best rewards credit cards

Best Credit Cards Rewards – How Does Yours Compare?

Over the years, I’ve simplified my credit-card usage to just a few reward cards. My main goal was to rake up rewards as much as possible, without having to remember a complex algorithm to decide which card to use when.

Not that I’m too stingy and trying to collect changes, but I dislike leaving money on the table, especially when a couple of one-time habit-changes/steps can increase annual cash-flow by at least several hundred dollars, if not more. At the same time, neither I nor my family members (additional card-holders) are inclined to carry a lot of cards together with a mini-manual. I use cards heavily for over 80% of my total expenses (notable exceptions being the property tax and a few small recurring/annual payouts).

I wanted to share what I do and also get input from others as to what they follow:

  1. All gas purchases anywhere are with a card from penfed.org. 4.25% or more cash value depending on how one redeems
  2. All travel-related expenses and restaurant/dining-out are with Costco Citi Visa card): 3% cash-back
  3. [Under Consideration] Amazon Prime Visa card (5% cash-back), given our increased purchase from Amazon.com
  4. Fidelity Card for most everything else (including #3 at this moment): 2% cash-back

Notable choices made:

  • I used to have a Shell card for 5% cashback at gas stations, but discontinued it since this is available only at Shell gas-stations
  • The switch from AMEX to VISA has simplified this further as AMEX is still not accepted in a few merchants we use
  • Stopped using “rotating reward category” cards (e.g., Chase gives 5% on 3 category of expenses, but the categories change frequently).
  • I prefer getting cash or equivalent as reward than “in-kind”, due to the flexibility
  • I learnt that x% reward does not necessarily mean x% cash. The reward points may be diluted depending on what is being redeemed
  • I noticed that over the last few years, many online payments, including most utilities, are now accepting credit card auto-payments without any extra fee. Previously only a bank account was possible.
  • I’ve left the other cards as is, and use them sporadically if needed (e.g., foreign travel)

What do you think? Anything you’d like to share from your experience?

Financially Stable by Age 30 How To

How to be Financially Stable by Age 30

When it comes to money, nobody knows what they’re doing – at least not in their 20’s. Don’t worry – it’s not just you. Most individuals have no clue how to even begin planning for their financial future. But it’s time to start. With a little work, you could stop living paycheck to paycheck and subsisting on ramen by the time you hit 30. Here are six ways to help you move toward financial stability:

1) Pay off Your Debts

Astronomical student loan debts are one of the reasons our generation is having such a hard time getting any kind of financial traction. They’re downright brutal. But getting those in order will save you a lot of money in the long run.

If your student debts are low interest, worry about any high interest loans first. Auto or credit card debts are common snares for 20-somethings. They have high interest rates, so the longer you put off paying those, the worse it’ll be. Any loan with an interest rate over 7%, are the debts you should tackle first.

Bite the bullet and map out a plan for eliminating your debts over the next five years or so, so you can actually start saving for the future. The future – ugh…so ominous.

2) Budget and Spend Within Your Means

Go through your most recent bank statement and categorize all your expenses. Pick out what you can cut back on (did you really need that 3 a.m. Chinese food delivery)? Now comes the hard part: sticking to a monthly budget. Know what you’ll earn and how much you can spend on what and when. Keep track of every penny spent and keep your eye on the prize.

Spending well within your means is the first step towards having extra cash to save like a real grown-up! This personal budget planning spreadsheet is a particularly useful resource.

3) Set Short-Term Goals

This sounds like something vague you’d slap on a vision board or the like, but it’s an incredibly important habit to practice. Setting goals (and writing them down) truly does keep you on track.

Set career goals for yourself:

  • Where do I want to be in a year? Five years? Ten years?
  • How do I plan to get there?
  • How can I hone my skills and assets to make myself more valuable to employers?

Set financial goals:

  • I want to pay off my debt within two years.
  • I want to have a certain amount of money in my savings account by this time next year.
  • I want to be making a salary within a certain range by the time I’m 30.

Set personal goals:

  • I want to finish grad school with no debt.
  • I want to buy a house at 30.
  • I want to be able to start a family in the next ten years.

Whatever your goals, map out a plan to get there and you’ll most likely find yourself achieving them quicker than you expected.

