This is a guest post by Kris Bickell. Kris is the owner of Debt-Tips.com, a site developed to share the lessons he learned about getting out of debt. Check out his debt reduction calculator and other tips that will help you pay off your credit card debt.

To start off, I’ll admit it, I’m no kid. So don’t think I’m blaming my parents for any money troubles I’ve had over the years. But if they had taught me these three lessons, then maybe life would have been a little easier.

Of course, there’s no guarantee I would have listened to any advice from my parents, but that’s another story.

A friend of mine used to say “too bad credit cards don’t come with instructions…”

What I Wish I Learned About Credit Cards
While most people know how credit cards work, I don’t think they truly understand the incredible impact they can have if you don’t know how to use them properly.

So for those of you who are new to adult life, or if you’ve had money problems and are starting over, or if you’re just stuck in debt and looking for some help digging out of a big financial hole, maybe these lessons can help you out a bit. I know they would have helped me.

So, here are the 3 lessons my parents never taught me about credit cards:

1. Credit cards are way too easy to get. I got my first one while still in college – American Express. Right on the front it says “Member since 1986″ (I told you I wasn’t a kid any more). By the way, what a great marketing tool because who wants to get rid of a credit card with a status symbol like that!

   Sounds cool, right? Actually it was a big mistake. I was a financial “newbie” way back then – with no job, no career, and no way to pay back what I charged on the card. Of course, with AMEX you must pay the entire balance each month, so that part wasn’t so bad. But what was crazy was the message that “Hey, getting credit cards is so easy you can get them even if you don’t have any income!”

   And then over the years you get a few more. Start buying things you really can’t afford. Then start making partial payments. And then you start paying high interest fees each month, so the debt builds up higher even when you don’t charge anything!

   See, these things shouldn’t be so easy to get. Wish my parents had warned me!!! Oh well, on to lesson #2:

2. Credit card companies won’t warn you – or stop you – or help you – when you’re getting in way too deep! I always figured that since I was such a valuable customer that the banks would want to do whatever it takes to keep me.

   Way off base on that thinking! Sure, as long as I kept paying, they would keep me around. But as soon as you’re late on a payment — ZING! — your interest rate goes way up. And if you need to skip a month, well, forget that idea. And if you get to the point of needing real help… then they tell you to call someone else, of course. Or have your card frozen. And you get hammered with late fees, over-the-limit fees, and before you know it your debt is growing by leaps and bounds!

   I know, it’s my fault for getting into financial trouble, not theirs. And the rules are in the terms & conditions. But I was just asking for a little warning, or a little help.

   And I was forced to learn the hard way that I was all alone and it was way too late. My bad, now on to lesson #3:

3. Credit cards should really be used like debit cards. To be paid off in full every month. And you should ignore the credit limit, and instead pay attention to the amount in your checking or savings account.

   Sounds a little idealistic for many people, I know. And not realistic when you get stuck with a huge medical bill or car repair bill, and need help paying it.

   But in the long run, if you don’t use your credit card like a debit card, and you charge more than you can afford, chances are pretty good you’ll get stuck in the good old “debt trap”, where the balance, and fees, and payments all keep going up and up and up …

   And more importantly, you figure out just how hard it is to get out! Just like the banks want (see Lesson #2).

So there you have it. If only my parents had taught me these lessons, I would have done like any teenager and listened very carefully to their words of wisdom, followed their advice every step along the way, and never would have had to deal with debt.

Well, OK, to be honest I probably wouldn’t have listened to most of what they had to say. But when the money issues started, at least I would have heard their words of advice buzzing somewhere in the back of my mind. And avoided some of the worst money issues I dealt with.

Hopefully, you’ll learn a tip or two from these lessons and avoid some of your own credit card disasters!

Simon’s Note: With the new Credit CARD Act legislation, credit cards are much less accessible by young adults under 21 years of age. But afterwards, it is still easy get credit cards and fall into tremendous debt.

