Last Post of the Wedding Series: Wedding Debt

This will be my last post on the little wedding series I created.  It has been so much fun to write about saving money on your wedding and I hope this has helped many brides to be (or grooms to be)!  :)

This post I'm going to talk about what happens after the wedding and honeymoon . . .  wedding debt.  If you're lucky, you'll either have somebody else paying for your entire wedding, have saved enough, or are able to pay it off in a timely fashion.  But for many, that is not the case and I am very sad to say that it is true for my husband and myself.

As you know, I am a huge proponent of using credit cards by using them wisely (See Make Money With Credit Cards).  This means never accruing debt by always spending within your means and paying off the bill each month in full.  Obviously this is quite hard to do when paying for a huge expense like a wedding so in my post, Using Credit Cards to Pay For Your Wedding and Honeymoon, I recommended opening a new card or two with a promotional 0% interest period to use to pay for your wedding and then paying off that card within the promotional period (therefor not paying any interest on the charges).  Well my year is almost up for the 0% interest on my cards and I am nowhere near to paying it off.

I really had no idea if we would be able to accomplish it.  I had really hoped so but with so many variables in my husband to be and my own income as well as moving, I didn't know what our budget to live and how much we would be making each month would be and so how much we could pay off each month.  After about 8 months, I know that we can comfortably live off of what we make and still pay a little off our wedding debt, but not enough to pay it off in time.

The safe and frugalness in me wants to be so upset that I didn't accomplish this, but I have to take a different mindset.  Honestly a large wedding and honeymoon is a big life purchase and it's okay to be paying it off over several years just like you would for purchasing a house, going to college, etc.  I'm very happy with the wedding and honeymoon I had and I wouldn't change it for all the money in the world.  And I would be more upset with myself years later if I hadn't gone big.

So now it comes to paying it off.  For my first card that came to the end of the 0% promotion period, it didn't have as much value on it.  I ended up transferring the balance to another card that was offering a 0% interest on balance transfers promotion (and payed a fee of a little more than $100, still less than interest would be).  I figured I could just keep getting new cards that have this offer and transferring the balance.  Wrong.  Not only at this point was I really messing up my credit score by having cards that were over or at the top of the credit limit, but each time you open a new account it lowers your score.  That makes it harder to get the better cards.  Plus, when you first get a new card, the credit line is pretty low.  I had a HUGE balance on my remaining card.

I realized it would get way too complicated to keep playing this transfer game.  I had been getting some things in the mail offering great rates on personal loans.  Once I realized this was a huge life expense that was going to take years to pay off, I figured a loan was the best option to consolidate and get the debt off of credit cards!

So I started researching personal loans.  I found out that peer to peer usually have the best rates since they are funded by people just like you and me and not a big corporation that has thousands of employees to pay.  Prosper was said to be one of the best companies.  So I applied.  I did not qualify (probably from all the credit card debt that I was trying to eliminate!).  I tried under my husband.  He did not qualify (Most likely because he has like no credit history.  We're going to work on that).  But they did point him to a different company that offered him a loan for just above the amount we needed to pay off the card in question.

I was filling out all the appropriate fields to accept the offer when it dawned on me, "What is the APR for the credit card once the promotional period ends?"  I went and checked and lo and behold, that rate was lower than the loan rate.  WAY lower.  I know credit card rates fluctuate but I thought at least for now, we might as well wait and just keep it on the card!

So the moral of the story is, pay off your debt within the period if you can but if you can't, just keeping it on the card might be the best option!

Using Credit Cards to Pay For Your Wedding and Honeymoon

For those of you that have read my post, Make Money With Credit Cards, you'll know I'm a big proponent of using credit cards.  As long as you use them wisely, you can actually make money off of them!  And paying for your wedding is no different.

We all know that a wedding is a big expense, so here are some tips to help you keep track of the amount you are spending and to make a little back!

Tip #1: Sign up for new cards with 0% APR
Although in my previous blog about using credit cards I state that you must always pay the credit card bill on time and in full, since a wedding is an unusually large expense that generally is not with in your normal living budget, I'm going to set that rule aside.  This can only be done if you open a new card that has one of its new perks as 0% APR for a certain period of time (usually 12 or 18 months, the longer the better).  This means that for that period of time, you will not have to pay interest on your purchases even if you don't pay your bill in full.  Meaning that you can take a year or a year and a half to pay off all your wedding expenses without paying anything extra.  You still need to pay the minimum amount on time to avoid late fees though.


