Introduction
Hello, everyone!
If you read my blog post “For I know the plans I have for me? A look at my summer plans 2021 - miniBlog # 12.5” you’ll know that I have two overarching goals to accomplish this summer.
Learn how to drive & get my license
Learn how to manage money
I realized that it’s not just me with money anxiety! Finances can feel super overwhelming, and no one in high school through college told me anything about saving, spending, or investing. No wonder so many people end up in difficult financial situations. So, I wanted to use my blog as a platform to:
1. Share how I believe we should view and handle our money with God in mind
2. Learn along with all of you!
Why is it important to learn about money from a biblical perspective?
“Money and possessions are the second most referenced topic in the Bible – money is mentioned more than 800 times – and the message is clear: Nowhere in Scripture is debt viewed in a positive way.” - “Is The Bible The Ultimate Financial Guide?” - Forbes
Basically, yes, God cares about money! God cares about how you view it. God cares about how you use it. God cares about it because He knows that it impacts our lives and our relationship with ourselves, others, and most importantly, Him.
To be perfectly honest, there’s a lot of advice around finances. I am no financial advisor. I have no idea where my money goes (probably coffee and clothes) most of the time, but I’m just learning along with you. I’m sharing this so you get exposed to the idea of money from the point of view of a blank slate AND someone who is your peer/friend!
Will I always be using a biblical basis for information? No, but I will always try my best to invite God into the conversation because it’s actually not my money or your money. All the money belongs to God, so when you think of it like that hopefully you will be more judicious and wise!
Starting Prayer
Lord,
You are the Creator of the Heavens and the Earth. You know how vital it is for us to learn how to manage our money well, and You never want us to be enslaved by any debts: sins and financially. Lord, it can feel so overwhelming to think about money because we feel overwhelmed, unsure where to start, poorly equipped, just plain lazy, or we don’t want to yield to You what feels like is ours.
God, please have mercy on Your children. We come before You asking for godly wisdom and insight onto our finances. God, I know that this money belongs to You, and I ask that You would provide me the tools to steward it properly. I do not want to be someone who is ignorant willfully or not. I rebuke poor financial decisions, unnecessary debts large or small, and attempts to make easy money out of greed and manipulation. I know that You love all of us and care for us so deeply. Lord, I want to surrender my financial life into Your hands. Please hear me and guide me through proper wisdom and sound advice that does not lead me into sinful thinking or behavior. I want to be known by the generosity of my spirit not by the temporary wealth that I managed to gather up.
In Jesus’ Name I pray,
Amen.
[Basics]
Again, really see this post as an appetizer or starter to your journey of becoming financially literate. I think the hardest part of any journey is getting started, so that’s my goal here! I’m just a noob at money so, don’t take my word as law but take it as an easy way to get started at least.
There’s honestly a lot of information to go through, so I probably won’t be able to touch on each and every subject too, FYI.
What is a Credit Card? How does it work?
Video to Watch:
Credit Cards 101 (Credit Card Basics 1/3)
A credit card: It is using money you don’t have on loan from the bank! You have a “due date” to pay it off by. If you don’t pay it off by then, the bank will charge you interest (that’s how banks make money)! If you do pay it off by the due date, you don’t have to pay the interest.
In contrast,
A debit card: It is using money that you do have from a checking account. No fees apply unless you overdraw (spend more money than you have in your account) to which your bank will apply a fee UNLESS you disable that feature.
Read: What Is a Credit Card?
Why get a credit card then?
Let’s just glance at a few questions together.
Do you ever want to:
Buy a car?
Get an apartment?
Get a house?
Get a private loan for any college or graduate debts?
Have money available to use when you’re tight on cash now?
Do anything a normal adult in the world does?
Let’s explain through a story:
One day, 26 year old Grace wants to buy a car since she spent the summer of 2021 learning how to drive and got her license for the past 4 years now. Grace works as an optometrist, but she also has debt to pay off for the past four years. She doesn’t have the IMMEDIATE funds to cover her car purchase, but she definitely is projected to be able to pay it off over time. So, she goes to the bank, and asks them to borrow $20,000 for example.
The bank looks at her file and checks how they could trust her to pay off her loans.
They see that at 22 years old, Grace has a history with her CREDIT CARD and has borrowed money and PAID IT BACK ON TIME before for a long time. She has a good credit score, and her current salary looks on track to be able to pay off this loan.
She gets the money and can get her new car!
