How I've been making money with credit cards..

Very, very simple concept here: use credit card rewards to your advantage.

VERY IMPORTANT:
YOU HAVE TO PAY OFF YOU BALANCE WEEKLY!


This is expert level: self control.

This idea works very well when you are already paying this amount every month. A great example is your cell phone bill or car insurance. I run these through my 1.5% cash back credit card and then pay the balance off just days later.

THIS WILL NOT WORK IF YOU ARE ALREADY BEHIND!

Again, I cannot stress this enough. Irresponsibility will put you behind real fast.

If you ever for a moment think I can buy this now and pay it later when I get my next paycheck, I'll be fine. The credit card company has already won!

ALWAYS HAVE WHAT YOU'RE ABOUT TO SPEND ALREADY IN YOUR ACCOUNT.

It's very important to understand that a credit card is NOT money you already have to spend. You are allowed to pay off outstanding balances before the due date. If you wait for the statement, they're already making money. The goal here is to make cash back work for you!

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A tip from the new guy

Hello. This is my first post, so I wanted to introduce myself. After that I will be diving into some techniques and strategies to position yourself as an investor. To be clear, this is for those of you that like me, struggle with finances. Living paycheck to paycheck? No savings? Check this out.

My Story

I'm Nate. I'm 26, married with 2 kids, and live in South Dakota in a 6 bedroom house that my wife and I purchased as a house hack. My whole life I've spent everything I had. My savings account never went above $200, and most of that was money given to me by family for birthdays. Mom and Dad would tuck the money away into my "Kid's 'N Coins" account. The only reason the balance existed is because I was unable to get my hands on the money.

Fast forward a few years, and I'm working minimum wage jobs - still living with my parents, and no savings to speak of. I had no bills, no required expenses, and still NO SAVINGS.

I always blamed my lack of savings on minimal income, that is until the past year.

Present day: Over the past year, my wife and I have become landlords. We have multiple savings accounts that don't go below the thousands. And we have investments that are also in the thousands. All of this was accomplished in approximately one year, despite having recurring expenses, 2 kids, 2 cars, and subpar incomes.

TLDR: I've gone from being broke on a couch and borrowing everything, to having a sizable savings. I never need to check my balance before filling up on gas or getting groceries. I own a house that makes me money. I have multiple paper assets that constantly make me money. It all started with a book.

I Will Teach You to be Rich

No not really, but kind of. This is the title of the book that started it all for me: "I Will Teach You to be Rich" by Ramit Sethi. This book is responsible for my financial makeover. If you want to be rich you've got to start somewhere. Success can be broken down into two steps: Learning and Applying. One without the other will not lead you to success. So learn, and apply. If you like to read, you can find copies of this book online by Googling the title. If you're like me and don't like to read - check it out on audible. The book costs $25 if you're a member (or just one credit). It's well worth it. I know, I know, the title is super spammy - but it's worth it. Trust me. Just be sure to get the format that will help you get through the book. For me, that was audio.

A free tip from the book: The Bucket System

The number one financial mistake that we all make is spending too much. I've been there. Living paycheck to paycheck sucks. And it's NOT YOUR INCOME that's the problem - it's your expenses. The only time low income is a problem, is when it's $0. Otherwise, focus on expenses first.

Budgeting

Have you ever tried a budgeting app like Mint? I did. For 3 years I used Mint budgeting unsuccessfully. Here's why Mint didn't work for me:
 1. It's a reactive budget. After you've spent too much, you get to look back and say "oh no, I went over budget again". People that find success in Mint are constantly checking their budget before purchases. I'm not that disciplined, and if you're reading this, you're probably not either.
2. It's a rigid budget. If you go over budget, you go over budget. The funds aren't taken from a different account and you're at a net loss for the period.

The Solution

If you're terrible at conventional budgeting like me, try the Bucket System. This is a flexible budget that helps you manage your finances proactively and avoid going over budget.
Your budget should contain the following categories:

Committed expenses(60%)

    Groceries, gas, monthly bills etc.

Fun Money (10%)

    Dining out, drinking, clothes, shoes etc.

Irregular expenses (10%)

    Vacations, gifts, short term savings

Retirement Savings (10%)

401k, retirement plans etc.

Long term savings (10%)

    Down-payments, large purchases, debt reduction.

To best work this system. You need to make sure that these categories don't exist on the same card. Most importantly, you need to isolate your "fun money" on it's own card/account. That way, when you reach the limit, your card will be declined. The rest of the categories can be put into one account, but they should remain separated using sub-accounts. This success of this system boils down to a simple principle - proactively limiting our compulsive nature. Don't get me wrong, it's tough to deny your compulsive side. Knowledge is half the battle, so if you haven't already, check out Jesse's post about how You're secretly hurting your financial health.

Of everything that got me from the couch to where I am today, the Bucket System is the most valuable. There it is! Now go out and apply this system to your finances. Take a snapshot of your current finances and put an event in your calendar a year from now to reflect and see your progress. For a full financial makeover, get the book and go through it at least twice. Don't forget to apply your knowledge for success!