Tip #2: Find credit cards that give you perks you can use
I always love signing up for new cards that have a cash bonus for spending a certain amount within a time frame which can give you anywhere from $50 to $200 for just using the card!  In general rewards, I usually go for cashback.  They are overall the most practical and give you the most bang for your buck, but since weddings and particularly honeymoons are such specific categories, it may be more in your interest to find a card that rewards you in those areas.  For example, finding a great travel rewards or airline card for your honeymoon expenses might get you free airline tickets, hotel stays, car rentals, etc.  This means you can spend more on extra treats!


Tip #3: Use the cards only for wedding or honeymoon expenses
Using these new credit cards only for your wedding or honeymoon expenses helps you to keep track of everything you are spending on it.  Even the most experienced planners are going to run into extra expenses that you didn't plan on, and things add up, it can be hard to keep track of everything.  As long as all your expenses are on one or two cards, it makes it easier to see.


Tip #4: Pay for as much as you can with credit cards
In order to make use of being able to pay off the purchases over the 12 or 18 months and to get the most rewards, always try and use the credit card for your expenses.  In today's world, it is much easier to pay with a credit card for almost every wedding expense where you normally would have to pay with a check.  Definitely make sure your venue accepts cards since that is your largest expense (there might be a little fee, but it's still worth it to use the card).  For smaller vendors like florists, caterers, musicians, DJ's, makeup artists, etc, ask them if they use PayPal or any other website or app that lets you pay with a card.  If they don't, suggest that they sign up for one.  There are many that are free to use and just charge a slight fee (a small percentage of their price) to use cards.  This can help gain more customers who are like us and prefer to pay with a card!


I hope these tips help you in paying for your wedding and honeymoon expenses.  I know it's a crazy huge amount so it's important to stay on top of it financially.  Keep reading this blog for more ways to save on your wedding and in your everyday life!

Make Money With Credit Cards, Part 2: My Favorite Cards

Because so many people are interested in my post, Make Money With Credit Cards, I decided to make a second part about my top 3 favorite credit cards.

#3: Discover

Signup Bonus: When I signed up for Discover, I had a special offer for a signup bonus which I can't really seem to find anywhere online.  This is part of why I ranked it at number three.  You may get a special offer in the mail if you've already signed up for a lot of cards, otherwise you won't get a signup bonus but it's still a good card.

Why I like it: It has a normal 1% cash back on most purchases but the thing I really like is each quarter there is a 5% cash back bonus on select categories.  I don't use this card for normal purchases, but I only use it in areas where I will get the 5% bonus.  Make sure you sign up each quarter for the new bonus!

Negatives: It's not as widely accepted as Visa.  It's gotten better over the years but there are still some places that don't accept it.

Sign up here: https://www.discover.com/credit-cards/

#2: Chase Freedom

Signup Bonus: Right now if you sign up for a Chase Freedom card you can earn a $100 Bonus after you make just $500 in purchases in your first 3 months.

Why I Like It: This card is the same as Discover, 1% cash back on most purchases, and a special 5% cash back on special categories each quarter.

Sign up here: https://creditcards.chase.com

**Update 12/2/14: Sign up with this link to get a $200 Bonus!  Signup before 12/18/14! https://applynow.chase.com/ 

$1: BankAmericard Cash Rewards

Signup Bonus: Online-exclusive $100 cash rewards bonus after making at least $500 in purchases in the first 90 days of your account opening.

Why I Like It: This is the card I use for most of my purchases because it gives you more cash back in the areas where you do the most spending.  You earn 2% at grocery stores and 3% on gas and 1% on everything else.  And, if you don't mind waiting, you get an extra $75 if you let your cash back accumulate to $300 before redeeming them.

Sing up here: https://www.bankofamerica.com 

Learning About Your Credit Score and Ways to Make it Better (Or Establish It!)

So today's post isn't really about saving or making money per se, but it is an important topic when talking about finances that I think many people have misconceptions about and that's your credit score.

What is your credit score?  Put simply, it shows how worthy you are of borrowing money.  Meaning, the higher your credit score, the more people are willing to lend you because you have a good history of paying back money you borrowed.

I think the biggest mistake made when concerning credit, is not establishing any.  Many people are afraid of credit cards or taking out loans because they are afraid they will go into debt.  It's smart not to try and buy things that you cannot afford, but it is not smart to be afraid of using credit as long as you use it wisely.  It's important to establish credit as soon as you can so you can build a long history of good credit.  Why is this important?  Because when the time comes in your life to be making a big purchase that you have to have a loan for, like a house, you have to have credit established to not only get a loan but to get a good one with better rates.

So how do you establish credit?  There are two big ways to establish credit: through credit cards and through loans.

