How To Have More Money at the End of Each Month

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As strange as it may be on a web site offering credit cards, here are some suggestions about how to manage money and when NOT to use your new credit card.

Tip #1: Buy tangible only. Limit your credit card use as much as you can to items which are tangible. A good rule of thumb is that if you can't return it in 29 days, don't buy it with a credit card.

Here's why: one of the fastest ways to reach unmanageable debt levels is to buy consumables on credit. It's all too easy to buy food, drinks, and silly stuff with a credit card, and very few people keep rigorous track of the little stuff. The $2.50 twice-daily cup of coffee adds up to a hefty $1,825 by the end of the year. Pay cash for your consumables, and reserve your credit card for hard purchases. You'll build up debt more slowly and manage it more effectively.

Tip #2: Keep a budget. When you go to school, you expect hard numbers to reflect your performance. A 93 in biology, a B+ in math, all of these are relatively tangible measures. Imagine your confusion if your professors simply issued grades like "Somewhat okay" or "I guess they did fine". It'd be unacceptable, wouldn't it? Yet most people manage their money in the same haphazard way. "Well, last time I looked at my balance at the ATM, I think I had..."

Keep a budget. Know how much money you do or don't have. Then never spend more than you can afford. Consider investing in financial management software like Quicken, Microsoft Money, GnuCash, GnuLedger, or MYOB. These programs often make it very easy to manage your money and link to your online accounts.

To free up cash flow, consider refinancing or consolidating debt, if a low-cost option is available. Some people choose student loan consolidation as a means of reducing monthly payments, in exchange for paying a loan longer.

Tip #3: Be very careful with cash advances. Cash advances may be a short term solution in an emergency, but unless you have the resources to make up for the cash advance within 30 days of requesting it, another solution may be less costly in the long-term. Check with your bank or credit union about overdraft coverage, as interest rates for overdraft coverage are usually less steep than cash advances.

Tip #4: Join a credit union. Credit unions are one of America's best kept secrets, with savings interest rates consistently higher than major banks, and services for members far better than any commercial bank. Check with your university student services office about whether the university has a credit union, and whether students are eligible to become members. Many university credit unions offer convenient locations on campus, ATMs, and Internet banking.

Tip #5: Pay your balance in full each month. All credit cards have interest rates and finance charges when you carry a balance. Pay your balance in full each month during your grace period and you won't pay a dime in interest. For more information about interest, APR, and balances, read our APR Tutorial!

Tip #6: Once or twice a year, check your credit report. Credit reports can quickly become polluted with bad information, and the only party truly responsible for your credit record is you. Check your credit report twice a year and ensure it is correct. Read our Repair Your Credit Record tutorial if it is incorrect.