Personal Finance Lesson 1

Would you like to give $30 or more each month to random people on the streets each month? Of course not! But you’re already doing it with your current debt, and you might not know.

If you are like me then most likely you’re wasting your hard-earned money on interests because you’re paying the minimum amount on your monthly credit card payments. This is not uncommon as the average US household credit card debt stands at $16,000.  Luckily my debt was not as high and I was able to see my mistakes before it became a bigger problem.

This introductory blog will offer steps on decreasing your debt and start saving some money. The savings will allow you to have a rainy day fund (for any unexpected expenses), and give you the ability to start investing that money.

Enough with the intro and let’s get into the action steps which are the following:

  1. Set up direct deposit with your employer
  2. Review your current expenses
  3. Break those expenses down
  4. Prioritize accounts with interest rate fees
  5. Automate  your payments
  6. Increase your minimum payments

Step 1: Setup a Direct Deposit

Before you dive into the next steps, please take some time to setup a direct deposit with your employer and bank. Talk to your HR representative and ask them to provide you with a form so you may add your bank account and be able to deposit your checks. This will help tremendously later on step 5 in automating our payments.

In this day and age most employers and most banks should allow you to do this easily. This process might take about 2 weeks to get setup; however, it’s worth it!

(If you are unable to do this: Don’t worry! you can still follow the rest of the guide as long as you have a checking account already)

One last question to ask: Do you get paid weekly, bi-weekly, or monthly? hold on to that answer for later.

Step 2: Review your current expenses

First of all write down all of your monthly expenses in your notepad or type it in your favorite word processing application.


Monthly Subscriptions:

  • Netflix
  • Gym Membership
  • Spotify
  • Others (Fitness magazine)

Monthly Bills:

  • Electric
  • Water
  • Cellphone/Phone
  • Internet
  • Rent

Credit Cards

  • Capital One Venture
  • Discover
  • (Others: JC Penney, Best Buy, Etc..etc..)

Other expenses:

  • Student Loans

Once you have made a list of all your monthly recurring payments sign up for allows you to link all of your accounts that you would normally access online individually. (You may use any other services if you desire, for simplicity I use

This website is free and I personally use it to view all of my accounts (including my bank account, student loans, and other credit card payment information)

Once you setup your profile, you may simply click on Financial > Add Account


Select your bank, credit card, or financial institution and add your username/password to link it.

Once you link all of your accounts, you should see the site break down your costs on Cash & Credit Card debt.

On the Alerts homepage it might also show you the total interest you have been paying for your current credit card. Personally I had paid about $320 on credit card interest because I was paying the minimum amount

There are multiple links on Youtube that will show you an overview on how to use (this is a good one I won’t spend time on the usability of this site because you can easily use any other services available.

(NOTE: If you don’t want to go the “high tech” route or mistrust or similar services, you may just log in to each of your student loan sites, credit card sites and manually look at your previous statements and look for the interest charges that you have incurred, and sum your total outstanding balances).

The point of this exercise is to see the big picture. Look at how much money you are throwing down the drain each month because you are paying off the minimum amount. These tools also show you the combined debt that you might have which might be (credit card + student loans). Don’t be intimidated if you owe a large sum of money, we’ll be able to pay this off in the near future, I promise!

Step 3: Break those expenses down

Now that you have a list of all your monthly expenses, take a look at each category.

I personally categorize these expenses as

  • Basic Necessities – Monthly Bills (Electricity, Water, Gas, Phone), and Mortgage payments.
  • Entertainment – Netflix, Spotify, Amazon Prime, and other subscriptions that you use.
  • Credit Card Debt – Self-explanatory (Department store credit cards, financial institution cards)
  • Loans – Student loans, or other long term loans.

At this point you may also start reviewing your Entertainment list and seeing what services you truly use and if you should continue using that service or cancelling it. (Example: You have a Netflix subscription but only watch a movie every 2 weeks. You might as well pay $1.99 to stream an individual movie in Amazon or other service at a time)

As you note these monthly bills make sure you note the date of the withdrawals, and method of payment. This will help us with step 5.

Example of a format you might use:

Name of Charge Amount Due Date Method of payment
Netflix $9.99 Every 13th day of the month Capital one Credit Card

Step 4: Prioritize accounts with interest rate fees

Now that you have a list of all your monthly expenses, take a look and see the interest rate on each of your loans, credit card balances. Personally I had 2 credit cards that I had an outstanding balance on:

1st Credit Card: Home Depot Credit card at 17.99% APR (Balance was $1,300)

2nd Credit Card:  Capital One Venture at 22.3& APR (Balance was $2,100)

As you can see my Capital Visa card had the highest interest rate therefore I decided to tackle that one first.