Credit Cards
I have already talked about using credit cards to your advantage to make money, see Make Money With Credit Cards, and I briefly talked how to manage credit cards so they don't lower your credit score -- that is . . . . paying off your bill every month!  As I said in that blog, don't be afraid of credit cards.  As long as you spend with it just like you would a debit card, only buy what you actually have money to pay for, you shouldn't run into any problems paying your bill.  And paying your bill in full on time means paying no interest or fees.

Paying your bill also means helping your credit score.  As long as you keep paying your bill, your credit score will go up.  This also increases the amount of money you are able to "borrow" each day from the credit card company.  Like I said, the more you pay off, the more you can borrow on credit.

An important thing to note, if you have multiple credit cards open that's fine!  DON'T EVER CLOSE A CREDIT CARD ACCOUNT!  This affects your score negatively.  Many people after going into debt and then eventually paying it off, want to close their accounts so their not tempted to use it anymore.  DON'T.  Cut up your card and don't use it, but keep the account open.  Why?  Because an open account, even if the bill is $0, you pay $0, you are paying off your bill.  That helps your credit score.  Closing an account even if you always paid your bills on time will negatively affect your credit score because banks and such see that as a cry for help, that you do not have money to pay things off.  So even if you want to open a credit card account and not use it, it could still help your credit score, though very slightly.

Loans
The other way to establish credit is through loans.  I remember my economics teacher in high school saying, never get a loan to buy a car, you should have enough money to pay it off right away.  That always stuck with me but now I see that getting loans is important to establishing credit, though there is still truth in what he said.  It's important to understand when you should be getting a loan to help your credit and when you should be getting a loan just because it's a big purchase and you have to have a loan.

What do I mean by this?  Well take the car example he used.  The idea that you should have enough money to pay for the car is still true.  It does not make sense to purchase a car that you cannot afford even though you can get a loan which makes it easier to buy.  Why?  Well first of all, in the scheme of all things in life, purchasing a car is a relatively small purchase compared to other things like education, houses, property, etc.  Second of all (and something more people will take to heart), cars depreciate in value where as most other things you need loans for increase in value -- houses and property if well taken care of and improved over time increase in value and even investing in an education means that you will be able to make more money in the future.

So why do I believe now that you should possibly still get a loan?  Well, just like credit cards, you can get a loan just to establish credit even if you have all the money to pay it off (as you should).  You can pay off the loan in full and not have to deal with interest.  It's just like paying for it with cash or a check, but you help your credit score while you're at it.  This can also be done with smaller large purchases (that sounds strange) like an engagement ring or other vehicles.

Really the only types of loans that you shouldn't be able to pay off right away or shortly after are: education, housing, and property loans.  Obviously these are are in the tens and hundreds of thousands (or millions) of dollars and most people cannot afford to pay for that right away, and rightfully so!  But to be able to get a loan for these things, you need to already have credit!

Important tips about loans:
1. If you can pay more than your monthly payment, do it.  Just because you have a loan for 30 years doesn't mean you have to take that long to pay it off.  The sooner you pay it off, the less interest you have to pay!
2. Don't get behind on payments, not only does that hurt your credit score, but the interest and fees that accumulate become insanely hard to pay off.  That's how people go into extreme debt.  If your financial situation changes, talk to the bank or company that has your loan and discuss different options.  Especially with long-term loans, there is generally a solution that both parties can agree upon that doesn't hurt you as much.


If you feel there's anything I forgot or if there's still something you don't understand, feel free to comment below!

Make Money With Credit Cards

(Read Part 2 of the series right here: Part 2: My Favorite Cards)

Up till now I've written posts about just saving money and I haven't written any about making money.  Well there's two reasons for that, there aren't as many easy ways to make money plus I feel that saving money is making money anyway.  But here's one that you actually gain money.  This is not for the faint of heart though.

The key for a really easy way to make money is . . . credit cards.  Don't gasp like I just said Voldemort or something.  Credit cards get a bad rap because of all the stories of people going into debt because of misuse.  It is not the credit card's fault that they are in debt, it is their own fault.  All it requires is self control.  If you don't think you can handle that, then by all means do not open up a credit card.

How to Not Go Into Debt with Credit:

1.)  As I said, the key to not going into debt is self control.  Do not think of it as being able to buy anything you want on credit, think of it just the same as your debit card, i.e. you have to have the money to buy it.  Generally I like to keep the rule that it already has to be in my account, like I could pay for it with cash right now, but if you know you will have enough money in your account by the time you have to pay your bill then that's okay too.  But I don't recommend living paycheck to paycheck like that if you can help it.

