Credit Cards

How I Use Credit Cards to My Advantage

Credit cards. To some people, those words mind sound like a slippery slope into financial ruin and crushing debt. To me, though, they are just another part of my everyday money management.

In my last post, I mentioned that, while I don’t have any debt, I do use credit cards for most of my expenses. Because of some key habits that I’ve developed around my credit card use, I’m able to take advantage of all the benefits of credit cards without slipping into any dangerous habits that could lead to paying interest or getting behind on bills. There are three main things that I do to maximize my credit card benefits:

  1. Track all credit card purchases in my YNAB budget. Every single time I swipe my card, I log the expense in YNAB. If I don’t have money left in the budget, then I don’t buy anything, no matter how I pay for it. To me, a charge on my credit card is just like spending money any other way, since I track it in my budget.
  2. Pay off all credit card balances every single month. This is probably the most-often repeated piece of advice about credit cards, but it is important! At the end of every month when I reconcile my budget in YNAB, I pay off my credit cards in full, so I’ve never paid a cent of interest. I don’t have to worry about having the money in my checking account to pay off the cards, because it’s already accounted for in YNAB.
  3. Use high-reward credit cards. I maximize my credit card benefits by choosing to use only cards that have high reward values. My main card is the Citi Double Cash card, which gives 2% cashback on all purchases. However, I also have a few travel rewards cards (which I got for their signup bonuses) and an Amazon card, which gets 5% cashback on purchases.

By consistently practicing these habits, I’m able to take advantage of all the perks of credit cards while staying out of debt and avoiding financial stress.

Do you have credit cards? What steps do you take to make sure you’re using them responsibly?


The Big Picture: Where I am, what I’m doing, and where I want to be

So- if this is a blog about my money, then I guess I should probably tell you where I am financially and what I’m doing. Here we go!

Where I am:

One of the most important ways I measure where I am financially is my net worth, which is currently sitting at about $51,800I use Personal Capital to track my net worth. It’s a handy website where you can link all of your accounts, and then look at pretty graphs showing how your net worth has changed over time.

That number is the sum total of three accounts (checking, savings, and retirement investments). I’m fortunate to not have any debt–no student loans, no car payment (hello NYC living), no consumer debt. (I do use credit cards for most of my purchases, but pay them off in full every month. At some point, I’ll write a post with more information about my credit card mentality, and how I’ve used credit cards to get some sweet rewards.)

Broken up, that net worth number comes from
– Checking: $1,440
– Savings: $25,260
– Retirement: $25,450
– Credit cards: -$350

What I’m doing:

Right now, I have a full-time administrative job at a large university. I make $60,000 a year before taxes, and there are a few steps I take to maximize that income.

First, I contribute 25% of my salary to my company’s retirement plan, invested in a Vanguard target date fund. I’m lucky to have a great retirement match (10%), which means that every month, $1750 goes straight to my retirement account. This is pre-tax money, which reduces my tax burden. (I’m also enrolled in commuter benefits, which means that my monthly subway card–which costs $116.50 and is a must for NYC commuting–is paid for with pre-tax money.)

Next, I budget my take-home pay religiously using YNAB. I have the older desktop version, YNAB 4, but they have a new(er) online version that seems like it’s also a good option. When budgeting, I always set aside $750/month to go into my non-retirement savings account, which includes both my emergency fund and the start of a downpayment on a house. My total take-home comes out to about $2600/month, so this leaves about $1850 to cover rent, groceries, entertainment, vacations, and everything else. In future posts, I’ll be sharing detailed budgets and talking about how I keep my expenses relatively low in such a high cost-of-living city. For now, let’s just say I’m very intentional with my money.

Where I want to be:

Right now, you might be wondering why, exactly, I do all this–the retirement savings, the strict budget (it’s not really so strict, but that’s for another post), the seemingly-huge savings account. There are lots of reasons,  really, but two very concrete ones:

1). I want to be able to retire comfortably, hopefully before 50.

2). I want to buy a house in the next 7-10 years. (The long timeframe is because I’m planning to buy in an area where housing costs are insanely high, so I’ll need at least $100K as a downpayment if I want to avoid PMI.)

These two big goals provide nearly-endless motivation for my saving habits. I want them more than I want any material possessions or restaurant meals.

To get to these goals, I’m funneling as much of my income towards retirement and savings. Having ended 2016 with a net worth just over $50,000, I’ve set a goal to increase that to $80,000 by the end of 2017. 

So, stay with me and over the next year I’ll be sharing updates, lifehacks, and more information about how I’m working towards these goals. I’d love to know–what are your financial goals for the next year? The next 10 years? And what are you doing to accomplish them?



Welcome to my blog! I started this blog so that I could have a place to talk about my money – budgeting it, spending it, saving it, and investing it – and hopefully connect with like-minded people. In future posts, I’ll be sharing my current financial situation, my monthly budget reviews, and all sorts of other personal finance-related topics. Please stick around!