It's been a while since I blogged about personal finance/budgeting and such, and I've been thinking a bit about it lately, so here ya go.
Topic #1: Credit! Hi. My name is Kim, and I just got my first credit card. Yes, my first. Yes, I am almost 27 years old. Yes, I have been living with just a debit card all this time. I've been thinking about getting one for years, but the combination of not wanting to pay annual fees and wanting some sort of rewards system and not being able to make a decision meant I never had one. And then along came Banana Republic. I was already receiving some massive discounts on a recent trip to the flagship store, thanks to a big sale (oh so much pretty there), and the super-helpful salesgirl (no joke, she was great) convinced me to get one (further discounts! I shop here anyway!). I am usually impervious to the siren song of the store credit card...so why did I give in?
For one, there is actually a decent rewards program when using my card at Banana Republic, Gap, and Old Navy (including the outlet). Those are the only places I actually shop for clothes anyway, so I might as well be earning rewards for doing it! I can use the card for other purchases, too (it's a Visa), which I may do eventually, but for now, I'm using it as a clothing shopping card. I figure this will keep me from spending too much each month, since I don't do much clothing shopping anyway. I will pay the balance every month (the one downside is a high interest rate - but I don't plan on carrying a balance on any credit card I might ever have). So yeah. Now I have a credit card. So far so good.
I am considering getting a bank credit card through Wells Fargo when I open a new checking account (something I'm planning on doing relatively soon), just to have one for emergencies that has a low interest rate. Is this something that would be useful? I hate the idea of spending money I don't have (hence my being ok with a high interest rate on the BR card - I pay it off right after I spend it), but would it be a good idea to have a card I can use in a real emergency? Something with a low interest rate, in case I have to pay for something I don't have money for (I don't know what kind of emergency that would be...medical expenses? Isn't that what my emergency fund is for?)? Thoughts?
Topic #2: Debts and Savings! Exciting news (for me)! I am thisclose to paying off my car loan! I've been working hard to get this paid off, doubling my payments for the last few months. I gave myself the arbitrary deadline of my birthday (May 10) to have paid off my car, and I am on track to come in ahead of schedule. I owe just over $1,000 and plan to pay $500 in March and the remainder in April. And I am stoked. Woo hoo! The plan was to then take the $500 I'm not spending on the car payment and put it into my "high interest" savings account, but since the interest on that account is pretty low right now, I have other plans.
See, I also have this student loan. The loan was originally for about $18,000. I decided to check up on my account this morning, just for fun (ha). And according to the loan website, I have paid about $5,000 since I graduated in 2006 (minus about a year when I was on financial hardship deferment during an unpaid internship). And somehow, I still owe about $16,000. That's what we call stupidcrazyinterest. omg. So. Since the interest on my student loan is significantly higher than what I'd be earning in the savings account, I'm going to take that extra $500 a month and aggressively work on the student loan repayment instead. It's still going to take me forever to pay off, but if I'm paying $700 a month instead of $200 a month on it, at least it'll take a little less time. I'm still budgeting about $200 a month for savings (I like a steady contribution to my emergency fund), but I figure it's better to throw my "extra" money at the loan right now.
It feels good to make grown-up decisions about my finances.