(Photo credit: fromcolettewithlove)

Something happened this week that reaffirmed my decision last month to start taking backups seriously.

So, I was making a small edit to an old post on WordPress. As I clicked “Update”, the “Posts” section went blank and my Dashboard showed that I had zero posts.

Apparently, all pages on Realm of Prosperity had disappeared!

I have no idea what happened but I logged straight into my web hosting server and restored the most recent WordPress database backup. I am so fortunate to have built a solid backup system just for occurrences like this.

Everyone Needs Backups
As a blogger, amateur photographer, and self-taught web designer, I’d like to believe that my digital content is very important. With our immense reliance on technology nowadays, everyone has some vital documents and files that require multiple backups.

My inspiration came from a blog post by world class photographer Chase Jarvis on his photography workflow (the video is very educational). He stresses redundancy and off-site storage so I tried my best to have multiple backups in different places.

Sure, I am no professional but my website and files mean the world to me so I treat all my files as if it were part of a professional business.

My Backup Procedure

1. Using the WP-DB-Backup plugin, I schedule a daily backup to my Gmail account.
2. When that email hits my inbox, I also download a copy of that backup to the Dropbox folder on my Macbook Pro.
3. At the end of each day, I use Apple’s Time Machine software to backup my entire laptop to an external hard drive, which is rotated weekly with another external hard drive.

Therefore, I have 4 backups of my blog, 3 backups of all my work, and 2 backups of my entire hard drive. Dropbox is great off-site online backup medium. I put one of the external hard drives on the other side of the house to be on the safe side.

Is my backup configuration too much? No, I like sleeping at night knowing that if anything happened, I wouldn’t have lost much. Besides, the whole process takes 5 minutes of my day.

This may be handy advice to these bloggers who are pumping out such great posts:

• What’s Wrong with the Modern Personal Investing World at Redeeming Riches. Investing is considered essential to those who want to build wealth but there are many flaws in the system that makes it much tougher to achieve our financial goals.
• 3 Guerrilla Tactics to Get Rid of Clutter at 20 Something Finance. Accumulation of stuff is a prime evil that diverts focus and attention – leading to reduced productivity. I strive to keep my life simple with fewer things so these tactics would surely be useful.
• The Five Minute Rule at Bargaineering. Keeping your finances simple allows for more efficient money management. If something get to confusing for you to understand, then you probably shouldn’t delve any more into the matter – especially when it puts your money at risk.

A few carnival that Realm of Prosperity participated in:

• Carnival of Personal Finance – Getting’ Hot in Here Edition at NerdWallet
• Carnival of Financial Planning – Edition #151 at The Skilled Investor

(Photo credit: Sarabbit)

Payback Time is an investing book written by Phil Town, a well known investment guru. Town actually puts his investing advice in a step-by-step format with examples in a comprehensible format – a rare sight among many investing books these days.

Town’s investing philosophy is very much based on the success of Warren Buffett’s endeavors. The strategy taught in this book involves value investing over the long-term.

He shows no respect for the mutual fund industry and reluctantly mentions index funds for investors who simply want to take the easy way out. Therefore, stocks are his weapon choice for revenge. Against who or what? I’m not too sure.

These are the highlights of the book:

• The Three M’s. Meaning. Moat. Management. Town stresses that we are not dealing with stocks but we are meddling with businesses. So, we would like to invest in a business that 1) is simple and understandable to the investor, 2) has a competitive advantage versus those in the same industry, and 3) has stellar cast in management to keep the business running as it should.
• The Big Five Numbers plus Debt. After finding the right companies, we want to find the value of that company through return on invested capital, earnings growth, sales growth, equity growth, cash growth and debt. This was the formula taught in Town’s previous book, Rule #1, to find value of a company.
• Stockpile at the right prices. As Town puts it, the key to growing wealth through stocks is stockpiling – hoarding shares at an optimal discount price. It represents a refined and picky version of dollar-cost averaging. He throws a bunch of different nicknames for numbers (Sticker Price, Margin of Safety Price, Payback Time) but they all point to a set price-point criteria for buying stock that yields a low-risk, profitable investment.