I hope that story helped you because as I wrote it out, I realized credit card is simply: trust. Can I trust you to pay back what I gave you on time and in full eventually? You need this trust because you will always have purchases that are only feasible with time. Most people don’t have hundreds of thousands of dollars to drop on a house for example.
You don’t want to run into a problem where you need a loan, but banks will not offer them OR offer them at a terrible APR (read later) to you because you have no history of credit.
How does the bank make money off your loans/credit card debt?
Watch: How Does Credit Card APR Work?
Two words: Interest rate.
When credit card companies try to sell you on why you should pick their card, they’ll usually say something like “0% APR for the first 9 or 15 months”.
APR = Annual Percentage Rate or how much % interest is charged to people who borrow
So, how do we avoid paying this APR after the initial trial period?
Answer: Pay off your ENTIRE debt, not just the minimum $25 or so, each month and APR is something you don’t need to really think about!
“Banks hate her!” cause they’re not making extra bank off you!
When does APR matter to you?
When you have remaining debt at the end of the month to the next month it matters.
Basically, what it means is you used your credit card to go to Trader Joe’s and buy $100 of groceries. The 1st of the month (an example due date for payment) rolls around, and you haven’t paid off that debt. If this is after that initial trial period, you’ll pay 15% EXTRA on top of that $100 you owe. So, now you’ll be paying $115 back to the bank. You’ll also need to keep up with paying the minimum too.
What’s the moral of the story?
Never spend what you don’t ALREADY have. Make that a hard rule now.
Have an automated billing system.
4. How does credit score impact APR?
High credit score (super trustworthy) = Lower APR
Simple.
5. What’s my APR?
Call your bank or look at the terms and agreements of your credit card.
6. What’s a good APR?
Average is 15%. Always aim for a lower interest rate!
7. Are you just repeating the video info?
Yeah, I am. I like to reinforce knowledge, and sometimes I don’t want to watch a video just to find one part. Also, I would love it if one day my kids would read this (hi in 10-15 years?), and if the videos were gone then the information would still be useful.
Moving on:
Anyways, Credit cards can have some of the highest APRs compared to other types of loans! You need to be vigilant on your spending. Master your self-control early, live generously, and submit financial decisions under God.
Your history matters. What this means is if you have poor credit, lenders will give you higher APRs. As you want to make bigger and bigger purchases, this will become much more expensive if you have bad credit/high APR to deal with.
[Optional] Read: Annual Percentage Rate (APR)
How do I use a credit card…? :’)
Watch: How do you use a credit card?
Read: How Do Credit Cards Work?
Grace uses credit card to pay for dinner
Your credit card info goes to the business’ bank
Business’ bank gets authorization to use money from your card
Your bank/card issuer verifies the information and accepts/denys payment request
So, from what I understand each credit card has a credit amount. If yours is, say, $1000 then you spend $100 for dinner, you’ll have $100 in credit card debt and $900 credit.
Let’s talk about credit card RATIOS.
In this example, you have 10% of your credit in debt and 90% in credit.
This is great because you should NEVER EVER EVER have over a 30%** debt ratio.
In terms of the $1000 credit card, this means don’t have at or over $300 in debt BY the end of your billing cycle. So, let’s say I went shopping after dinner and spent $500 now my debt ratio to credit ratio is 50:50. Bad.
Either before the end of your cycle you should:
Pay off that debt until you get below 30% or $500 for example you’ll pay $200+ to go below that ratio again
CONS:
APR on that debt leftover still meaning that $300 you owe will now include interest you owe to the bank
Credit score will not increase as much as it could
OR
You pay off the entire thing BEFORE the billing cycle ends: the best case scenario
PROS:
NO APR
Credit score increases greatly
**For your bank it might be 30-40-50%. I would honestly say never go for the higher extreme because you should be paying off 100% of your debt in full.
As a Christian, paying off your debts is something God wants you to do because a trustworthy person keeps their commitments even when it hurts. Don’t manipulate things to go your way. Don’t make your parents have to bail you out. Don’t procrastinate paying off things.
If this is debt you owe on an informal basis like with friends or family: repay them back ASAP. Don’t wait if you have the proper funds back. Don’t say “Well they’re rich. They don’t need the money.” It’s not your money. You are incurring a bad reputation for yourself, that person will not probably help you out again, and you are hurting your witness as a Christian.
Romans 13:8 Let no debt remain outstanding except the continuing debt to love on another..
Proverbs 22:26–27 Do not be one who shakes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you.
ANOTHER THING I LEARNED:
Watch: Understanding and MASTERING Credit Cards
There are apparently 2 dates to be aware of when paying your credit card off.
