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Cash or Credit? Easy Formulas to Help You Juggle Payment Options

Especially now, in a time where the economic situation may be forcing you to be creative in your spending exploits, you have to be on top of your money. It’s in your best interest to be smart when you spend.

Your ability to find that delicate balance between cash and credit could be the difference between:

· Having enough reserves to cushion a possible financial blow, and

· Having a mountain of debt staring you in the face

Using these strategies will help you juggle your payment methods effectively:

1. Separate recurring and one-time expenses. Split your expenses into two categories: regular monthly expenses, like utilities and rent, and one-time expenses, like a trip or unexpected medical fees.

· In most cases, recurring monthly expenses can be paid for with your credit card because you likely would have budgeted for them from the onset. Just be sure to clear those amounts from your credit card in full when the statement comes.

· One-time expenses are best settled with cash so you’re more honest with yourself in terms of your financial position. Credit cards can sometimes give a false sense of financial wellness because of the spending power they give you.

· When using this strategy, it’s really important to be able to stick to your budget. Remember to put aside those funds for your recurring expenses, even if you’re putting them on a credit card. One of the worst financial mistakes is to spend the cash for your rent on a one-time expense!

· The beauty of using cash for your one-time expenses is that when you run out of available cash, you know to stop spending, at least until the next paycheck.