Credit cards are powerful tools. They can be credit cards with miles rewards and special incentives. They can help organize and facilitate expenses. They are so much a part of daily spending that we use them without even thinking. That’s where financial expert David Weliver from MoneyUnder30 comes in. He advises twenty-somethings on their way to organizing their finances and their credit.
I had an opportunity to have a personal conversation with David on how examining spending habits can help you make use of all the tools available to manage them. Furthermore, knowing your own spending can help you make conscious financial goals which will influence future spending habits. David’s advice is never far from practical as he gives his personal outlook on these important topics.
Credit can be a powerful ally or a costly enemy based on how you use it. Build credit using credit cards and make smart decisions when you know your own spending and prioritize goals. We’re thankful that David could join us to answer a few questions!
1. You recently encouraged your readers to evaluate their saving and spending tendencies where you surprisingly identified yourself as a spender. Is being a natural saver inherently better than being a natural spender?
“Having an inclination toward spending isn’t a bad thing” assures David. It’s when spending goes unbalanced and leads to increasing debt that it becomes negative. Those who are fighting excessive debt don’t need to think of an expense of any kind as inherently bad. The trick is making your spending “a more conscious spending, a more conscious use of money.”
Conscious spending doesn’t mean no spending. It just means spending with purpose. Saving isn’t necessarily better if you’re not meeting financial goals and life goals.
2. On this popular post, many people were hesitant to categorize themselves as one or the other. Do you have any further words for these people (who don’t like the restriction of a label) but could maybe still profit from a self-evaluation?
Obviously people will be somewhere in the middle of two extremes that are easy to point out. Usually, a person will have an inclination towards one or the other, but even if there is a person that is right in the middle, David thinks that they can benefit from an assessment of their spending habits.
3. Many people go a lifetime without evaluating their own spending habits. What resources would you recommend to those contemplating how to shape up their spending?
David recommends his Richer by the Week for financial goals. It is ”a simple 5 day plan to take control of your money and your life.”
He further tells us to “think of good financial habits as good weight loss habits.” Someone may begin to make small changes to lose weight, but it is possible to continually be hindered by one very big negative influence that stands in the way. Working out isn’t going to help if you’re still eating cake every night.
“A coffee isn’t going to kill your budget.” If you are making budget changes, don’t start by putting yourself on a guilt trip about buying a coffee. Start analyzing your big expenses like car payments and house payments.
Stop interest on credit cards accumulating and look at what’s really hurting. Those things are the big negative influences that will keep you from attaining financial stability.
A budget is helpful because it exposes real spending habits. It is not just there so you can analyze every little coffee that shows up.
David reminds us that we may underestimate our spending in a particular area, but “a budget never lies.” You may think you’re spending $100 a month on eating out, but after examining the credit card bill, you realize you’re spending $300 a month. You’ve just uncovered a significant issue that could be contributing to debt.
4. A big piece of advice on MoneyUnder30 is to prioritize and work toward goals. Many people have mentioned that this is getting out of credit card debt for them. What words of wisdom or encouragement do you have for people who are trying to make that their #1 financial goal?
This is a personal question to Money Under 30 since David himself was in a considerable amount of credit card debt. It’s by making that his #1 financial goal that he was able to start moving towards paying it off.
“Having getting out of debt as a #1 goal does not necessarily mean killing yourself and setting unreasonable expectations for paying it off.” If you set a goal of $500 monthly debt payments but get discouraged by missing the goal every month, then you are not helping your cause. Setting a $300 monthly debt contribution goal could be the right goal for you.
5. If someone has successfully avoided credit card debt and feels “ahead of the pack,” what is a good financial goal that takes financial responsibility to the next level?
If someone has managed to avoid debt or repay their existing debt from a crisis, they can make financially beneficial goals at that point to continue providing for their future. A number of goals are often talked about: start to build credit history, create an emergency fund, monthly budget, 401(k), or Roth IRA.
What all of these goals have in common is that you are providing for your future.
“It’s hard to wrap your mind around these goals at a young age, because you can’t see a tangible item such as a house for a mortgage or a convertible for a car payment.” It’s not exciting to make these payments and there is not bills coming in from debt payments, so it is easy to miss them. But these goals factor into a strategy that David calls “paying yourself first,” contributing towards a long-term goal to provide for the future.
A good credit score and wise investing may not be things you can grasp with your hands, but David assures making monthly contributions to these makes it possible to responsibly enjoy what you have set aside for spending each month… which brings us back to our first topic of savers and spenders and their daily habits.
Thank you, David, for answering some questions about using credit and everyday spending to its fullest potential!
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