Gail Vaz-Oxlade's Blog, page 68

Parenting on a Budget

There's probably no time of the year when parents feel more like pulling out their hair then when the holidays roll around, especially those that have "shopping" as a big part of the experience. Christmas shopping with and for kids can make a budget go way off track. And some parents are so intent on ensuring their kids get the stuff they have their hearts set on, they're willing to go into debt to make the day special. Some go so far as to hit the pay advance stores to come up with the money to make Christmas Magic. You would think grown-ups would know better.

Helping kids create expectations you can manage is an important part of learning about how to make the most of what you have, as opposed to always wanting more, More, MORE. Suggest your kids make a list of four or five things they'd like as gifts. Make it clear that it isn't your intent to buy everything on the list, but they'll get at least one or two things. Now your children know what they can expect and it isn't the world. And you can create a shopping list that fits within your budget.

Toys and electronics are often at the top of kids' lists and tend to be big money-eaters. But there's no need to hit a fancy toy store or high-priced electronics store to make magic. Your little mites won't wonder how much you paid for that bucketful of Lego you found at the garage sale. And who cares if Barbie doesn't come in a fancy package if she does comes with a boxful of clothes, all from a local toy-trade.  Many electronic stores have refurbished options that are a fraction of the cost of buying new. Shopping smart leaves you room in your holiday or birthday budget for the little extras that will make the day special.

During the year you can establish your own toy-trade to keep your kids' toy-chests fresh and interesting. Meet once a month for a play-date with a few friends and each bring five toys you're prepared to trade. Now your kids have new, interesting playthings that didn't tap your budget.

Clothing is another of those kid categories where you can blow a fortune or save big-time. Second-hand and thrift shops are great places to score brand name clothes in good condition. But whether you're Christmas shopping or getting ready for back-to-school, first, start with a list.

Keep an inventory of what your kids have and what they will soon need so you're in a position to spot a bargain as you're browsing. If you come across a great deal and it isn't on your list, walk away unless you have plenty of money to spare. With kids growing at record speed, it's unlikely that the clothes you buy will wear out before they are out-grown. Taking your child's used clothes to a second-hand store is a great way to build up credits for when you need to get Little Missy a new leotard for dance class.

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Married & Moving Forward

Psychologists have identified a phenomenon that's probably been around as long as the Jack & Jill but hasn't been talked about much: The Post-wedding Blues.  After the frantic build-up to the big day, the let-down can be huge, particularly for brides.  If you've been managing a team of service providers, coordinating a b'zillion details and spending like there's no tomorrow, the day after can seem like the big fizzle.

Now it's time to get down to the business of life. And if you want that life to be fabulous, you have to come to terms with your reality. While it's wonderful to dream that you could make every day your wedding day where everyone does your bidding and money isn't top of mind, it's time to grow up and get real.

The only way you'll be able to create a life that is satisfying and magical – yes, there is magic still to come – is to set some realistic expectations. Don't just pull wishes out of the air and then hope that you can make them come true. "I want to own my own McMansion by this time next year" may be a little bigger bite than you can chew.  Instead, figure out what you really, really want, prioritize your goals and then create the plan to make it all come to pass.

Whether you want to own your own home, start a family or go into business for yourself, you need to break your goal down into manageable steps. Step #1: Talk to your partner. Now that you're part of a family, you can't go off half-cocked, assuming your buddy is on the same page as you.  You've got to talk about it. Sit down and discuss what it is you each want to achieve, and what kind of timeline you each have in mind.

Your new life partner may want to have children, but may want to wait a year or four until you're settled in a home of your own. You, on the other hand, may be dying to get pregnant. Step #2 is to work out a time frame that meets both your needs.

Which brings us to Step #3: make a plan that let's you achieve this dream without putting your new family at risk financially. Will you live on one income and bank the rest so you can save up for a downpayment on a home? Will you practice living on one income so that when baby does come along you have a big fat slush fund to supplement your paltry maternity benefits? Will you delay your family long enough to get your student loans paid off? Figure out what's important to both of you and plan together to make your real life work.

Now that you're married and moving forward together, you can use each other's strengths to keep you on track. Share your dreams. Talk about your expectations. And make a plan that takes you from where you are now to where you want to be. Working as a team, you can make all your dreams come true.