4) Create an Emergency Fund

Rather than draining your savings account (which is a thing you should now have and be actively and consistently contributing to) when somebody rear-ends your car, you should start an emergency fund. Create an emergency account and regularly add money.

When you’re just starting out, it’s always a good idea to have about 3-6 months worth of your income stashed away for a rainy day is . There will be rainy days, and let’s be honest…you currently might not have auto or health insurance. Purchasing insurance is definitely a goal to consider if you want to be a true grown-up.

5) Start Saving for Retirement Now

Nothing says a quarter-life crisis like facing your own mortality! The absolute last thing on your mind is retirement. I recommend that you start putting away at least 5-10% of your earnings into a 401(k) or a Roth IRA.

If your employer matches contributions on a 401(k) plan, go with the maximum amount they’ll match, because that’s just free money, man.

Even if you still have debt, try to regularly contribute to the following:

  • Debt repayments
  • Emergency fund
  • Savings account
  • Retirement fund

It may seem like you’re getting nowhere fast, but that’s normal. As you start making more money, you’ll be able to add more money into each of the aforementioned categories until the debts are finally gone, your emergency fund is where it needs to be, and you’re able to set more long-term goals for your savings and retirement funds.

6) Grow Up

Now is the time in your life to give yourself a good hard kick. If you’re out of school, or will be soon, then it’s time to buckle down and be an adult. Jumping into a life without the structure of parental guidance or the education system can leave you feeling disoriented. However, you know it’s time to become financially independent, as well as financially stable.

Financial stability means planning for the future like a responsible human being, and not blowing all your money on a night out with your friends. Figuring out where you stand financially and where you’d like to be isn’t easy, but it has to be done.

Take a deep breath and set aside a day to do some planning. You’ve got this – you’re a grown-up now, even if you don’t quite feel like it. By the time you’re 30, you’ll feel like a financial ninja master. By 40, you’ll be a full-on money samurai. By retirement, you’ll be rolling in all the money you have worked so hard to save.

Alternatives for Retirement Without a 401k Plan

Planning for Retirement Without a 401k Plan

Even if your employer doesn’t offer a 401k program, you can still plan for retirement through other savings options. Like many industries, the financial environment continues to grow and expand its products.

Keep in mind there’s really no reason to feel you’re the only one without such benefits. In a recent study from CNBC, only half of all U.S. workers were employed at a business or company offering a sponsored retirement plan.

So, in the spirit of looking at the glass half full, consider this an opportunity to take control of your finances and become money savvy at the same time.

Know Your Savings Options

There are a few common savings plans to explore if you’re an independent saver. They all share the benefit of being available to consumers who find they’ll be “going it alone.”

A Traditional IRA:

An IRA is an Individual Retirement Account which acts as an individual’s savings account and also offers tax breaks. Contribute the maximum amount of $6,000 per year and deduct money when you file your taxes. You only pay taxes on your contributed income when you use the IRA funds.

A Roth IRA:

A Roth IRA is another savings program available to individuals. The key difference between a Roth and traditional IRA is you postpone your tax savings with a Roth until after you retire and begin utilizing those funds.

What is attractive to many people is all money from your Roth IRA savings is free and clear.

A Basic Savings Account:

Yes, we all remember these from our earliest days of depositing extra money from babysitting or yard chores. Despite traditionally low interest rate benefits, there is the joy of seeing small amounts of money accrue and the relief of knowing you don’t have to tap into your other accounts, such as your IRA, if you encounter a financial emergency.

A basic savings account is also one of the best ways to get into the savings habit, since there’s never a minimum amount of money required to deposit.

Is it Best to Invest?

We see so many ads and commercials about how easy it is for any individual to invest and trade in the stock market, but since this is your money we’re talking about, we encourage a little bit of research.

Buying Stocks:

For close to 100 years, stocks have returned almost 10% on the investment dollar. Many individuals enjoy the process of seeing how their decisions play out and there is always guidance (not necessarily on which stocks to choose), but when it comes to making decisions which fit your financial personality.

However, this is a “long game” we’re talking about. Much like going to a casino, don’t spend if you can’t afford to lose. If you’re looking to get rich in a couple of years, the stock market might not be the smartest choice.

