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Money that I usually forget about

April 28th, 2011 at 04:48 pm

Whether I'm looking at credit card balances or next month's budget, my eye is always drawn to the big numbers. Who cares about a few pennies here or there when I've got thousands of dollars to worry about?

Whenever I begin feeling overwhelmed from focusing on the "big picture", I find it encouraging to take a breather and appreciate the seemingly insignificant contributions that we've made to bolster our income.

Credit card cashback - $100 since starting in February
Swipe the rewards credit card on everything that I would have previously used my debit card for, pay it off at the end of the month, and get a check in the mail. Better yet, use it for recurring expenses (like utilities and insurance) and get even more back.

I realize that I probably look foolish to some for using a credit card while digging myself out of debt. I'm confident that I can treat it like cash and not regress to my pre-budget days, but I acknowledge that this option is not ideal for everyone.

Rebates - $10 year-to-date
The most common form of rebate is the type you mail in after purchasing certain products. However, websites like Ebates also count (just substitute the physical rebate form for an electronic version).

In the past, I could not be bothered to look for rebates. In fact, most of the time I wouldn't even mail in the ones that I had. A darn shame, really, since we received over $200 in rebate money last year alone. Now, I always make a point to look for rebates when purchasing items that cost more than a few bucks.

Swag Bucks - $60 year-to-date
The easiest one to forget about (because it is so simple to do!), Swag Bucks rewards you for using their search engine. Rack up enough "Swag Bucks" and you can choose items from their store.

For me, the Amazon $5 gift cards make the most sense (and also seem to convert better than just about any other choice). In a typical month, my wife and I earn enough for 2-3 cards. If we're feeling ambitious, we'll participate in the swag code hunts and surveys to finish the push towards another card.

Envaulted - $29 since starting in March
Similar to receiving cashback for using a rewards credit card, Envaulted is an online service that pays 1% for every dollar you spend using your credit card (even if it isn't a rewards card) in exchange for having access to your spending data.

First, the good. Once you authorize your credit card with Envaulted (up to 3), you just use your card as usual to receive the 1% cashback. No extra work is required. Plus, each week Envaulted will select several vendors (department stores, fast food, gas stations, etc.) that will give you additional cashback (up to 100%!) if you purchase from them during that period.

Now, the bad. In exchange for the cashback, Envaulted wants access to your purchasing behavior. This data, I believe, is used to target the weekly offers to you. But it might also be sold to 3rd parties, so keep that in mind if you decide to give Envaulted a try. For more information, check out my complete review.

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I'm probably forgetting some of the other sources of non-work income, but this is a good start for now. I purposely chose options that anyone can do, instead of side-work that might require certain skills or talent. What is everyone else doing to supplement their income?

Debt, Dave Ramsey, and a dilemma

April 22nd, 2011 at 07:15 pm

When I first got married (just days after both of us graduated from college), my initial reaction to anything debt-related was "no big deal, we'll pay it all off once our incomes increase". Naturally, with our fancy new diplomas in hand, the money would soon start flowing in and wash away any of the spending that occurred in the meantime ... except, it never did.

In fact, income had been stagnant for most of the past decade. Sure, it was enough to cover 2002-era expenses, but the free-wheeling spending never stopped climbing upward. Thinking that the only answer to our problems was to make more money (and not being able to deliver), I became increasingly frustrated thinking about the future.

Dave Ramsey was my cure. The stories of people paying off debts greater than their annual incomes seemed unbelievable to me, yet I couldn't get enough of his radio program. Though highly skeptical at first, I finally bought his book The Total Money Makeover. My wife and I read it, discussed it, and decided to act upon it May of last year.

So here I am, nearly a year later, and our financial life is much improved. In particular, budgeting has been a godsend for us. Acknowledging our expenses, working the snowball, and finding snowflakes is now an obsession. I can now see an exit.

Unfortunately, I'm finding that I don't need Dave so much anymore. Sure, I don't technically owe him anything since I forked over the cash for the book and have listened to the sponsors that fund his show. But I'm discovering that the more I educate myself on personal finance, the more I find Dave Ramsey's advice to be basic and even, dare I say, inefficient.

The most obvious example is Dave's insistence on paying down debts starting with the lowest balance and working on up. The psychological aspect might make sense when the balances range from very small to very large. Each of my debts started very close in size (and many over $10,000), so it is hard for me to wrap my mind around the amount of the balance when the interest rates vary so much.

But I'm also finding myself disagreeing with some of Mr. Ramsey's core beliefs. My biggest offense: I don't think credit cards are evil. I type this even as I glance over at my $12,000 Capital One balance. True, I haven't accumulated a single dollar of new debt since last year. But I've been educating myself on using credit for profit through leveraging and cashback programs and believe that I can handle the responsibility.

So my dilemma is this: am I hypocrite for loving Dave Ramsey for opening up my eyes to basic personal finance, even while outwardly admitting that I can do better following my own plan?