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Learn from Your Grands

We like to talk about the good old days. Life was simpler. Life was slower. There was more time to think. All true, if you count the time you had to think as you smashed the laundry on the rocks down by the river. Or the simplicity of hanging your laundry out on the line in -40 degree weather. Or the slowness of how long it took to get from here to there.

I'll give you that Grands had a different life. And while we've outpaced our Grands in terms of the number of toys we have, and the conveniences we can now employ, we've lost sight of a bunch of lessons we should have taken from them. Like these:

1. Don't buy stuff you can't pay for. Truth is our Grands didn't have much choice on this one. Credit cards didn't come to Canada until the mid 1960s, and the line of credit wasn't handed out to every Tom, Dick and Harriet until the mid 1980s. So the best our Grads could do was run a tab. But, by and large, if they didn't have the money to pay for a thing, they simply had to do without it.

2. Things have multiple uses. Granny didn't have a knife that only peeled potatoes, cut apples or slice avocados. Now we have a tool with a specific use for just about everything we do. And just because a thing got old didn't mean they dump it; Grandpa would repurpose just about anything he could lay his hands on to do a job for which it was not initially intended.

3. Fix it yourself. The ability to fix things resides with those who don't have the money to hire someone else to do it. My former next-door neighbor could fix anything. It didn't matter how broken it was, Ron would find the pieces and the stick-it to make it whole again. But it's so easy just to buy a new one now, most of us don't even bother. And since manufacturers know we'll buy a new one, they keep shortening the life expectancy on the stuff they're making. My Danby fridge died before its 18 month warranty was up, and Danby never paid a cent. It's almost to the point where you can chuck the whole thing in the garbage before you take it out of the box!

4. Function beats fashion. Grandma may not have worn the most stylish shoes, but she got her money's worth out of them. She wore those puppies until they needed new soles, then she handed them to Grandpa who fixed 'em so she could wear them some more. How many pairs of shoes do you have? And how often do you wear out a pair of shoes before you buy another? Ditto handbags, jeans, shirts, jackets, watches, cell phones, TVs… and everything else we throw money at.

5. If you don't save some money, you won't have any. Our Grands didn't need tax incentives to save money. They knew that if they didn't put ten cents aside when they earned a dollar, come time to hang up their saddles there'd be nothing to buy food with. Such a simple idea. So sensible. So what's wrong with us? How come we think saving money is optional?

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This & That: Figuring It Out Edition

H Wrote:  My mother passed away a few years ago and I inherited her townhouse, which was paid off under a life-insured mortgage. Aside from the townhouse, the monetary portion of the inheritance was put into a trust fund until I turn 27. When I turn 27 later this year, I stand to inherit over $150,000. I want to sell the townhouse and put the equity into buying a new home. Is it best to put most of my inheritance towards the mortgage, or should I save the money for retirement?

Gail says:  You need to lay a solid foundation for your future, as well as take care of some details in the presents.

First, you need an emergency fund: six months' worth of essential expenses. Take that and put it somewhere you can access it easily if the crap hits the fan — a high interest savings account, not at one of the normal banks because even if they call it "high interest" it isn't. Look at ING, PC or Ally to start.

Next, you can't do all your equity-building in a home because that'll leave you with no money to stay in that home when you end up retiring. I know it seems a long way off, but that "long way" is the time it will take to help your assets grow. So:

a) don't buy too much house for what you really need; we have a tendency to do this, and

b) invest regularly in a TFSA and/or RRSP to make sure you're building assets for the future.

You don't say how much you make right now, or what your career prospects are like, so I don't know if you'll benefit hugely from RRSP deductions in terms of your taxes. However, if you put money into an RRSP, you don't have to claim the deduction right away… you can save it for when your income goes up and the tax savings will be more significant. In the mean time your investments will grow on a tax deferred basis. If you are very low income and will need all the government benefits you can get your hands on when you retire, stick with a TFSA.

D Wrote:  I have stopped using my credit cards (and debit besides getting gas) and am other wise strictly cash. I am just wondering when I am applying extra payments, over and above what I already put towards my cards, which is more then the minimum payment, does it matter if when I apply the extra payment as long as my monthly payment is made between the "alotted" time they give? Or should I hold the money till next time to make the payment and make it an even larger payment? ps: Love your show!!

Gail says:  The sooner you put the money on the account, the sooner the interest stops being calculated on what you just paid off! Don't hold the payment. Slap that sucker where it'll do you the most good.

