Use Your Credit Card

Excuse me!?!??   What kind of crazy financial planner would ever RECOMMEND using your credit card?!  

Hear me out.

You're going to spend money to buy groceries, pay Comcast and get yer hair did.  Why not get a 2% discount on all that stuff?

The best credit card deals out there offer 2% back either in cash or miles.  If you spend $10,000 per month, that's $120,000 per year which is $2,400 you could get back by buying everything with your credit card. 

However, there are several caveats:

  1. You MUST pay it off every week.   That's right - not every month, but every week.  Pick the same day and same time every week and schedule an appointment with yourself to pay it off.  Paying it off every week will keep you conscious of your spending and prevent you from feeling like you have a bottomless pit of money which is how people get into credit card trouble. 
     
  2. Get a card that pays 2%.  They are hard to find, but get back as much as you can.  Some cards pay as high as 3%, but only on certain items like groceries or gas.   The best deal you'll find on everything you buy is 2%.    Feel free to do your own research, but two cards that pay 2% and get good reviews are the Citi Double Cash Card and the CapitalOne Venture card.
     
  3. Know thyself.   Some people have a tough time maintaining the discipline required to responsibly reap the benefits of a credit card (see #1 above).  If you're one of them, then disregard everything you just read and use your debit card.  (If you're not sure if that's you, then ask yourself if you've ever carried a credit card balance for longer than 3 months.  If you have, then that's you and you should stick with your debit card.) 

A 2% discount for life is a pretty good deal and will add up over 30, 40, 50 years.   Not so crazy after all, am I? 

Disclosure: This blog is for educational purposes only and should not be considered financial or legal advice.  These statements have been simplified to illustrate the concept.  Consult your Financial Planner or Estate Attorney for help with your specific situation.