to splurge at restaurants and malls and ran up thousands of dollars of debt and ruined my credit. It took years for me to pay off the debt, rebuild my credit and adjust my spending habits. I was unable to get a credit cards for years after that debacle.
Now, I have two credit cards but they are used primarily for emergencies. I do not like using my debit card for travel or paying for goods online. If there is fraud with your debit card that cash is gone for months while you fight with the bank to get the funds replenished. Credit cards on the other hand holds the bank’s money.
My rule with Credit Cards is: If I cannot save and buy something cash I do not buy it. The exception of course; are emergencies. What are you to do if you need a new AC in the middle of summer in Florida? With that said, there is one type of credit card that is worth getting, if you are disciplined: Rewards Credit Card
I have a Rewards Credit Card that gives me 1 point for every dollar I spend and 5 points for every dollar spent on a goods or service in the category of the quarter. For example, for the January to March quarter the 5 points reward category may be Groceries and Gasoline. If I spend $1,000 ( not hard to do for a large family) per month during the quarter I get 5,000 points. For my rewards credit card every 100 points can be redeemed for $1. So $1,000 would yield 5,000 points which translate to $50 per the month excluding your regular charges outside of the category.
The “TRICK” is to pay off the credit card at the end of the billing cycle so as not to accrue interest charges. I pay ALL our monthly expenses with the Rewards Credit Card except rent. I then pay the balance on the card at the end of the billing cycle. I average roughly $50-$80 dollar a month in redeemed cash . Now you may scoff at that small amount but that works out to roughly $600-$960 a year.
To put that into perspective that is enough for a 4 day cruise for two. In my case I am distributing the money between retirement, investment and business capital. Of course this only works if you pay it off at the end of the month and you are discipline and able to only use the credit card for your monthly expenses that are within your budget. If you are spending more that you make per month my technique wont work.