B Wrote:  I Love the show and website. But I have to say I get a little spooked when I see people on your show with half the amount of debt I do. I am 27 years old and recently graduated with a Doctor of Pharmacy Degree. I have OSAP debt of $16,000, and a professional student LOC of $80,000 maxed out. No consumer debt. I have a job I will be starting soon making $95,000.

I have been given every bit of advice under the moon from friends and family (i.e. pay it off making min payments, consolidate into a mortgage, Rent and pay off as much as possible, apply for CC and utilize introductory rates, etc, etc.). What are your suggestions on handling my debt and moving on with my life ( i.e buying a home)?!

Gail says:  The rule of thumb is to not take on more student debt than you can earn in salary in a year. You're fine. As for how to pay it back, you need to pay as much as you can afford to get the debt gone as soon as possible. But this is a huge debt and you also need to have a life, so have some balance. If you don't intend to take advantage of the "special benefits" of the student loan system (interest deduction, payment deferral in hard times, etc.) then consolidating to a regular loan will be cheaper because the student loan system is actually more expensive than going with a regular lender. Don't try to get too fancy in your footwork (using credit card introductory rates). Just make a plan and stick to it.

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Retirement In Four Stages

Did you read (or see the movie) Lord of the Rings? The Hobbits eat several meals a day: breakfast, second breakfast, elevensies, luncheon, afternoon tea, dinner and supper. I see retirement a little like the Hobbits see their meals… there are stages and if you don't plan for them you won't be as happy as if you did.

First Retirement: This is when you leave the job you've been dying to leave so you can do what you really, really want. I'm going to skip this stage since I've been doing what I really, really want all along. But for many people, the idea of taking off one worker-hat and putting on another is as good as retirement. Having locked in their pensions or paid off their houses, they're ready for a new adventure. There may be a reduction in income as they follow their bliss. Or First Retirement may open up sources of income they never would have imagined.

Second Retirement: Semi-retirement holds a lot of hope for some folks. Being able to cut back on their work hours, take jobs where they can work-share, or switch to part-time means having more time for family, friends and themselves.  It usually means less money too, and it's the stage at which you'd be wise to practice living as if you're fully retired. The more used you are to living on your fixed income, the better the next stage will be. You'll also want to make sure you've got your big expenses – think mortgage, new car, home renovations to accommodate aging – out of the way.

Third Retirement: Full retirement comes next. Now you're not working at all. You've got your pension, some savings, and lots of time on your hands. You're still relatively healthy, so you want to do stuff. If you're smart, you used your second retirement to practice what you'd do at this stage and you're ready for all that time on your hands. You're also ready to live on the income you now have since you're no longer working. Stuff's not as important, but travel may be as you seek to connect with friends and family. You'll also want to start thinking about things like long-term care and retirement residences for the next stage.

Fourth Retirement:  Your health will likely dictate when you enter this stage. Less able to get around, and more focused on doctor's appointments than on weeding the garden, you're less active but more worried about whether the money will last.  You may also wonder about how you'll manage with your kids focused on their own lives or living far away. In my neighbourhood, there is a bunch of folks who have been living on the same street for the past 15 years. They have all signed up for the same retirement residence. They plan to take their neighbourhood with them to their Fourth Retirement. Smart!

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How Long Could You Last?

The October 2011 RBC Canadian Consumer Outlook Index found that 57% of Canadians don't have an emergency fund. And then there are the folks who have no idea what a EF is for. How else do you explains the fact that some respondents said they had used their savings for either everyday expenses.

People who have taken my message to heart are writing me to tell me all about how much better life is with an emergency fund at hand. I got this letter recently that made me cry:

Gail, I have to thank you. Before I watched your show, I didn't have any money saved for, as you say, when the caca hits the fan. But I've been diligently putting away money every week and thank heaven's I did. My husband died suddenly five months ago. He was riding his motorcycle to work and got hit in an intersection. I have four children and I'm three months pregnant. I had just been to the doctor that day, so he died not knowing we're having another child. I felt like someone had reached inside me and dragged my stomach up out of my mouth.

I'm very lucky because I have a family that loves me. And I've got great friends. They all came. They brought food. They brought love. And they wanted me to know that if I needed any money, they'd help.

My husband and I bought life insurance about two years ago after I watched you tell a couple on TV how important it was. Thank God. But it would take time to get everything settled. In the mean time I had to make a mortgage payment, buy food, and pay for the kids' daycare. I work but it wouldn't be enough to cover everything.

