Twenty years later and mid career we live very frugally compared to our family, friends and peers. Yes we make good salaries, but we live on about 55% of our take home pay. We buy used cars with cash, shop at thrift stores, meal plan, rarely eat out, pack lunches etc etc. Basically we do all the typical things PF sites recommend. Travel is our one big splurge though, and we take a big trip with the kids every other year. Generally a month long and on another continent.

At this point in our lives, being frugal and knowing where every penny is going is such a habit that there is no concern about using credit cards. We put EVERYTHING possible on our card to get the flight miles. I’m frankly annoyed when I can’t use my card for something. To me it’s lost miles toward the next trip. Since there is no risk of us spending beyond our means or even spending more because it’s going on the card, to me it’s just a method of funding our travel. Our phone, cell, internet, alarm monitoring, and life insurance all go on the card automatically every month. They used to come out of the bank account automatically. All our groceries, gas and miscellaneous purchases each week are put on the card. We used to pay home/car insurance monthly by automated payment from our bank account. By paying the entire year in advance we can put it on the card. Yes I’ll take those 3000 miles, thanks very much. New tires for the truck last month? 1000 more miles to pay with the card instead of cash. SInce our last trip in 2008 we’ve once again earned enough miles for all four of us to fly to Europe this summer.

Once you have your financial house in order a credit card can be a wonderful tool for getting more for your dollar than just the product or service you are buying. Why wouldn’t I take the flight miles (or cash rebate or whatever your card offers) if it’s costing me nothing. I pay off my balance WEEKLY and have never paid a cent of interest on the card. I know I don’t have to pay weekly but I like to balance up the actuals that have been processed with my spreadsheet of planned spending. I replace the estimated numbers with the actuals, add any unplanned spending and see what’s left over for the week. Every Friday once the pay is received and the card is paid off I skim off the “excess”. Every week any unused funds are immediately redirected to either retirement savings, kids education funds or extra mortgage payments. By paying off the card every week I kind of see it as a debit card that takes a few days to clear the bank. We generally do all our shopping on the weekend and I pay it off on Friday once everything has been posted to the CC website and I can double check the charges. As soon as I use the card I consider the money spent and gone, it will just take ~5 days before the cash actually leaves the bank account. I also find clearing it on a weekly basis is a quick job. If I had to do a month’s worth of transactions and updating to my spreadsheet it would feel like a much bigger job.

Great article. It’s always interesting to see how others “work” their cards to maximize the benefits.

FYI – regarding the post by Panda Mike and your question on extending warranties – some cards include extending the standard warranty on your purchase just for buying it on the card. When we bought our washer and dryer they came with a 2yr warranty. That was automatically extended to 3yrs according to the policy on our card. We never needed the extra year but it’s a nice feature. Other cards offer an insurance type feature. My inlaws once bought a glass topped coffee table. The glass top got broken as they brought it home from the store. No problem, the credit card had an insurance clause that covered the replacement glass. Our card also offers basic travel insurance and coverage on rental cars paid for on the card. You need to read the policies carefully though and determine if it’s enough coverage. On our last trip we bought additional travel insurance to suppliment what the card provided, but it still reduced the overall cost.

your financial well being is a very importance piece of your overall success.

if you can’t afford it on a 30 day hedge don’t pull the trigger keep your credit card in you pocket.

I like your idea for a parenting workshop too. That sounds like it could work. You are right in that the parents are the key. Just like with normal academics, if the parent doesn’t follow up then the teachers can’t force a child to learn. The parental example is essential. sadly too many parents look at the schools as a babysitter as well as a parent when the kids are there. VERY sad.

I think it is so wonderful that your kids are learning the value of a dollar. My son is only 4 years old and I am working with him on the same concept. He doesn’t quite get it yet, or I should say that it doesn’t keep him from asking for a toy at the very next store, but he will understand the more I work with him on it. You are doing your children a great service by preparing them for the reality of financial life. I wish more parents would understand its importance.

My 9 and 7 year old both understand that when I use an ATM to get money or my credit card for a purchase, the money is really coming out of my bank account. This was explained to them the first time they wanted me to use either option to pay for something they wanted when I said I didn’t have the money for it. They each have a savings account that they put money into. They both are saving money at home for spending money on our next trip. When they want to spend money on something, I’ll ask what is more important, that item or having money to spend on their trip. I think they truely get it. But they wouldn’t get it if they didn’t hold the money. Schools can’t give the kids real money to “play” with while they learn.

I did have a consumer education class that I was required to take in order to graduate high school. The program was cut becuase when they looked at it, our kids weren’t fairing any better in the real world than kids who didn’t have the class. Of the things you listed that should be taught, the only 2 that weren’t overly touched on in the semester long class were the importance of responsible borrowing and the dangers of debt. How could you teach this to high school seniors while helping them fill out financial aid papers to get loans to pay for college? After all, the more graduating seniors you can get to attend college, the better your school looks.

Reading this and thinking on this, does give me an idea for a parent workshop at the school for next year, however. Just as children who see their parents vote are more likely to grow up to vote, I’m sure children who see their parents balance their checkbooks are more likely to balance their checkbooks when they grow up.