Reducing Credit Card Spending One Month At A Time

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

Category	Description	Amount
Food	McDonald’s Double Cheeseburger	$2.18
Food	Farmer’s Market	$8.47
Beverage	Wine Bar	$18
Beverage	Bar in The Mission District	$43
Transportation	Taxi	$29
Food	French Café for two	$29.30
Beverage	Beers at Bar	$12
Food	Organic Restaurant For One	$13
Tennis	Tennis Grip	$7
Postal	US Postal Service	$2.80
Taxes	H&R Block State Filing	$19.95
Transportation	Parking	$5.50
Postal	US Postal Service	$5.95
Food	Wok Tossed Prawns	$10.85
Transportation	Parking	$5
Food	Oyster Po Boy and Guinness	$20
Tennis	Tennis Club	$150
Food	Organic Beet Burger	$12.91
Insurance	Car, home, umbrella, etc	$285
Food	Organic Food	$13.50
Food	French Bakery	$3.80
Food	Nasi Lemak For One	$9
Food	Farmer’s Market	$11.00
Tennis	Strings and Guest	$85
Misc	Haircut	$18
Food	French Bakery	$6
Food	Tofu Skewers For Two	$18
Food	Organic Mushroom Burger	$12.91
Tennis	Strings and Guest	$87
Food	Client Lunch (Reimbursable)	$49.50
Dentist	Teeth cleaning, etc	$175
Tennis	New Tennis League Team Fee	$25
Food	Farmer’s Market	$9
Food	Sushi lunch	$11
Food	French Bakery	$2.75
	Total	$1,216.37 ($1,165 net)

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.

RECOMMENDATIONS

* Looking for an awesome travel rewards credit card? Check out the Chase Sapphire Preferred® Card and other great rewards cards. I use my Chase credit card for all my business and travel spending to get points for more free travel, insurance in case my bags are lost or my flight is stuck, and more insurance for defective products I buy and want to return. Everybody should have a credit card for the free 30 day credit. Just make sure to pay off your credit card every month in full! Check out some of the benefits:

• Earn 50,000 bonus points when you spend $4,000 on purchases in the first 3 months from account opening. That’s a ~$650 value right there.
• Named a ‘Best Credit Card’ for Travel Rewards by MONEY Magazine.
• You get 2X points on travel and dining at restaurants & 1 point per dollar spent on all other purchases.

* Manage Your Money In One Place: Sign up for Personal Capital, the web’s #1 free wealth management tool to get a better handle on your finances. You can use Personal Capital to help monitor illegal use of your credit cards and other accounts with their tracking software. In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.

After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. I’ve been using Personal Capital since 2012 and have seen my net worth skyrocket during this time thanks to better money management.

Updated for 2020 and beyond.