Invest in the Markets:

The “markets” go beyond the stock market. For more conservative investors or those not interested in the dramatics of the stock market, tax-managed mutual funds also offer an opportunity to sock away some cash.

A tax-managed mutual fund produces gains as soon as you sell. You do pay tax on the money, but you can also sell the fund at a time most financially beneficial to you.

Real Estate:

Due to the economy, the good news is there are still many properties being sold below market value, so it may be tempting to buy a property or two as rental units.

However, if people are paying you to live in your investment, it means you’re the landlord and absorb all the associated responsibility. If you’re very handy or can either pay or barter for a “handyman,” being a landlord can be a beneficial investment. Plus, there’s always the opportunity to buy a multi-family unit and live in one unit while collecting income and equity at the same time.

Work is a Four-Letter Word

You’re young and ambitious. You’re even well-versed in regards to the state of the economy and how the landscape of work is changing. Of course you’ll do everything you can to stash away money for retirement.

But the person you are today may not be the employee you are in a few years. It’s estimated 91 percent of Millennials (born between 1977 and 1997) may have as many as 20 jobs in their lifetime. Meanwhile, the Baby Boomer generation (born between 1946 and 1964) can expect, on average, 7 careers in a lifetime.

So let’s agree for now that the best real life benefits of a good job are the experience it provides and the money it puts in your pocket. If you see a pattern of taking jobs you enjoy over the sole financial gain, then maybe work isn’t something you grow to dislike. Here are two questions to ask in regards to prolonging your work life:

Do I Need to Work Longer?

How you answer this question will depend on your overall work history, savings contributions, etc. One statistic which may make the idea more attractive is five more years working full-time may allow you to contribute an additional $30,000 into a Roth IRA.

Will I Need to Work Full-Time?

As you progress through your early-to-mid working years, you may already see the option of working part-time – maybe you have skills and experiences allowing you to work from home.

Or perhaps you’ve experienced the benefits of “simple living” and want to spend more quality time with your loved ones. This mindset can also include living in a smaller house or taking on a job with a shorter commute and/or more flexible hours.

Being proactive and independent about your financial future is a way to craft how your retirement years will look. Plus, in the future (even if you do land a job with retirement benefits), you‘ll understand the perks may not last forever.

It’s always easy to benefit from a company-sponsored 401k program. However, there really isn’t any excuse to delay your own savings strategy. Being proactive will allow you to fully reap the benefits of your working years.

How to beat average returns stock market

How to Beat Average Returns – Stock Market

Whether you’re saving for retirement, a house or other goals, investing your money can bring higher returns. Some people hold all their cash in a savings account. However, regular savings accounts earn pitiful rates — about 2.29% APY (average saving rates) —which isn’t enough to take any savings efforts to the next level.

Banks have other savings products that earn higher yields, such as:

  • Money market accounts
  • Certificate of deposits
  • High-yield savings accounts

However, to benefit the most from these accounts, you need to make sizable deposits.

Depending on your financial goals and how fast you want a return on your money, investment options such as the stock market might be a better choice. The stock market can be risky, and there’s always a chance that you’ll lose your investment. But if you invest long-term and choose the right investments, you can receive an average yearly return around 9% or 10%, which might be the boost your money needs.

But while average returns are better than nothing, you may strive to beat these returns. Some money experts say it’s impossible to beat the stock market — primarily because there’s no way to know how stocks will perform. You may think you’ve made a good pick, only to see a chosen stock plummet in value. But if you speak with other experts, they might say it’s possible to beat average returns — although not guaranteed.

Any time you invest money in the stock market you’re taking a risk; but if you follow the tips below, you might enjoy better returns and grow your money faster.

1. Don’t Get Emotional

The value of stocks can rise and fall on a whim; and to be honest, not everyone has the stomach to invest in the market. But if you’re willing to take a chance, you need to maintain control over your emotions.

Too often, people invest in the stock market and make the mistake of selling too soon when prices drop. Naturally, nobody wants to lose all of their investment. But if you’re trying to beat average returns, you have to ride the wave and not panic with every market drop. A stock can drop today and rise to greater levels next week. If you sell too early, you can miss out on huge profits.

