photo credit: danesparza

You probably already know that one of the most important steps in improving your financial situation is getting away from your dependence on credit cards. Unfortunately, if you are already using your credit card for necessities every month, it’s easier to talk about getting rid of your credit cards than it is to actually do it.

When you use your credit card for regular purchases in order to get through the month, the payments can start to cut into the cash that you would use the next month. After you’ve used all of your cash to pay the credit card bill from the previous month, you often feel like you don’t have a choice other than using your credit card to get through the current month. Then the whole process starts all over again. How will you ever get out from under it?

Now, you may not like the answer. It isn’t fun or easy. You just need to start a month-long moratorium on spending. If you could get through one month without using your credit card, you’d find yourself getting out of the vicious credit card cycle and starting to get ahead of your expenses. Here are a few key points to keep in mind as you push through that month:

1. Pay the regular bills. Your month without spending does not include things you have to have pay like your utility bills, rent payments, or basic (very basic) food. If you lapse on these payments, you’ll just find yourself in hot water with your landlord or utility companies. You won’t be any better off at the end of your month.

2. Remember that you only have to endure this for a month. Cutting out all spending for a month isn’t an act that you could keep up over the long haul, and no one expects you to. This is a short-term step to get you over a hurdle. Keep repeating, “It’s only a month.” You can start adding small indulgences back into your life in thirty days.

3. Avoid temptation. Don’t go shopping with your friends this month. You’ll feel awful dejected when you’re friends are treating themselves to nice things. Or, worse, you’ll find something on sale and convince yourself that you have to buy it because it’s such a good deal. Guys, this means you, too. Stay away from the grill store, the sporting goods store, or whatever store that usually causes you to get carried away.

4. Celebrate when the month is over. You need a reward to keep in mind while you work your way through your month of no spending. Now, don’t get carried away and blow all of your hard work on the first day of the next month. Just treat yourself to one of the things that you’ve been missing over the month such as going to the movies or buying a pizza.

Going a whole month without buying anything won’t be easy. Once you’ve finished, however, you’ll feel great. You’ll find that you’ve quickly jump-started yourself on that path to independence from credit cards. Who knows? You may even decide that you don’t need all of those things you used to buy.

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We’ve all seen those little warranty cards that come with the products we’ve purchased. Sometimes it can seem like a real bother to fill out the card, but if you fail to register your product correctly, it can come back to haunt you later. Here are the top 5 things you should do after you purchased an item that comes with a warranty:

1. Read the warranty. A really simple step, but make sure you read all the fine print about what is covered and what is not. Also note any limitations on service or use, some warranties are nullified under certain conditions - make sure you know those for the product you purchased.

2. Keep the receipt for any item for the entire term of the warranty. We keep our receipts in a file and staple warranty information and the original sales receipt (or a copy) to the instruction manual. At the end of the warranty period we toss the receipt.

3. Save the box the product came in until the store’s replacement time is up. Some stores won’t even take a return if you don’t have the original packaging. Most stores have a 90 day return policy and some have restocking fees, so make sure you know the store’s policy and their return time frames. If you have any problems or issues with the item return it to the place you purchased it for a refund or exchange before the return time is up.

4. Fill out the warranty and send the warranty card in if you are required to do so. Failure to fill out the appropriate forms can invalidate your warranty. A second benefit of sending in the warranty card (or registering the product online if that is an option) is that you can get valuable updates on the product and the company will already have your information should you need to return it after the store’s return time is up.

5. Read the instruction manual on proper use, care, and maintenance of the product. Make sure you know how to take care of the item (proper method of cleaning it, etc.) and be aware of any maintenance steps you need to take to keep the warranty valid.

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I came across this article yesterday by Kiplinger’s Personal Finance Magazine featured at MSN Money. According to the article there are 5 people who may be checking your credit history - lenders, insurers, employers, landlords, and cell phone carriers.

The fact that lenders would be looking into credit scores came as no surprise. I always knew that when we applied for a loan when purchasing our home that lenders looked at our credit scores, and our excellent credit score allowed us to get the lowest rate possible. It makes sense, too, because a lender would want to see a history of timely payments made in the past as a type of assurance that they will receive their money back. Other potential lenders who will check your credit reports include those for auto loans, student loans, and credit cards.

Insurers are also looking at credit information. We insure our home and our car with the same insurance company. Our credit score is part of the “insurance risk” score and because our credit score is high, we receive the best rate on our auto and home insurance.

I can understand why landlords would want information about a credit score. If you are looking to rent an apartment or home, the owner wants to see some type of indication that they will receive rent payments on a timely basis. Utility companies will also request credit information and can require higher deposits based on your credit score.

News to me was that some employers are looking at credit scores. From what I’ve read, some employers look at credit scores out of concern that a person with credit problems could be preoccupied at work. But a credit score is based on events that happened in the past. Should a person continually be penalized for poor choices or for events out of their control (i.e. medical expenses) that happened in prior years?

Lastly, I have no idea why a cell phone carrier would want to know your credit score other than to charge you a higher rate (i.e. larger deposit or higher service fees) if you have a lower score.

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