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Fun Ways to Rein in Credit Card Spending

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By Eva Norlyk Smith, Ph.D.
June 18, 2009

Imagine how nice it would be to have a financial advisor at your fingertips, a kind of personal Jeeves to keep track of expenditures, help make ends meet, and, particularly, rein in credit card spending. Well, a new breed of Web 2.0 financial management sites aims to be just that, and best of all, most of them are completely free.

Best described as a kind of “Quicken meets Facebook,” web-based personal finance applications like Geezeo.com and Wesabe.com combine personal finance software and social networking forums, and throw in quite a few additional innovative services and tools. Here are some of the functions and benefits afforded by this new generation of websites.

1. Keep track of expenditures. One of the great secrets to controlling expenses in general and credit card spending in particular is to keep track of your expenditures. If you know where your money goes, you’ll also know how much money is left to spend. It’s that simple. But let’s face it, bookkeeping is tedious and time-consuming—it’s just one of those things most of us never get around to.

One advantage of personal finance sites is that they put expense tracking on automatic. Once the information for your accounts has been entered, including credit cards, checking or savings accounts, all transactions are automatically updated, enabling you to stay on top of expenditures in real time. By tagging expenses by category, users have an instant overview of how much they’ve spent in different areas, such as clothing, transportation, or food. When a transaction has been tagged once, the website itself assigns categories to future transactions from the same vendor, making expense tracking almost automatic.

2. Set financial goals. Want to reduce your credit card debt by $1,000 over the next three months? Pay off student loans faster? Or save up for that dream vacation in Hawaii? Most websites have a goal-setting feature, which lets users specify their financial goals. Once the goals are set up, users are directed to discussion forums or they automatically receive tips from other users about how to meet those goals.

3. Create a budget and stick to it. One of the great strengths of personal finance sites is that they can help users create a budget around their goals and determine how much they can spend in each area and still meet those goals. Users can set budgeting goals for how much they want to spend on, for example, food, transportation, clothing, entertainment, and coffee/snacks.

Tempted to get that new dress on sale? Log in to your account (you can even use a mobile device) to see how much you’ve already spent on clothing and how much over or under budget you are for that area of spending. So yes, sure, you can charge that dress to your credit card. But then again, that means that the Hawaii vacation will have to wait until next year. Hmm, now, is that dress really worth it?

4. Save money. Wondering how to cut back on expenses and free up some extra cash? Some personal finance websites come with cool little add-ons that will look through your regular expenditures and alert you to items you may not really need. Wesabe.com, for example, features a “Cutback Tool,” which looks over your transactions and picks up monthly charges for subscriptions you may want to reevaluate or bank fees that quietly add up without your realizing it.

5. Get a little help from your friends. Whatever financial issues you’re dealing with, be it credit card debt or increasing cost-of-living expenses, one thing is for sure: There are millions of other people out there who are struggling with similar issues. A major strength of many of the new breed of Web 2.0 finance sites is that you can exchange advice with other users and learn from their experiences.

For starters, browse online forums for savings advice, other people’s experience with changing credit card practices, tips for the best deals on auto insurance, and so on. Exchange experiences and advice with other users who have similar goals or are struggling with the same financial issues as you. See what goals other people are setting, choose the same goals, and track your progress compared to other users.

In short, investing half an hour in getting yourself set up on a financial management site might be well worth the time. Whether you want help getting rid of credit card debt, saving for college for your kids, or simply are tired of looking at an empty checking account at the end of the month wondering where all your money went, personal finance sites offer an easy way to take charge of your finances and make better financial decisions.

Also see: 3 Cool Credit Card Management Tools