Dos and Don'ts Of Using Credit Cards Responsibly

Most of us aren't born knowing how to use credit cards. Still, it’s important to learn
the rules of the credit card game – preferably before you start playing. These do’s and
don’ts of credit card usage encourage healthy spending habits for new and experienced
credit card users alike.

Don't

Use your credit card to make everyday purchases. Items like food, clothing, and gas shouldn't
be purchased with a credit card. Using your credit card as a substitute for cash is a habit
that can quickly lead to debt. For ordinary purchases, leave your credit card in your wallet
and use cash or debit card instead.

Get into the habit of making minimum-only payments. Making only the minimum payment each month
increases the amount of time it will take to pay off your debt. It also increases the amount
of interest you end up paying. To pay your debts off quicker and cheaper, you should pay as
much as you can on your balance each month.

Use your credit card to buy things you can’t afford. Living a borrowed lifestyle is the
quickest way to get into debt. If you can’t afford a purchase today, chances are you won’t be
able to afford it tomorrow, or even next month.

Close out a credit card without knowing how your credit will be impacted. There are times when
closing a credit card can hurt your credit score. Avoid closing cards that still have a
balance or those that make up a significant amount of your credit history.

Do

Make wise decisions about purchasing items you need versus those you simply want. We’ve all
used the word “need” to describe something we really just wanted badly. Using your credit card
responsibly means recognizing which things you need and which you just want.

Let your creditor know in advance if you won’t be able to make your monthly payment on time.
The worst thing you can do is simply forgo your credit card payment, no matter the reason.
Most creditors will assist you if you let them know before you miss your payment.
Simply call your creditor, briefly explain the situation, and ask that any late fees be waived.

Stay within 30% of your credit limit. A large part of your credit score considers the amount
of debt you have. Keeping your balances low helps you maintain a good credit score. Not only
that, lower balances are easier to manage than those that are higher.

Negotiate a lower interest rate. Especially if your current rate is higher than offers you
receive. Your interest rate determines how much you pay for carrying a balance on your credit
card. Evaluate the interest rate on your credit card periodically to be sure you are getting
the best deal possible.

How to Make Money

Steps

1. Use the law of supply and demand to your advantage. Most of us are familiar with the law of supply and demand--the more there is of something, the cheaper it is; conversely, the rarer the product or service, the more expensive it is. However, other than when we get to a toy store before sunrise to get on line for the latest fad toy that kids can't get enough of, we don't really apply the law of supply and demand to our own lives--particularly our careers. For example, if you're aspiring to do something that many, many other people want to do (so much so that they do it for free, as a hobby) then it will be far more challenging for you to make money doing it. On the other hand, if you do something that most people don't want to do, or if you get very good at doing something most people don't do all that well, then you can make a whole lot more money. In other words, choose a career in pharmacy over photography.
2. Recognize that time is money. This critical piece of advice is attributed to Benjamin Franklin, who was an accomplished American inventor, journalist, printer, diplomat, and statesman--the ultimate multitasker. Your ability to manage your time (and stop procrastinating) is a critical ingredient in your ability to make money. Whether you have a job or are self-employed, keep track of what you're spending your time on. Ask yourself "Which of these activities make the most money, and which of them are a waste of time?" Do more of the former and less of the latter, simple as that. When you're focusing on high-priority tasks, get the job done well, and get the job done fast. By working efficiently, you're giving your employer or clients more time, and they'll appreciate you for it. Remember that time is a limited resource that you're always investing. Will your investments pay off?
3. Jack up your prices. If you're providing a skill, service or product that is in high demand and low supply, and you're making the most of your time, you should be making good money. Unfortunately, there are many people who are too humble or fearful to demand that they get paid accordingly. It's the pushovers in life who get taken advantage of and exploited, so if you think you might be one of them, learn how to stop being a people pleaser. If you work for someone else, ask for a pay raise or get a promotion, and if none of that pans out, revisit your career options as described previously. If you're self-employed, the first thing to do is to make sure your customers and clients pay up on time--this alone can substantially improve your income. Check your prices and rates against those of your competitors--are you undercutting them? Why? If you're providing a superior product or service, you should be getting at least the average, unless your profitability depends on mass production, in which case you're probably making a lot of money and wouldn't be reading this article anyway!
4. Be proactive. Remember Murphy's Law: "Whatever can go wrong will go wrong." Make plans, complete with as many calculations as possible, then anticipate everything that can go wrong. Then make contingency or backup plans for each scenario. Don't leave anything to luck. If you're writing a business plan, for example, do your best to estimate when you'll break even, then multiply that time frame by three to get a more realistic date; and after you've identified all the costs, add 20% to that for costs that will come up that you didn't anticipate.^[1] Your best defense against Murphy's law is to assume the worst, and brace yourself. An appropriate amount of insurance may be something worth considering. Don't forget the advice of Louis Pasteur, a French chemist who made several incredible breakthroughs in the causes and prevention of disease: "Luck favors the prepared mind."
5. Redefine wealth. In studies of millionaires, people are surprised to learn that most millionaires aren't doctors, lawyers, and corporate leaders with big houses and fancy cars; they're people who religiously live below their means and invest the surplus into assets, rather than liabilities.^[2] As you're taking the above steps to make more money, keep in mind that increased income does not necessarily equal increased wealth. Most people who flaunt their wealth actually have a low net worth because their debt to asset ratio is high--in other words, they owe a whole lot more money than they actually have. All of the previous steps have outlined aggressive strategies for making money, but you'll never get anywhere if you have a hole in your pocket.
6. Know the difference between an asset and a liability. The dividing line is whether it puts money in your pocket, or takes it out.^[3] As much as you love your home, for instance, it is a liability rather than an asset because you put more money into it than you get out of it (unless you're flipping it or renting it out). Whatever money you save, invest it in assets such as stocks, mutual funds, patents, copyrighted works--anything that generates interest or royalties. Eventually, you might get to the point where your assets are doing the work for you, and all you have to do is sit there and make money!