The following is a guest post from Martin of Studenomics. Martin has just released a super-helpful guide that shows you how to completely conquer credit before you hit 30. His theory is, “You can’t leave your mark on the world if you spend your 20s paying off credit card debt. I did all of the boring research for you so that you can see how easy it is to figure out credit.” [Editor’s Note: Though Martin is portraying himself here as a lazy man, the reader should not confuse him with me, Lazy Man. Though I approve of all these ideas, regular readers will know that I have a few other tips that personally have helped me. Let’s just let you absorb Martin’s for now.]
The most intimidating thing with managing our own money is that we worry that it’s going to be complex and time-consuming. None of us want to be “financially literate” nor do we want to spend all of our time on worrying about our finances. This is why most of us avoid managing our own money or trying to figure out our credit situation. We just don’t know where to start. As with the paradox of choice, when one is faced with too many options they’re likely to do nothing.
It doesn’t have to be like that. You can manage your finances, your credit, or any other area of your life without much effort. You can be completely lazy in one area, while being completely active in another area of life.
I had the honor of meeting the author of this blog a few weeks ago. We got to chat many times and share laughs over a few drinks. We never got into money management because you can manage your money well without always talking about it. When it came to the weekend I certainly wasn’t a lazy man when it came to dancing like a complete fool. On the bright side, I’m a lazy man when it comes to managing my credit cards.
Let’s look at the lazy man’s guide to managing credit cards in your 20s…
Get a credit card that you’ll keep for a long time.
Don’t sign up for every offer that comes in the mail and especially don’t go chasing rates. When I was 18 years old I went to my local bank to setup a credit card and a retirement account. The bank teller laughed because I look like I’m 18 now so a few years ago I must have looked like I was 12. I ended up getting the credit card and the retirement account. I’ve been using both for the past 5 years. I find that for the lazy man inside all of us it makes perfect sense to get a basic no-fee credit card with our local bank that we trust. I also recommend that you keep this account open for a very long time. Switching accounts and chasing rates is far too time-consuming.
Don’t get more credit cards than you need.
How many credit cards do you really need? You can argue that the more credit you have available the higher your credit utilization ratio will be. You can also find the occasional financial incentive to sign up for a new credit card because they’ll throw you a few dollars. I’ll argue by telling you that the more credit cards you have the more you have to worry about fraud, keeping track of your credit cards, and of spending money that you don’t have. Get a credit card that you’ll keep for a long time and don’t worry about every new offer that comes your
Automate your payments to your credit card.
Over the years I’ve automated all of my payments to my credit card. This is actually really simple. You only have to do this once. When you get your first bill for the gym (a lazy man still needs to train, not a lot though), cell phone, utilities, insurance, or anything else, you need to get in touch with the billing department and attach your
main credit card to the account. This way your bills will get paid on time every single month. No late fees for this lazy man!
Quick note: You still need to go through your bills just because they’re automated. Trust me you don’t want to be a lazy man that gets ripped off! A lazy man is not a stupid man. Automating your payments just ensures that you never miss a payment so that your credit score doesn’t take a hit for a small mistake.
Avoid balance transfers.
Balance transfers and other complex credit card tricks can be very beneficial. The problem is that the process is simply too easy to screw up. The process also takes an extensive amount of research and knowledge on credit cards. If you want to be a lazy man with your credit cards I highly recommend that you avoid these complex schemes. You don’t want to lose money because you got caught up in the next big trend.
That’s how you can manage your credit cards as a lazy man. I don’t want you guys to think that personal finance always has to be complicating and boring. You can really keep it simple. The beauty about being lazy with your credit cards is that you can focus your energy on what really matters in life to you instead of worrying about
your financial system.
Barb Friedberg says
Hi Martin! Good tips. I’d also ad, automate a monthly contribution to an investing account, either from your workplace retirement account or a discount brokerage.
Thanks for stopping by Barb. Your idea makes sense.
I’ve recently automated charity payments to my credit card. My younger brother had open heart surgery at this specific hospital and I couldn’t help but say yes when the opportunity came to donate to the same place.
I think you’re nailed all those points pretty good. In my early college days I was transferring balances from one card to another until I got sick of it. I decided to pay it all off. Then i was credit card less for a few months until I saw a good credit card offer where I get alot of miles. Now since I fly a a lot, I figured it would be a good deal with my purchases. Now here is the key, I use my credit card for EVERY purchase. However, as soon as buy something I pay it off through online banking. I mean instantly. That way I dont forget to make a payment and get charged and i get to keep my low rates. There has been a couple of times that because of my good track record they’ve given me 0% again and have increase my limit which i’m not planning on reaching anytime soon.
Joao Crawford says
Nice post. I´m with you, I have the same credit card for the last 11 years and I won´t change unless a really good opportunity appears. I had already forgot to pay some bills on time, but as i´m a old customer of my my bank they hadn´t charged me any interests. There´s mutual trust, and that´s important for your financial life.