(Quick note! There are two ways of tackling this:

  1. You can either pay off the one with the lowest balance, in my example the Office Depot credit card, and you can get that out of the way. This is more of a psychological WIN since it will get the ball rolling and you can continue with the rest of your debts.
  2. Pay off the Card/Loan with the highest interest rate. This will save you more money on the long run since you’ll be able to pay it off in less time. )

Choose one method but don’t spend too much time deciding on it.

Step 5: Automate your payments

From Step 3 you noted all your recurring expenses and monthly subscription fees.

Personally my reoccurring monthly charges looked like this (Before)

Service | Loan | Credit card Amount Due Date Method of payment
Netflix $9.99 Every 13th day of the month Capital one Credit Card
Home Depot Credit Card $46 Every 18th day of the month Checking account
Capital One Credit Card $60 Every 5th day  of the month Checking Account
Internet $60 Every 20th day of the month Capital one Credit Card
Rent + Utilities $1100 Every 16th day of the month Checking Account
Other Charges $250 Every 25th of each month Capital one Credit Card

Now that you know when your monthly charges occur, take a look at your current paycheck and note the total amount that ends up in your bank account for 1 month. I’m talking about the Take-home money, after income-taxes, 401k contributions, insurance contributions, employee stock purchases, etc.

Add this total and subtract it from your monthly fixed expenses (Your Bills, Loans, Credit card payments). NOTE: Your personal expenses might be hard to calculate since you don’t know how much you’ll spend each month, and if you do then congratulations!

If you don’t…I would use the calculations which break down past costs such as Gas, Restaurants, etc. and come up with a number that way, otherwise just estimate.


Total Monthly Income (paycheck): $3500   (I Get paid Bi-weekly)

–                                                                   (Minus)

Total monthly fixed costs: $1800

Total Personal expenses: $450

Total Amount:                   $2250


Total Income left:           $1250

Okay so now we know how much money we would have at the end of the month, why did you make me note the dates of each payment?

If you’re like me, most likely you’re not sure when each payment is due for your student loans, or credit cards; therefore, let’s offload that reminder to our creditors!

Call your credit card company customer service, your loan lender, your Netflix customer service, etc. and ask them to change their withdrawal date or due date to a specific day that you choose. This will give you reassurance that all of your payments are being made at a specific date rather than scrambling and worrying about those late payments. Remember: there are also late-payment fees that you might have incurred because of late payments, so this step is important!

After calling various customer services I was able to change my due dates to the following:

Service | Loan | Credit card Amount Due Date Method of payment
Netflix $9.99 Every 2ndth day of the month Capital one Credit Card
Home Depot Credit Card $46 Every 2ndth day of the month Checking Account
Capital One Credit Card $60 Every 6h day  of the month Checking Account
Internet $60 Every 2nd day of the month Capital One Credit Card
Rent + Utilities $1100 Every 2ndth day of the month Checking Account
Other Charges $250 Every 1stth of each month Capital One Credit Card

Before moving on, I want to note that some of these methods will not work as some of your payments such as rent might not be automated easily (although some banks are able to send checks automatically to your Landlord)

As you can see most of my monthly fixed expenses are paid off either the 1st or second of the month, then I pay my credit card in full on the 6th of the month. Important: make sure you give yourself enough time (4 to 5 days) from the point where your monthly charges happen to the day your credit card is paid in full (or monthly payment). I have seen instances where a payments are not consistent and might take a few days to process.

Step 6 – Increase your credit card & loan payments

At this point you have setup an automated system which takes care of your monthly expenses in addition to paying your credit card payments on time. Look back at step 5 to see the amount of income left that you have each month and ask yourself, can I increase my monthly payment? Are you paying $60 on your $3,000 credit card debt each month because it’s the minimum payment? do you realize how much time it’s going to take you to pay off the debt as a whole? and most importantly how much interest you’ll be paying?

Of course you don’t! because you don’t see the big picture yet.

Let me give you this scenario:

You Owe: $3,000

Annual Percentage Rate (APR): 18%

Your Minimum Monthly Payment: $60

It will take you approximately 97 payments and close to 8 years to pay off your debt and you’ve thrown away $2,587 in interest.

Now let’s assume that you have an extra $100 in your income that you’d like to add to your monthly credit card payment.

You Owe:$3000

APR: 18%

Monthly Payment: $160


it will take you about 23 Payments and close to 2 years to pay off your debt, and you’ve paid only $549 (which you shouldn’t feel proud about by the way), but it’s better than $2,587.

Hopefully now you see the big picture! I’d suggest you visit the following site and enter your current loan or credit card debt to calculate the amount of time it’ll take you to pay it off

I hope you learned something new from this reading or at least it made you feel guilty about being irresponsible with your own finances, that was the whole point! j/k, j/k. The point of this reading is for you to take a look at your own finances and see where you might be wasting your hard-earned money and try to change that aspect of your life. I hope this triggers something inside that brain of yours and something finally clicks so you can start taking action.

Good luck!

I will continue to update this blog with Personal finance, and Cybersecurity-related posts.

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