Instructional Investing is Hard to Find
Payback Time is written in a great instructional format that teaches the reader what to look for and how to look for it. In my opinion, the most valuable content is the set of parameters that Town uses to identify a good investing opportunity. Along with guidelines to find the right company, he tells you when you should buy and when to sell.

Town gives a complete example of how to enforce the strategies that he teaches. To top it off, he touches upon the various investment vehicles that would maximize earnings and advises on making routine contributions – which is the best way to begin saving to invest.

Town’s value calculations include data research from many years ago. He likes to look at the trends of a company’s core financials dating back up to 10 years before. While historical numbers tell how a business became what it is today, I’ve always been skeptical as to how it translates into future performance – especially in the fast-paced, volatile age that we live in now.

He also wrote a section on trending and the use of technical indicators to pick out the right times to buy and sell. Again, technical analysis was invented to time the market, which is something I wouldn’t attempt. Instead, I prefer his price indicators over such hooey. If the stock’s price has reached its value without significant potential for growth, sell it. If the stock’s price reaches a significant discount to value, buy it.

Overview
This book definitely encompasses the investment mentality that any stock investor should have. Town stresses that we are investing in a business of which we are looking to become part-owners. Therefore, we must start from the perspective of a owner, not just an investor.

I am someone who is starting to jump into individual stocks rather than simply relying on index funds. Payback Time is just the book to learn more about sound long-term investing with stocks, which has greater potential for higher returns compared to diversified funds.

For anyone looking to become more active in building a stock portfolio, Payback Time is worth the read. The concepts are basic and simple (you probably already know them) but the book provides a systematic approach won’t leave you in the dark.

Cash is not a regular camper in my wallet. My cash back credit card, on the other hand, gets much more action.

Wow. That just made me sound like a compulsive spender. But, that is not the case. I am a little more aggressive with the way I use my credit card to maximize the cash back I get.

Cash Back Hoarding
Unless there were plans that would require cash, the maximum amount of cash I carry with me on a typical uneventful day is about $20. I like to take advantage of the cash back perks on my card whenever possible – even it means just a few cents.

So when friends call me on a whim to hang out, I’m usually caught off guard when we decide to eat somewhere a step up from the ubiquitous fast food chains. For the past few occasions, I’ve been the one who didn’t have the cash when it came time to pay the bill. Obviously, I’d be the one to take their cash and put the tab on my credit card.

Sure, I could have told the waitress to charge the difference but I would be missing out on free cash back.

Right after spending the night out, I’d head straight to the ATM on the way home and deposit the money into my checking account. After the transaction is posted in my credit card account, I pay the bill.

Also, my dad and his friends are obsessive aficionados of vintage audio. They lack the English skills and computer skills to buy the many music toys that audiophiles crave. Their favorite place to shop – eBay.

Every time they find something they want, it costs hundreds to thousands of dollars. They don’t have the means to make the purchases so I buy everything for them. In addition to the cash back that I get from my credit card, I’m racking up a bunch of cash back on eBay through Bing cashback and eBay Bucks.

A Bootleg “Cash Advance”
There have been instances where the cash actually becomes a cash advance without the ridiculous interest rate.

I wouldn’t have incurred the debt if I didn’t have to put any extraneous charges on my card. With a swipe of the card, I get cash. That is a recipe for a financial disaster. It is no different from borrowing cash on a credit card. Soon, it can build up and end up putting you in debt.

There were a few times where I had paid for something with my card and gotten cash for it – just to spend it and realize my credit card balance was over the roof.

Are there any other readers out there who are love offering their cash back credit card to pay for stuff while you get the cash?

(Photo credit: JOE MARINARO)