Financial Samurai

After January/February’s credit card spending blow out of around $3,100, I’ve successfully reduced my latest credit card spending by 61% to $1,200!  $1,000-$1,500 is the target credit card spending range I have every month.  If I can spend just $1,000 one month, it’s like building a $500 buffer to be able to spend $2,000 ($1,500 upper range + $500) the next month.  By spending $1,200 in Feb/March, I “gain back” about $300 from the $3,100 credit card blowout in Jan/Feb.

So what changed this last statement?  Well, I didn’t go on vacation to Hawaii, which saved me $500-$700 right there in flights, food, and extra discretionary spending.  The other thing I learned after meeting my accountant is that some of my expenses can be classified as business expenses.

For example, if I am to write about the best resorts in Lake Tahoe, technically, the costs associated with going to Lake Tahoe (gas, lodging, meals) to do my due diligence is expensable.  Think about the workers of The Lonely Planet and Rick Steve’s travel guides.  Of course all their travel expenses are business expenses!

Hence, I should really write more about the places I love and the things I like to do.  Nobody says I can’t enjoy myself while working.  In fact, one of the main goals is to find work that you enjoy doing, so it doesn’t feel like work.  This type of enjoyable work is writing online!

FEBRUARY/MARCH CREDIT CARD STATEMENT OVERVIEW

CREDIT CARD STATEMENT ANALYSIS

I’ve really narrowed my credit card expenses to food, tennis, insurance, and health.  Insurance and tennis costs alone cost about $500-$600 a month, which I considered fixed costs that cannot be avoided.  Tennis is my favorite hobby that also counts as my necessary exercise outlet to stay in shape.  Good health and fitness is priceless.  Hence, spending $200-250 a month isn’t that much.

I’ve noticed over the past three statements that I don’t spend much on material things at all.  It’s partly because I’m trying to declutter the house, which also means that I have everything I need and then some.  The main material items that keep recurring are tennis rackets, tennis shoes, baseball caps, and strings.  Other than that, there’s not much else!  I’m on a mission to keep credit card spending between $1,000-$1,500/month on average all year because I anticipate an income decline in the future.

REDUCING CREDIT CARD SPENDING STRATEGIES

* Reveal your spending goals. By publicly writing these credit card reports and highlighting exactly what my monthly target range of spending ($1,000-$1,500) is, I’ve become much more conscience of my spending habits.  I’m tethered by your expectations, and my own expectations and don’t want to be a donkey and fail.  Seeing is believing and motivating.

* Consolidate your credit cards.  I’ve only got a company card and a personal credit card now.  There’s no mental games of spreading out costs across various credit cards to make myself feel better.  When you’ve only got one personal credit card, it makes your spending that much more real as you can see all spending in one place.

* Carry many types of bills.  I suggest carrying about $100 worth of $1 dollar, $5 dollar, $10 dollar, and $20 bills in your wallet.  Make the wallet feel nice and full.  You feel a little richer that way, and a little more shocked at the transformation of your wallet into a skinny old flap once you’ve spent all your money.

* Start a business.  Start a business because you have a business idea, and not because you want to load your personal expenses onto your business.  There are enough legitimate things you can write off before going overboard.  I have to warn you, starting a business can be a very painful process due to all the paperwork and taxes involved.  Here’s an example of how painful taxes are to small business owners.  The classification of some expenses as business expenses for some items such as transportation costs and my monthly smartphone bill help defray some of my personal costs.  However, I still have to pay them, just at a discounted price equal to my highest business marginal tax rate.  Just be careful not to use your business solely as a vehicle to load all your expenses on.

Best Rewards Credit Card: If you’re looking for a rewards credit card, I happily recommend the Citi ThankYou Preferred credit card. It’s great for everyday use and has the most comprehensive rewards program around. I’ve been a card holder for the past eight years and plan to continue being a cardholder for the rest of my credit card using days!

Photo: On my way to do some research. SD.

Regards,

Sam