Due date (AKA pay off your debt by this time)
Bill cycle date (AKA your balance will be checked and REPORTED to the credit score people where they’ll calculate then)
These are not the same. Call your bank and ask for the latter, do not let them say your due date. Ask for the day your balance is reported/the billing cycle close date.
In the video, it explained that your due date may be the 1st but your billing cycle close date might be the 10th meaning that you’re thinking you paid off your debt completely and those 9 days you’re spending like usual when in actuality you’re incurring debt upon yourself!
What do you do with this information?
Pay off full or your minimum payment at least on time/your due date.
Pay off your debt below 30%** before your cycle close date.
Automatic Billing Tips:
Banks will set an arbitrary due date in which they want their money back or else APR will get you.
Let’s say yours is due the 21st of every month: if you have a credit card with Bank A, you can set your checking account with Bank A to automatically make a payment on the 21st.
However, let’s say you get a credit card from another place like Costco or Target, then you will have that automatic billing date set a few days before that due date (my own preference would be 3 days) because there will be some possible delays in sending that money over since it’s not a direct payment situation.
BEWARE:
Golden Rules of Credit Cards:
DON'T SPEND WHAT YOU CANNOT PAY OFF.
You think it’s small stuff. Oh, $20? I can pay it back when I get my check next week.
Habits in youth become adult problems.
PAY IN FULL.
Don’t carry over debt. Don’t do it. Pay in full.
PAY ON TIME.
Set up your automatic billing ASAP.
Okay, Grace, now we’re BOTH super cool and know a lot about credit cards.
How do I pick out the right one?
Getting the Right Credit Card:
My friend gave me the great advice to look into Graham Stephen on Youtube for financial advice.
Another friend gave me the advice of looking for a credit card that has low APR interest, no annual fees, and 0% APR for 1-2 years along with cash back/benefits based on your lifestyle.
General consensus: START EARLIER!
I’m a beginner, so that leads me to…
[Read]: How to Pick the Best Credit Card for You: 4 Easy Steps
[Watch]: The 5 BEST Credit Cards For Beginners in 2021
An overview:
Check your credit.
Some credit cards need you to have good credit before you get that credit card…? It reminds me of those unpaid internships that require you to have 20 years of working experience.
Get a credit card that offers free credit score checks. (I feel like that’s like making me pay to see my grades at the end of the semester).
What do you want the card to do?
Do you want to build your credit?
Get lots of points to travel?
Earn money back?
“IF YOU WANT TO BUILD OR REBUILD CREDIT: STUDENT OR SECURED CREDIT CARD
Student credit cards, unsecured cards meant for college students who are new to credit, are easier to qualify for than other types of credit cards. So are secured credit cards, which generally require a security deposit of $200 or more. Your deposit is returned to you when the account is upgraded or closed in good standing.”
I’m out of college, and based on GS’ recommendation I will be going the secured credit card route.
What are features/fees involved in each card?
What’s the APR look like? How long will it stay 0%?
Do you want those travel points or cash back?
Any annual fee or as my friend put it “a subscription plan to use your card”?
Get the card that maximizes benefits and minimizes losses/high APRs.
...onto Graham Stephen’s recommendations!
Directly taken from his description under his video:
“
1. The Discover It Secured Credit Card
This card has NO ANNUAL FEE. And you will get you 2% cash back on restaurants and gas stations up to the first $1000, AND you’ll get unlimited 1% cash back on everything else. They’re also running a promotion where they will MATCH your cash back in the first year. Not only that, but Discover also allows you to monitor your FICO score for free on their platform, so you can keep track of how your score is improving over time.
2. The Petal 1 Visa Credit Card
They say that the Petal 1 looks beyond your credit score, by instead - looking at your banking history. Your Cash Score shows your creditworthiness and can help you qualify for more credit at better rates. With this, you can get a credit limit anywhere from $500 to $5000…and, BEST OF ALL, THERE’S NO ANNUAL FEE. They also offer anywhere from 2-10% back on select merchants, and their mobile interface helps you better understand how much you spend, what you’ll need to do to pay off your balance in full, and - will help you track your expenses over time.
3. The Apple Credit Card
Like the others - NO ANNUAL FEE. They’ll also give you DAILY cash back…when you use the Apple Card with Apple Pay, you’ll get unlimited 2% cash back on everything. You’ll also get 3% cash back on Apple Products and select merchants. Their app is also fantastic for tracking expenses, and learning good financial habits to make sure you pay off your credit card as soon as possible to avoid paying interest.