2.)  The second reason people go into debt over credit cards is because they don't pay their bill IN FULL each month.  If you've followed the rule above, you will have enough money in your account to pay the full amount.  DO THAT.  If you do not, the interest charged on what you have not paid will end up being way more than you should ever pay for the stuff you bought.  Just don't do it.  If you happened to have an emergency or something that prevented you from paying your bill in full one month, that's understandable, pay as much as you can, not just the minimum.  And then make sure you pay it off as soon as possible.  Oh and make sure you pay on time.


And that's it!  If you keep your spending limit within your means, that means only buying what you can actually pay for, and if you pay your bill in full on time, you will never pay credit cards any extra money (as long as you get a card with no annual fee but more on that next) and you won't go into debt.


Things to Look For When Choosing a Card:

1.)  NO ANNUAL FEE!!!!!!  This is super important.  Really the only fine print you have to look for as long as you follow the above two rules, is no annual fee.  Why should you have to pay a fee to pay for thins?  You shouldn't and that's why you won't.  There are plenty of cards out there to choose from that fit your style that don't have one.

2.)  Rewards.  Here comes the fun part and a little bit of the money making.  The reason why credit cards are so nice (not because of the credit because we don't use it based on credit we used it based on the knowledge that we have the money for it) is because you get rewarded for your purchases.

The way you get rewarded varies greatly per card.  Most are either based on points or a percentage.  Generally points give you less value per dollar spent, but that's not always the case.  It's also just easier with a percentage to know how much you are gaining back.

What you are rewarded for.  Here's where choosing a card that is tailored to your specific buying habits is key to getting the most out of your rewards.  I'm not going to go into great detail because there are hundreds of sites devoted to devouring every bit of every credit card offered out there.  Just do your research to find one that benefits you most.

Redeeming rewards is probably the most fun.  Generally the rewards options come in the forms of actual objects, gift cards, statement credit, or cash.  While it may be fun to build up the rewards to get that fancy TV on the list, you usually get more value out of getting either statement credit or cash (don't worry it usually comes in a check or direct deposit not actual cash).  Why, you ask?  Because the amount you get back in cash is usually more than what you would actually spend on whatever item you are looking at.  Say you've saved up 100,000 points.  That TV you were looking at is valued at 100,000 points.  But 100,000 points equals $500 cash back.  Look up the value of the TV (they're not gonna let you know it's not worth all those points) and you'll see that it would only cost you $350 to buy.  The value of that TV is $150 less than you would get in cash.  So get the cash, then ask yourself if you really need that TV or if the cash can go to something more useful.


Now that's all cool, you get free rewards for spending money.  But that's not the only way, and certainly not the most prosperous way, to make money off credit cards.  Here's a way to make a lot of money, quickly, without going over your budget.


BONUS REWARDS

Bonus rewards are offers for when you first open up a credit card.  As long as you spend a certain amount in a certain time period (generally 3 months) you get the bonus reward.  These rewards start at $100 and can go up to $500!  Or if you're into travel, enough miles for a plane ticket anywhere in the world.

Now be careful.  Remember to still check to make sure there's no annual fee.  Also make sure the amount you need to spend to get the reward is doable, within your normal spending amount.  The ones that offer the larger amounts, usually either have an annual fee or it's a really high amount you have to spend to get the reward.


And those are the keys to making money off credit cards while not spending any extra yourself.

Sometimes I open a credit card just to get the bonus reward.  That's fine.  Just make sure you don't start using too many different cards at the same time.  Find one that really suits your style: rewards you the most for your normal spending habits and has rewards you like, and use only that one.  Obviously you need to switch to the new one for those three months or however long it takes you to get the bonus reward.  Then when you are done with getting the reward, switch back to the old one.

If you build up a pile of cards, you can even just cut up the cards you don't use anymore and throw those away.  But don't close the account, that will kill your credit score.  Even though you may have accounts you don't use at all, it still builds up positive credit because you are "paying it off" every month.  It's strange, but it's true.  So actually having multiple accounts helps your credit score as long as you are paying everything off.

Also make sure you don't open too many new cards within a short amount of time.  This can also kill your credit score.  It looks like you're in a desperate need to borrow money.  I like to only open 2 or 3 new cards a year.

It think that covers all the essentials.  If you have any questions, feel free to ask.


*A note about travel cards, i.e. cards that give you miles towards plane tickets.  I didn't really cover these kinds of cards in my post because I don't have experience with them.  I've looked into them, but found that just like the product in catalogs for rewards, the miles you have to build up to get a good plane ticket are more than you would get back in cash.  BUT there may be some really good ones out there that I'm missing out on.  Let me know if there's one you really like.

 
Read Part 2 of the series right here: Part 2: My Favorite Cards