2. Diversification

If you’re seeking higher returns, understand the importance of diversification. Some people diversify their income to protect their finances from a potential job loss. Another income source provides a backup plan and a way to keep their head above water. The same is true with investing. Some people fall in love with one particular type of investment, such as real estate, stocks or bonds, and this is where they focus their energy. But since there are no guarantees when investing your money, you have to exercise caution and spread out your money. Don’t invest 100% of your portfolio in a single asset. If this portfolio drops significantly, your losses will be huge. But when your money is spread across different portfolios, a drop in one area won’t result in catastrophic losses. Additionally, if your different asset classes grow and over-perform simultaneously, there’s the opportunity for a better return.

 3. Understand What You’re Buying

Some novice investors jump into the stock market too soon. But if you want to beat average returns, you need to understand what you’re buying. Don’t choose a stock simply because someone says it’s a hot pick. Do your research, study stocks and don’t rely on others to make a decision for you. Who is the company? How do they make their money? What’s their future outlook?

Consider the current and potential future strength of any stock before you purchase. While other investors may ignore a small startup, you might take a chance with this stock if research leads you to believe the company will be the next big thing. If you buy low and the stock rises, you may receive better than average returns on your small investment.

4. Watch Out for Fees

Some people are determined to seek a higher return; therefore, they work with brokers or a financial planner. This is a good move, especially if you don’t have a strong understanding of the stock market or investments. Just know that knowledge isn’t cheap; and fees paid to brokers can eat away at your return over the long haul. So although it’s important that you choose investments that are more likely to perform well, you also need to look for brokers who charge lower fees.

Final Word

Any type of investment has its risk, and it’s only by taking some risks that you’ll realize big gains. Of course, your risk level depends on various factors, such as how much you’re investing and your age. For example, if you’re close to retiring, this probably isn’t the best time to invest in risky stocks or other investments that might deplete your life savings. But if you’re young — perhaps in your 20s or 30s — you can afford to be a little aggressive. You may lose money, but there’s plenty of time to recoup what you lose, especially if you’re investing long-term.

Also, understand that risks don’t only apply to the stock market. If you’re investing in real estate, the risk could be buying a distressed property and putting tens of thousands of dollars into improving property with hopes of selling for a huge profit. If you buy a distressed property for $50,000, invest $30,000 of your own money, and then sell the renovated house for $160,000, that’s a return of 50 percent. Risks can be scary, but this is how some of the best investors get higher returns on their money.

6 Easy Ways to Save Money This Summer

6 Easy Ways to Spend Less This Summer

Summer is just around the corner, and while some are worrying about sculpting their summer physiques, my concern focuses more on trimming up my summer budget. Summer is a spend-heavy season, synonymous with vacations, road trips, and even smaller-ticket items like ice cream trips that can still really add up.

I want to enjoy all of that, but I want to be able to do it guilt free. Fortunately, there are a number of ways to cut down spending before summer, so that your savings won’t take a hit when it’s time to get up and get out.

Enjoy What You Have

It may seem like a trivial bit of advice, but psychological evidence is stacking up to suggest that creating a positive mindset when it comes to what’s already in your life can help you control larger habits, including spending.

The underlying ideology is that creating contentment with what one has counteracts the need to refresh or replace; a need that’s constantly fed to us, because the free market is only as good as its ability to sell in the marketplace.

Think about the mania surrounding the iPhone as an example. We all know someone who lines up at midnight to be one of the first to get their hands on a new generation, even when they had a perfectly functional piece of technology beforehand.

We want the new phone because it’s supposed to be better, more capable, and have a more rewarding user experience. At the end of the day, though, a new phone might alter our mood for a few hours, but what does it do for us long-term that one generation previous couldn’t?

Small things like simply writing down a few things you appreciate in your life and taking the time to do things you can enjoy for free can get your mind off of spending and help you focus on the material items in your life that are truly, functionally worth the cost of addition or replacement.

Here are a few free things worth trying that might just lead to a pretty great time:

  • Going for a walk through a nice part of town
  • Checking online for free neighborhood activities or festivals
  • Finding a museum with a free admission day
  • Organizing a game night or fantasy sports league
  • Using sites like Meetup.com to meet people who share similar interests

You’d be surprised at how many fun ways there are to pass the time that don’t cost a penny, especially during the summer season.