I was able to tell my family and friends that I'd be fine. And it's because of you. I told my husband just how important you thought it was to have an emergency fund (he had a bit of a crush on you) and we had been diligently setting aside some money every pay to build it up. It hadn't reached the max, but it was enough to see me through until the insurance kicked in and I could pay off the mortgage and do some planning for the future.

So my mortgage is paid off Gail. My children can eat and sleep in their own home. I'm still crying about my husband being gone, but I'm not stressed out because, as you say, I had money in the bank so I had options.

Thank you, thank you, thank you. You have no idea how you saved us. The baby is almost here and we have something to look forward to as a family. A joy in among the sorrow. Bless you Gail.

People always seem to think that bad things don't happen to good people. It isn't true. Crap happens all the time. Thank goodness the message is getting out and people are starting to take this part of their financial plan more seriously.

The question to ask yourself is this: How long could you last without a paycheque? If you were to get sick, or if someone you loved needed to be cared for, how long would you last without a paycheque? If you were downsized, right-sized or wrongly dismissed, how long would you last? If you tripped and fell, broke your wrist, your leg or your back and couldn't work, how long would you last?

Remember, when we talk about emergency funds, we're talking about the most basic costs being covered: rent/mortgage payment, property taxes, utilities, car payment, insurance of all kinds, food, debt repayment. You can cancel the cable. You can find free fun.

Some people consider their lines of credit to be an emergency fund; that might even have worked for the woman who wrote this letter because she had a substantial life insurance settlement coming. Most of us don't have a pool of cash ready to flow in and pay off a line. So using a line means digging a debt hole. Short-term solution; long term problem.

If you haven't started to save your emergency fund yet, I hope you never have need of one. But if you hit the wall and have no money, you can't say you weren't warned.

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Ch..ch..ch..ch..Changes

Now don't go getting your freak on. Life is about change and there are some changes coming to the website.

Perhaps the one I'll get the most flack on is the elimination of the Gail Clubs bulletin board. I'm sorry folks, but it's been swamped with spam and until I can figure out a better way, it's just creating all sorts of problems. Those of you who use it regularly can set up an email system to keep your communication going. The Gail Club bulletin boards will come down the last week in December.

Next year will also see the introduction of six new bloggers. They'll have a separate blog because that's what you said you'd prefer. Each will have his/her own day of the week, and I'll introduce you to them before they start posting. I hope you enjoy this new adventure.

BTW, each of these writers has made a six-month commitment. If you'd like more from them, let me know.  If you'd like a spot on the roster, send some samples of your writing and I'll let you know if a spot opens up for you. (Send enquires to getgvo@gmail.com with "guest writer" in the subject line.)

I'm also putting up Tracking Your Money The Gail Way in January so you can put a system in place next year if you've been looking for one. Lots of people have been asking me for apps and for software to track their money. I have a problem with amalgamation sites where you put in all your personal info because giving that info immediately breaks the rules your bank has in place to protect your financial identity. And, no, I have no intention of creating an app. There are about a b'zillion apps out there, and I'm not getting into the fray.

I use a notebook and spreadsheets to manage my money, and I'm quite happy with how they work. If you want to manage your money The Gail Way, you can download the package for $4.99 using Paypal. The package will come with a spending analysis worksheet and instructions, a spending journal worksheet with examples (although I just use a notebook and you can too) and a budget worksheet, which includes the Life Pie and The Jars.

There is no magic to this system. It's not easy. It takes time and it requires discipline. Don't download it and then whine about how hard it is. If you aren't prepared to put in the time and effort, save your $4.99.

Because I'm more than just money, Next year I'm going to be blogging about some of the things I love to do. From cooking to knitting, from gardening to parenting, books I'm enjoying, movies or TV shows I'm watching, Wednesdays are going to be about something other than money. I actually live a very balanced life, and that's what I hope to share with you.

I've been thinking about these changes for some time, as those of you who have been around for a while know. But change takes time and I'm loathed to rush into things, so I've been plotting for the new and considering carefully what needs to get a kick to the curb.

As always, I value your input. Your turn now: What changes would you like to see here? How can this community be more useful to you? You know I love to hear from you.

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Did I Ever Tell You How Lucky You Are?

Sometimes when the caca hits the fan it's hard to think about how lucky we are. Hey, I've been there people. Sad children, sickness, divorce, unemployment, any of life's challenges can make you feel lower than the belly of a snake. But focusing on what's not working in our lives won't get us to a better place.