4. Bank of America Cash Rewards Card
I like this because they’ll give you a $200 cash bonus when you spend $1000 on the credit card within the first 90 days.Besides that, you’ll also get 3% cash back on the category of your choice, 2% cash back at grocery stores and wholesale clubs, and 1% cash back on everything else. You can also get a $200 Cash bonus when you spend $1000 in the first 90 days!
5. Chase Freedom Flex Credit Card: https://www.referyourchasecard.com/18...
First, they’ll be giving you a $200 bonus when you spend only $500 on purchases within the first 3 months…AND, you’ll earn 5% cash back on grocery store purchases on up to $12,000 spent in the first year! They’ll also offer you 5% cash back on up to $1500 worth of bonus categories, 5% back on travel through the ultimate rewards portal, 3% back at restaurants and dining….3% on drugstores…and 1% back on everything else. All with no annual fee.
Step By Step:
First, sign up for the Discover It Secured Card with a $200 deposit. Once you get the card, all you need to do is put a few of your normal expenses on the card each month…and then pay it off in full.
Second, if you want to expedite the credit building process just a little further…around the same time you apply for the Discover It card, also apply for the Petal 1 Visa Card.
Third, after 6 months of doing this…you’ll want to apply for either the Apple Credit Card or Bank of America Card. These will be your first “unsecured credit cards."
Fourth, from there…after 8-12 months from getting your first card…get the Chase freedom flex, and enjoy that free $200 cash back.
Then, after 12 months…you should have built up enough of a credit foundation to have a score above 750, and then be able to take advantage of every amazing credit card offer out there to get thousands of dollars back in rewards, travel first class, and get free nights at the best hotels in the world!”
Amazing! All this great information really concisely and clearly stated, I’m so happy to learn this all as I choose the right card for me.
Closing:
I think I've covered as much as I personally needed to know for the basics of getting a credit card. I think this took me around 2-3 hours of watching, reading, and getting advice from friends who have been down this path before.
Finances can be really confusing and scary, but everything is better with a friend!
I’ve been praying as I write this blog post that God would help us all become more financially responsible and knowledgeable. I feel like this may be stuff a lot of people know already, but I know that I didn’t know a lot of these things - and knowing that I would be making a post for other people made me really think, process, and retain this information.
Thanks to all these people who spent their time writing articles or making videos to explain essential life skills relating to money! It made it a much smoother and enjoyable time for me.
Possible Upcoming Topics:
Budgeting
Tithing
Taxes
Mortgages
Giving back to your parents
Retirement Funds - ROTH IRA/401K
Investing/stocks robinhood
Avoiding identity theft
Paying off Student Loans/grad school debt
High interest saving account
Buying real estate
Money & Marriage
Emergency savings
Ending Prayer
Dear God,
Thank you for being our Ultimate Provider and Friend. Like any good Father, You desire Your children to be wise with their choices and spending habits. You do not rejoice over people who incur debt willingly, and I know this because You came for our freedom from the debt of sin. Lord, watch over us as we think and spend well. I pray that we would use our money for godly purposes and be generous to others as You have been generous to us. Would we not feel entitled or greedy when it’s so easy. I pray over myself, my loved ones, my friends reading, and my future husband to be financially smart and high credit score earners! Thank you, God!
In Jesus’ Name I pray,
Amen.
Bonus Story: A God Moment
As I applied to get my credit card literally within this past week, the exact amount I needed to deposit was sent to me. I’m honestly shocked at how attuned God is to my every moment. God and I have always had a special relationship, like He does with everyone, but in ours He gives me nudges, signs, and confirmations sometimes. He’ll get a verse stuck in my head then have someone else I talk to or an article I read or a sermon I watch speak on it.
Sometimes, He gives me exactly what I need to know: Grace, my beautiful daughter, I see that this journey you’re on has the right heart and mind. You asked, and I will provide the exact dollar you needs.This money isn’t yours, but I will give you Mine so that you know that the provision isn’t from anyone else but Me. Does a Father not lavish His love and care for His children? Trust me. I know you are comfortable in the mindset of poverty, but you are a princess and your Father is the King of the Universe. You do not need to chase money or material things. Chase after Me and My heart to be rich in life.
I don’t believe in coincidences, I don’t need good luck when I have a good God.
God gave me that seed money for a reason: a seed of trust.
Jesus did, afterall, pay it all on the cross.
Thank You, God, for loving me and giving me more than I deserve every day.
Please remind me of Your provision. I am not an orphan. I rebuke the spirit of poverty in myself and every person that reads this. We are children of a King who withholds nothing good from those He loves.
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