Set No-Spend Goals

Once your head is in the right place, challenge yourself to not spend outside of necessity. The Budget Diet ran the numbers, and if you cut down spending by $13 a day, you could save $400 a month, which comes out to around $4,800 a year.

Living completely no-spend is difficult, but going no-spend for short bursts can help cut out those unnecessary costs, such as impulse buys, entertainment costs, and even things like clothes and shoes that are eating up thousands of dollars of savings a year. Spending only on necessities such as bills, groceries, and gas for even a week can add up.

Take me, for example. I have a set food budget every month that gets me more than enough at the store to get by. For the sake of convenience, though, I rarely bring lunch and thus spend about $10 five days a week grabbing a bite. If I went no-spend for one week, my lunch expenses alone would save me $50.

The idea of no-spend is not to get you to give up all spending, but rather to create short savings bursts that can help you better evaluate what is really worth your time and cash. Free apps like GoodBudget and Mint can even help you keep track of your spending easily and on the go.

Get Minimalist

Minimalism is as hot a trend in finance as it is in design, and believe it or not, the two actually kind of pair. This is a big and small change coupling, where you need to go through both your current space, expenses and see what you can cut.

Minimizing things like clothing, furniture, and home décor is a cent-on-the-dollar kind of change that can not only help with creating a clear headspace when it comes to cash, but will also save you a little bit each time you downsize since there is less that has to be cleaned and maintained, meaning less spending on things that aren’t that important.

The next step is go through and financially clean up those things that you’re actively paying for, but don’t really need. If you’re paying for a cable package, for example, but spend most of your time binge watching Netflix, cutting your package down to just internet could be a savings of $100+ a month.

Go through your services, utilities, insurance, etc., and see what can be cut down based on what you actually use. Pay specific attention to services like car insurance, cable and internet, cell phone plans, and anything that comes in bundles. You may be able to cut it down to just the services you need and save in the process.

Change Your Transportation

There are a lot of ways to save on transportation, especially if you drive yourself. Taking advantage of even one of these even once a week can cut some major fat from the gas budget:

  • Take public transportation
  • Walk or bike to work
  • Participate in a commuter carpool
  • Take advantage of pretax commute payment options

Changing the way you get to work can greatly impact the way you save. Paying with pretax dollars, alone, can save commuters hundreds a year without even having to change the way they get around, and the American Public Transit Association estimates that by switching from driving to transit, commuters could save between $8,960 and $14,612 annually. I was actually very surprised when I saw this.

Cut Back On Inflating Items

A good beer is one of the great indulgences in my daily life, but did you know that between July and August of 2018, the average cost of alcohol and tobacco products went up by 1%? Considering that’s just one month, that’s a climb worth noting.

The good news is, these things tend to move in cycles, and prices both rise and fall over time. Keeping track of what’s on an upswing (such as alcohol) and where deals are good (such as gas) can help you prioritize your spending so that you can focus more money on what will get you further.

If you really do have a bar you’re seeking to stock, fear not. There are plenty of Apps that can help you compare prices both in store and online to help you make sure you’re getting the best deal on those things you just can’t do without.

Sell Before You Buy

If spending really must be on the table, you might as well get a return on it, even if it’s small. Look at selling earlier versions of the items you’re looking to purchase, especially for larger items like new technology, household appliances, or anything that’s going to take three or four figures out of your account.

Selling off your old wares won’t cover the full cost of the new one, but it will help recoup some of the budget, and mitigate overall costs by tens of percentages at a time. Items with the highest resale value on private listing online marketplaces such as eBay and Craigslist include:

  • Cell phones
  • Power tools
  • Yard equipment
  • Computers
  • Electronics
  • Gently used furniture
  • Bicycles
  • Motorcycles and scooters
  • Large household appliances
  • Cars

Through a mix of cutting expenses, smart spending, and a healthy mental attitude when it comes to money, getting your budget in line before summer is completely possible. Of course, these things are good year-round, but now’s the time to rake in the savings so that you can enjoy fun in the sun without any added financial stress.