In this very profound Dr. Seuss book, a little boy who feels blue learns that he is lucky after listening to an old man talk of other people's misfortunes. Compared to the problems of some of the creatures the old man describes, the boy is really quite fortunate.

This is all about counting your blessings. Sure, you may not have as much money as you wish you did to take the kids on vacation, but you have those beautiful children. And maybe you wish you didn't have to spend so much money on groceries, but you're eating, which is better than a lot of other folks around the world. A mortgage payment, as hefty as it may be, means you have a home of your own. A truck payment means you have a way to get around. And all that money you can't spend because you have to save, means options to deal with life's emergencies and, ultimately, retirement.

There will always be times when you get frustrated, even angry at your circumstances. Psychologists now know that our brains are wired to respond and remember negatives more strongly than positives. That's what stopped us from being annihilated as we were evolving.  According to Jonathan Haidt, a professor of psychology at the University of Virginia, and author of The Happiness Hypothesis, "bad is stronger than good" is an important principle of design by evolution. "Responses to threats and unpleasantness are faster, stronger, and harder to inhibit than responses to opportunities and pleasures."

If you want to be happy, you have to work at giving equal time to the good stuff in your life. There are sunny days and rainy days both. The trick is to remember that even when it is pouring with rain, you are blessed so count 'em.

"When you think things are bad,

when you feel sour and blue,

when you start to get mad…

You should do what I do!

Just tell yourself, Duckie, you're really quite lucky!"

If you find it hard to remember just how lucky you are, it's time to start a gratitude journal and write down the tings you're grateful for at least once a week.  Studies show that people who keep gratitude journals are more optimistic as a whole than those who focus on the potholes in their lives.

Counting your blessings before you fall asleep or when you first wake up in the morning is another way to focus on how lucky you are. What better way to pull positive energy into your life than saying thank you for the gifts you've been given.

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T&T: Smart Decisions Edition

I'm at the beginning stages of trying to create a budget and to live my life more financially responsible. I am a recent graduate from theatre school and am trying to build a career in the arts and as such I tend to work on contract basis. So my question is: How do I calculate my income or create a budget when I might only have a contract that guarantees payment for six to eight months of the year?

Gail says: You do it by treating your income as if it were for a year. After all, if your contract ends and you do not have another, you'll need to have some money set aside so you can continue to pay rent and eat. It may mean you have a very tight budget, but it'll also mean you'll have some money at the ready just in case. If you can't live on the money you're currently making because of what you're setting aside for the 4 months you aren't working, you'll have to look at what you can do to reduce your expenses, like have a roommate.  Or you'll have to find a way to make more money.

I was at the bank recently. They suggested that it is a good idea for a young person to get a credit card just to establish a credit rating for the future but pay it off at the end of the month. Otherwise they will have a hard time obtaining any loans etc. with no credit rating. I am thinking of my daughter who is 19 going to school and working part time. She has a bank account and pays cash for her expenses. Is it a good idea for her to have a credit card at this point just to create a credit rating?

Gail says: Absolutely, as long as you get a low-balance card and she develops the discipline of keeping track of all her purchases in a notebook and paying of her balance in full every single month.

Here's how to use the notebook:

1. Write the current balance in her bank account at the top of the page.

2. Each time she uses your credit card, makes a debit using her debit card, or withdrawals cash, deduct the amount spent from the notebook.

3. Each time she gets money – a paycheque, money from the Bank of Mom, she writes it into the notebook. So the notebook has a running account of all her spending.

4. Since she's already deducted the amount she spent using her credit card from the notebook when she made each transaction, when the bill comes in, she'll have all the transactions already debited from her balance, so the money's there to pay off the bill. She simply makes a note beside each transaction that's come through on her statement. Remember, some transactions may not make it onto the current statement, but they'll come through on the next one.

I have a question about when all the interest rates are the same – which debt gets paid first – the one with the biggest balance or the one with the smallest?  I have always heard you say highest interest rate first, but I have never heard you say what you should do when the rates are all the same. I have four debts – one is a credit card and the other three are student loans.  The credit card is obviously the one to pay first, since it's interest rate is more than twice that of the student loans. But once it is paid, which loan do I tackle?