Thanks for reading! If you like this, keep coming back - there's more coming down the pipeline.
Nate.

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You're secretly hurting your financial health

I'm sure you've done it; I have done it myself. We use our voice of reason to justify spending. "This jacket has seen better days" or "Guests need to see that I have the newest stuff." I just know you have a good excuse you've come up with.

As it turns outs a behavioral expert, Daniel Crosby, Ph.D. call this the "junk food of personal decision making." Easy in a pinch, but detrimental for long-term health. Of course the first step is admitting there is a problem.

Here are four common ways we justify our spending:

1. It's for a good cause.

After we meet our financial goals and priorities, we may find that spending money on others makes us feel happy. Well there is most certainly a time and place for this, don't cause yourself stress by doing it prematurely. Your financial well-being is definitely a worthy cause in of it's own right.

2. I'll start to save or save more when I make more

This thought process is completely wrong. In fact, I can't think of a way better way to hurt your financial health. Think of investing and saving as muscles; use them or lose them. Get yourself used to saving a portion of your income now. Do you really think you're going to start later? Even if it's $10 or $50 per paycheck, you need to start.

3. I had a bad day or a great day!

Not surprisingly, it goes both ways: comforting the pains of a lousy day or celebrating the ups of a good one. I'm guilty, myself, of going out to eat on pay day. You can make a list, that doesn't involve spending, to combat this. Often times, free things can be more gratifying than splurging.

4. I work hard - I deserve it!

You're not alone, though. A lot of people work hard, everyday... day after day. You may even start to think after saving for a while, that you've shown you capable and deserve something for it. Instead, start rewarding yourself for saving and not spending.


The first year has been my, and probably yours, hardest journey for starting to save and invest your money. Stick with it and when your money starts working for you, you'll know what to do.

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Liabilities vs. Assets

What you think might be an asset to you, could actually be a liability.

Let's start by defining those two terms:

Asset -

• property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.

Liability -

• a thing for which someone is responsible, especially a debt or financial obligation.

"In its simplest form, your balance sheet can be divided into two categories: assets and liabilities. Assets are the items your company owns that can provide future economic benefit. Liabilities are what you owe other parties. In short, assets put money in your pocket, and liabilities take money out!"

That new car itself may be an asset, but the loan against it is a liability. To top it off, that car may lose value over time, especially in the form of repairs. This is called depreciation. So is that really an asset? Yes, it is. It may still be worth of something of value to you or someone.

Even cold hard cash is subjected to this. Think about it - $5 dollars doesn't have the purchasing power that it did even 10 years ago. This is due to inflation.

This is where investments come into the picture.

Investment -

• the action or process of investing money for profit or material result.

If you're not doing something with your money, the entities you owe probably will.

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Our struggle with debt

I was never taught how to manage money.

I was taught to balance a check book, but not balance my spending and saving. I was reassure getting a loan and purchasing was new (to me) car was the right thing to do. I was never taught to put most of it away. 12 years later, I finally realized: If I can't pay for it in cash, I probably don't need it that badly.

I hope to change this shortfall with my kids. I hope everyone that reads this blog starts to have a similar mindset. Yes, there is good debt to have - like a mortgage or insurance. But that brand new car can wait. Unless you're buying cheap to fix up and flip, automobiles are losing you money. That is with maintenance, fuel and depreciation alone. What happens when it need a major repair? I hope you've been saving! 🙂

I've been there, showing up in the new truck or car. Feeling good for a few days. But that feeling doesn't last the 3 to 5 years loan!

"In 10 years, the $34,000 car will be worth less than $10,000 due to a ~70% depreciation schedule. The investor of the $30,000, however, could have investments worth 5 to 6 times more!"

You need a plan. You need to stick to that plan.

I believe debt should come first. Pay off that credit card and then the next! But always put a little away into at least a savings account. It's hard to make money with interest when higher interest is in play.

Of course,  there are better alternatives to a traditional bank's savings accounts, (ex ALLY @ 2.15 APY). I'd still recommend putting money into an investment strategy. Acorns has gained $2.64 (2.80% on $94.34 initial investment, $96.98 total) in just a month. It would've taken an APY of 2.15% a year to increase to 102.17 with just a $100 deposit.

Let's face it, nice and band new things are great and advertisements have us all chasing that dream. I see too many young people blowing their paycheck to feel good about themselves for a short period of time.

I'm here to tell you: Slightly used is OK. Money management is awesome and you don't have to go out every weekend. Hopefully opening your portfolio in 15 years and thinking "wow, that was worth it."

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Your Tax Refund

Thinking of getting that new car? Or, maybe that new T.V.?  Yes, new things are great! But, why don't you put that money to work? Did you know putting $5,000 into a saving account with 2.00% APY will make you $101.00 that year? Five years your balance will be about $5,525! Without doing anything but sitting on it!

Another option is actively investing your hard earned cash! You could let Acorns do the investing for you! 
Acorns portfolios are developed with help from Nobel Prize-winning economist, Dr. Harry Markowitz. 
Use Acorns to invest change!

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