Do Reward Cards Actually Reward You?

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There are many different reward cards and most pay between 1% to 5% back. These cards could still be costing you money though. This is because people generally spend more when paying with credit cards than paying with cash. The most often quoted percentages I see are from 12-18% but I couldn’t find the actual study these figures are based on. It does make sense to me though that people in general probably spend more when using credit cards and the percentage is probably higher than what they would receive back from a reward card.

That being said just because it is true for people in general doesn’t mean it is true for you. When using your reward card you just need to be sure that you aren’t spending more than you would otherwise. I occasionally spend money with my credit card that I know I wouldn’t have spent otherwise because I didn’t have any cash with me. This doesn’t mean I’m spending more money overall though because otherwise I probably would have just made the purchase later and if I didn’t have a credit card I would be carrying more cash with me to spend. I keep my spending quite low overall and don’t feel that using credit cards increases my spending. If I make an excessive purchase using my credit card it will probably be offset by reduced spending somewhere else. I’m confident that my reward cards actually reward me. If you’re using reward cards you should make sure the same is true for you.

Keeping Hobbies Inexpensive

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What you do with your spare time has a big impact on where your discretionary income goes. That is why it is good to have inexpensive hobbies. If you are a spender though even inexpensive hobbies might be expensive. It is wise to look at how much you spend on your hobbies and determine if you can do them cheaper without significantly impacting your enjoyment of them.

For example three of my favorite hobbies are running,long-distance backpacking,and blogging. These hobbies can be done on the cheap but many people spend a lot of money on them. My only running expenses are around $30 for a good pair of running shoes and perhaps one or two race entries a year. This makes it an inexpensive hobby for me. If you buy $100 running shoes,all kinds of special running clothing, and enter a 5k every weekend then it is going to be an expensive hobby. I don’t think the extra money spent results in much,if any, extra enjoyment though.

Long-distance backpacking takes more money but I don’t do it as often so it is still possible to do it inexpensively. I acquired most of my equipment little-by-little as I found good deals. When I went on my first long-distance backpacking trip(270 miles) I had about $300 worth of backpacking gear and supplies which is what some people spend on just one piece of gear. Most of my gear worked fine and I was appropriately equipped for the hike. There are lots of sources of information on the internet detailing how to get equipped cheaply. I especially like ” Cheap Gear – How to Dirt Bag and Deal Shop Like a Professional”.

Blogging is even better than an inexpensive hobby-it actually makes me money. My costs for this blog are roughly $21 a year for the hosting and domain name. By shopping around and getting a great deal on hosting I don’t have to make much money to be profitable. When I started this blog I wanted to keep the advertising to a minimum and I’ve been able to do that since my operating costs are so low. I do occasionally wonder how much money I could make if I fully monetized this blog but for now I’m keeping it as is.

These are just a few examples. There are plenty of other hobbies out there that can be done inexpensively or can actually make you money. You just need to plan your spending and do it wisely.

Increase the Gas Tax

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This doesn’t have much chance of happening but it should. The federal gas tax has been at 18.4 cents since 1993 when the price of gas was about $1 a gallon. Now that gas is over $3 a gallon the gas tax is a much smaller percentage of the price. The gas tax needs to be raised to help improve the nation’s transportation infrastructure.

That isn’t why I think the gas tax should be increased though. I think it should be increased to help change people’s gas consumption habits. Many people complain about the high cost of gas now but not that many make changes to deal with high gas prices. If gas prices go back down most people will return to their old habits and sales of gas-guzzlers will rise once again. An increase in the gas tax might help people to adopt or continue with gas-saving practices. The price of gas in the United States has long been extremely low compared to the price in Europe. The United States uses over 5 times as much gas and diesel per capita compared to Europe. Higher gas taxes would reduce consumption and help lead to greener alternatives such as walking,bicycling, and use of public transportation. I don’t expect there to be a significant increase in the gas tax any time soon but it needs to happen eventually.

Forced Frugality

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Back when I was getting over a problem with gambling I used a technique I call ‘forced frugality’ to help deal with it. Basically whenever I received money I would immediately spend it on a bill. This way I never had any extra money that I was tempted to gamble away. If I didn’t have any bills due I would just pay them ahead of time. I often paid my next month’s rent at the beginning of the month. I was giving up a little interest that I could have earned on the money but one gambling binge would wipe out all that interest and more. A major drawback to the technique was I could never actually save money just pay ahead on bills.

Now I don’t have a problem with gambling and can save money. The past couple of months though I’ve been spending my money unwisely and not paying down my debt or saving money like I should. I’m going to implement my forced frugality technique again. Any time I receive money it will immediately go to a bill,savings, or to pay off debt. I don’t have a problem with spending money once it is in my savings. If the money is just sitting in my checking account and I don’t need it to pay a bill I’ve been giving in to temptation lately and spending it frivolously. Until I feel that I have my spending back under control I’ll be using the forced frugality technique.

March Expenses

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Here is a breakdown of my expenses for March:

Household

$378

Utilities

$107.11

Transportation

$151.90

Entertainment

$335.85

Food

$121.96

Student loans

$100

Health Insurance/Medical

$170.22

Total

$1365.04

 

My expenses are too high mainly because of my entertainment expense.  I really need to cut that one back.  My health insurance is paid for three months so I shouldn’t have any medical expense this month. Other categories should be roughly the same. My goal is to get my expenses under $1000 a month not counting what I pay towards my student loans.