Gail says: If all the interest rates are the same, tackling the lowest balance first and getting it paid off will give you some momentum. Remember to roll the amount you're using to pay off each debt to the next debt to snowball your payments.

Our home is worth $200,000 with mortgage for $111,000. This includes my student loan for $13,000 that we rolled into the mortgage earlier this year when it came up for renewal. Mortgage rate is 4.13% for next 5 years. We also have $11,000 left on a home equity line of credit, which we used to do a big renovation, interest rate is 3.25%. We own both our vehicles outright, but will need to purchase new ones within the next couple years.  We are 25 and 26 and have $10,000 between us in RRSPs right now, and we have $1600 in our savings/emergency fund right now. We have been focusing so hard on paying down debt: we have paid off about $15,000 in less than a year. As you can tell by our emergency fund, we have been lacking in that aspect.

I am getting a substantial tax refund this year, about $4200 expected to arrive any day.  I am not sure what to do with this refund. We could put it directly on the line of credit, pay in directly to the mortgage to try and make up for the $13,000 we added to it earlier this year, or save it. We want to take maybe $1000-$2000 of it and do a little bit more work to the house and yard. Are we stupid to do that and not pay off our debt with all of this money?

Another question: you caution folks against depleting all of their savings to pay down debt. What about the case where it is revolving debt like a LOC? I figure we should put our savings to the LOC right now too, because we can always advance some money off the LOC again if we need it.

Gail says: I don't believe that anything (including debt repayment) done to the extreme (eliminating savings) is a good idea. If it were my $4,200, I'd take $4000 and put it into the emergency fund… you really do need a much bigger emergency fund. The remaining $200… have some fun. Hey, all work and no play… spread it out though (don't spend it all in one place). You've done a good job of paying down debt this year, so take a pat on the back. As for the money you want to spend to finish up the house, you can do this when you've got the line paid off! That'll be your reward. Assuming you've saved the $2,000 you plan to spend.

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When Loyalty Cards Are BAD for You

You know how I feel about debt. But I don't have anything against credit that's used smartly. And one of the smartest things you can do is have a credit card that you pay off in full every month AND earn points or cash back. But can too many loyalty cards be too much of a good thing? You betcha.

There you are standing in line in the big ol' department store. You arrive at the check-out with your arms full of stuff and the cashier says, "If you apply for our card today, you'll get a 10% discount." You've been adding it up in your head. That's about a $30 savings for doing nothing more than getting the card. Hey, how can that be wrong? You'll just cancel the card once you've paid it off and you're in the clear.

Here are a few things you should know:

1.  Not all credit cards follow the same rules. There are department store credit cards like the HBC MasterCard that do not actually cancel the account when they say they do even if you ask them to close the account or report the card lost. That leaves the account open to fraud. No discount is worth the risk! And since it's virtually impossible to get a body on the phone to solve a problem with some card companies, you'll be left in purgatory wondering what you can possibly do to solve the problem you created when you went for the quick discount!

2. The more cards you apply for, the worse your credit score can become. That's because very time a lender requests a credit score, an "inquiry" is placed on your credit report. Too many inquiries — usually more than two in a year — is often associated with higher rates of default.

3. Closing credit card accounts can also negatively affect your credit report. Close a card with a positive history and the record of your good behavior will disappear. But negative credit reports stick around for six years whether or not you cancel the account, so you could be left with a credit report full of bruises.

The total amount of available credit can also affect your future ability to borrow, even if you don't use the cards. Lenders look at the total amount of credit you have available. So if you have five cards each with a $2,000 limit, they see that as you having borrowed $10,000. Never mind that the balances on those cards are zero! Since you could use those cards (or lines of credit) at any time for any reason, they have to count that credit as already used, and that'll limit how much more you can borrow.

If you're finding the lure of rewards cards irresistible, be very careful. There are heaps of fools who get hooked by generous sign-up bonuses or the hunt to accumulate points. Some folks get so obsessed with their points that they completely lose sight of their growing debt. One or two cards mean you can keep track of what's happening. Multiple cards offering multiple rewards, or department store cards with special bonuses, means you may end up with balances that start out small and accumulate quickly. The interest you end up paying more than negates the points or discounts you got in the first place. (How do you think they can afford to offer all those discounts?)

Remember, too, that the STUPID credit score system takes into account the total amount of money spent on each card, versus the available credit, regardless of whether you pay off your balance in full each month. (Have I mentioned recently just what a piece of crap the credit scoring system is?)

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