I received this letter today from my credit card company on how they have decided to lower my cash advance interest rate to 3.9%. Although, that still doesn’t seem very good though. This is one of those things where I don’t really pay much attention to as they can make the interest rate as high as they want considering I never use the service and pay my bills fully.

I was just thinking though on how I was trying to imagine myself using these cash advance services and how it seems like such a financially disastrous move to borrow money this way. Not only do you have to pay interest on it, but from what I am reading in this brochure there isn’t really a grace period and the interest is ongoing to the date of the transaction.

That’s like a quick path to debtville, so to speak. I’d rather adopt the” if you can’t afford it, don’t buy it” mentality if you are short on money for something.

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For these next few weeks there seems to be an excess amount of people who happen to have birthdays coming up as well as other occasions that normally involve buying presents for people. As a result, I have been trying to find presents for people that I thought would be suiting.

Another person who was shopping for the same people was telling me on how this was such a financially draining week as she was using up her entire monthly non essential budget solely on gifts for others.

This got me thinking too as if you are in a situation where there are say too many birthdays and you are on a very tight budget as it is which one of the following would you do?

1) Determine how much money you can truly afford and divide it equally amongst the recipients or even giving things that are more personal instead.

2) Spend however much you would normally spend on a person by using tools such as a credit card even if it means adding more debt to yourself.

3) Delay giving certain people a present so that you can get them what you intended once you have the funds to do so.

I personally would be inclined to do the first option. Although realistically, I think most of the time people have a “I can so I will” mentality and will instead opt for say option two and start racking up on the credit card. It just seems more like a debt that you are paying back to the other person, so to speak, as oppose to giving a gift if you are spending more than you can afford I’d say.

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A person yesterday was telling me how he knows this guy who is in his 30’s and when it comes to money the only thing he wants to do is save it. He would refuse to spend it on anything that is not a necessity such as traveling for a vacation.

The gentleman was basically ridiculing him and how he doesn’t understand why a person like that would even bother making money if they don’t intend to use it. I can definitely understand not wanting to waste money on just anything, but just saving for the sake of saving money seems kind of counter productive both from a time and investment point of view.

To a certain extent being able to save a lot of money is a way to prove to yourself that you can manage money and follow through with goals. At the same time, I guess like most things you can’t keep conquering the same goals that you know you are good at or be afraid to lose a little. It’s like saying, you can’t grow much taller by standing on the same block. Stepping off that block might make you shorter for awhile, but once you find a taller block to stand on you’ll wonder why you did not do it sooner.

Another way to think about it is why should you do all the work while that lazy money sits in the bank account? You earned it, so find a way to make it work for you now.

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Just a few days ago I started doing my monthly credit card charges to pay various vendors and as usual I try to take advantage of the monthly cut-off dates for transaction on my credit to keep more money for myself such as earning more interest in a savings account.

What I mean by this is that credit cards have a billing cycle where if certain transactions do not get posted on your credit card by a certain time period of the month then the charged amount will be posted on your next month’s bill instead. Therefore, you get to keep the money in your bank still and won’t have to worry about it for more than 30 days later.

As an example, for myself any transactions that do not get posted to my credit card by the 16th of any given month won’t appear on the upcoming bill but rather the next one. So let’s take a phone bill that I receive monthly usually around the first to second week of the month. Like most bills, it indicates that payments need to be received by a certain date like say the 28th of the month or else you will incur a late penalty.

Now, if I just paid the bill right away with my credit card upon receiving the bill like say on the 12th of the month then that means I would need to withdraw my own money to pay for it in the upcoming billing cycle. Instead, because there is a rather good grace period for the bill I wait until the 17th of the month to pay the bill with my credit card. Therefore, it satisfies the vendor as they got paid on time and I don’t really have to withdraw money to pay for it until more than 30 days later.

One thing to keep in mind is that if you try this technique then it would be wise to make sure you pay the bill with at least two to three days before the actual due date of it as many times there is a delay in receiving your payment. If your due date was the 28th and you submit your payment on the 27th with your credit card there is a good chance that the vendor won’t receive it on time and hence you will incur penalties. This technique has worked very well for me personally and is another example on how a credit card can be a great tool if used responsibly.

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A person was telling me the other day that he has a pretty structured financial management plan as he always divides his funds appropriately. On top of that, he mentioned that for certain funds such as ones set aside for entertainment purposes he would force himself to spend it one way or another even if he didn’t feel like it.

He mentioned that this way he is making sure that he is constantly being active in life as oppose to always being tied down to work and money issues. I’ve seen quite a few people adopt this type of approach as well. I personally prefer to spend based in a non structured yet disciplined fashion. Would feel too much like a chore the other way for me I think.

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