"Float" through your financial life. It's a game and an art. Enjoy.

I am not a financial consultant.  I am not even a real samurai.  So any advice you get here is solely my personal experience and not necessarily a guide to general action.

The true warrior learns to fight so she does not have to fight.   The financial warrior learns about money so they become less wrapped up in how money controls their lives.

Credit cards are a convenience but if not mastered they will master you.  (Master You Card.)  After years of credit card debt, I have gone for years paying the balance in full.  I have come to see paying credit card interest as voluntary servitude, so I don’t do it.

Now that I have incorporated the habit of paying the balance in full every month, I’ve played with it a little bit by incorporating “the float.”   For me, the float is the time between when you make a charge and when the credit card bill is due.

Here is how it works:

  1. When I make a credit card purchase, by the end of the day, I put the exact amount of money into my “Bills” savings account at ingdirect.com.   (There may be plenty of other great internet banking options but I’ve kind of grown financially with ING, especially by creating different savings accounts and creating nicknames for each account.)  If I don’t have the money, I don’t charge.    This way, when the bill comes, the money is in my “Bills”  account already.  It also earns interest.
  2. When the bill comes, I check the due date and schedule a payment two days before the due date.  (I pay my credit card bills online, even though I’m starting to feel sorry for the post office.)
  3. The money is already in my special savings account, so I schedule a transfer from my “Bills” account to the checking account the bill will be paid from two days before the scheduled pay date.   This prolongs the amount of time that your money will be earning interest.

Really, the most important step is #1.  Always have the money in an account to pay your credit card bills.   Let’s say the credit card company charges 20% interest.  If you always leave $1000 unpaid throughout the year, even though you make payments, you will be paying an extra $200 or more and get nothing in return.

Steps #2 and #3 are more like financial Farmville, except that they train your brain to think like a financially independent person.   By keeping my money in a “Bills” account I earned a whopping $6.17 in 2011.  I waste that much on coffee in a 48 hour period. (I will focus on this in a future article.)   But these steps, if you decide to take them on, are just one way to tell your samurai mind that, “My money works for me.”   (You may spend $10 on a book, but the lessons in that book may have the power to change your life.)

Learn more about money so that you do money and money doesn’t “do” you.   Have fun!

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