Welcome to the The Old Money Edition of the Money Hacks Carnival! If this is your first time here, please have a look around and consider subscribing to our RSS feed. Be sure to also check out Festival of Frugality No. 139: The Michael Phelps Edition which was hosted here yesterday for more recommended reading.

Madoline and I have a fondness for history and all things old, so the theme for today’s carnival is “Old Money.” While credit cards, online banking and checks are great modern commodities, they just don’t have the charm of good, old fashioned money - in other words, cash. We hope you enjoy this tour through United States Treasury history and the art to be found in currencies of the past.

1934 $100,000 USD Bill (Woodrow Wilson)

Editor’s Picks

• PT presents 9 Tips For Going To One Income.
• Twenties Money Magazine presents My College Sold Me Out.
• Toni presents Happy with What We Don’t Have.
• The Investor presents How a boring broker will make you richer.
• Karen presents Spending money can save your money.

1918 $10,000 USD Bill (Salmon P. Chase)

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Welcome to the 139th Edition of the Festival of Frugality! This week’s edition celebrates the sensational achievements of Michael Phelps, holder of 15 Olympic Gold Medals and 7 World Records in swimming, in the past week and a half at the 2008 Olympics with photos and inspirational quotes from the champion himself.

I am also hosting the Money Hacks Carnival tomorrow, so be sure and check back for more great reads! If this is your first time here, please look around and consider subscribing to our RSS feed. 

Now on with the carnival!

(AP Photo/Mark J. Terrill)

Editor’s Picks

• Silicon Valley Blogger presents Lost Money: How Money Drains Add Up To $175,000 In 10 Years.
• MoneyNing presents Frugally and Happily Back to School 9 Different Ways.
• Kevin Brink presents “Sale” Can Sometimes be Just Another Four Letter Word.
• ISPF presents 10 Tips to Get Anyone into the Habit of Cooking at Home (Even if You Have Never Stepped into the Kitchen Before).
• Savingadvice presents Reached Financial Independence. Now What?

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When our cousin went home last month after her 3-month visit, I thought I’d be able to spend more time working on this blog and post more often, but I guess plans are made to be broken. If it’s not one thing, it’s another - all three of our dogs catching cold, changing webhosting plans and 2 out of 3 of our websites breaking, which I’m still working on, etc. But anyways, c’est la vie. So on with the roundup.

PF Bloggers Network

• I really enjoyed Ashley’s Living Like Kings at Wide Open Wallet. Nothing like a little perspective to keep our attitudes in check.
• JB from Get Rich or Die Trying shares their child’s allowance system
• Kristy from Master Your Card warns that Card Issuers May Know You Better than You Think
• Living Almost Large gives us 7 Ways to Stay Poor
• Kevin at No Debt Plan shares a great guide on Protecting Yourself: 5 Easy Steps to a Complete Home Inventory

Elsewhere in the Personal Finance Blogosphere

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Welcome to the 3rd edition of the Finance Fiesta. I’ve always enjoyed proverbs, and since Spanish is one of my favorite languages, our theme for this week’s fiesta is Spanish Money Proverbs. The following proverbs all come from A Polyglot of Foreign Proverbs for anyone who wants to know. Hope you enjoy them.

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Back in the day when Madoline and I were concerned (or maybe obsessed is a better word) with weight loss and weight control, we would set restrictions for ourselves - daily caloric limit, no fat, no sugar, no carbohydrates, no wheat, etc., depending on the type of diet we were on. We were never really that overweight to begin with but were obsessed with being thin. From the year after graduating from college up until around 3 years ago (about a 4-year period), we lived in a permanent state of deprivation and craving. And when we fell off the wagon, we really fell off. For example, we would buy a bag of chocolates and eat it all in 1 or 2 days. We’d bake a cake and eat half in one evening.

There was a period when we limited ourselves to 1,200 calories and ran 5 miles a day (after working 8-5), then sit around the rest of the evening looking for things to eat until we were up to our daily quota, and then sit around still hungry, wanting to eat more and planning what we were going to eat the next day when the calorie count started at 0 again. Sometimes we went over the 1,200 and had 1,300 instead and guilt-tripped about it all night. We did lose an impressive bit of weight during that time (which we gained back plus more as soon as we ended that diet), but we were also miserable, hungry and food-obsessed.

Then, a few years ago we decided that a life of deprivation and restriction was not how we wanted to live for the next 60 or so years, so we opted to try the “no-diet” system and eat what we wanted in moderation. And we have never looked back.

So the point of all this and how it has to do with finance? It works the same way. This may not be true or may not work for everyone, but I believe that it could for certain types of individuals. There is something about a restriction that creates a tendency in human nature to go right up to, and sometimes test, the boundaries. If one receives a budget or allowance for something, the natural tendency is to use it all up and then wait for and start planning the various ways in which one is going to spend the next month’s allowance. How often has the thought, “I have $___ left. What can I buy with it?” come into your head when given an allowance to spend on something?
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In every online discussion I have seen about credit cards, there are always at least a few contributors whose only comments are “Credit cards are evil” or “No credit card is best”, etc. This post is mostly for those people.

For several years, we also believed that credit cards were bad, having been thus informed by our stepfather, a compulsive spender who is constantly in debt. But over the past few years, we have learned that credit cards are actually a good thing and provide many benefits and advantages:

• Building Credit History
  If you plan on buying a car or house in future, chances are that you will need a loan, and if you have no credit history, it can be difficult to get a good interest rate on a loan. Interest rates make a huge difference in the amount you end up paying or saving. Credit cards, if used responsibly, are a good and easy way to build a good credit history, which can ultimately save you thousands of dollars.

• Tracking spending
  Credit card statements provide an good way to track and analyze your spending habits. By charging all your purchases, you will have a printed statement of where every dollar has gone, a useful too for budgeting.

• Safer than carrying cash
  If you carry a lot of cash and lose your wallet, you can usually assume that money gone forever. If you mostly use your credit card and carry very little cash though, all you have to do is call the credit card company as soon as you discover the loss and you won’t be liable for any unauthorized charges to the card.

• Backup for emergencies
  Credit cards can be a backup source of funds for emergencies when you don’t have cash on hand. Though these should be true emergencies and not things like “fashion emergencies”.

And best of all, the reason we use our credit cards whenever and wherever we can:

• Credit cards can earn you money
  Credit cards can “make” you money in 2 ways:
  • There are many cards out there that earn you cash back or rewards. Some earn you as much as 5% cash back on grocery, drugstore and gas purchases. If you get a card with no annual fee (there are many out there), use it responsibly for regular purchases (not cash advances), and pay your balance in full every month, you can earn money without paying a cent to the credit card company. We have an American Express Blue Cash Credit Card that earned us over $300 cash back last year.
  • In addition to the cash back, credit cards also earn you money by allowing you keep your money in the bank longer. Depending on your billing cycle, you can charge your purchases and bills to a credit card and your money can sit in the bank earning interest for up to 6 more weeks. For example, our propane bill was due on January 30, 2008. Our credit card billing cycle ends on the 28th of each month. If we charge our bill to our credit card on the Jan. 30, 2008, it goes on the new billing cycle which ends on February 28, 2008, and the due date for that billing cycle is in mid-March 2008. So the money for that propane bill that was due and paid on Jan. 30, 2008 won’t actually leave our bank account until 6 weeks later. That’s 6 extra weeks of interest on money that would have left your account immediately had you paid by cash or check.

These are just a few basic reasons we use and approve of credit cards. However, if you know that you won’t be able to control your spending, then perhaps it is better to not go this route. If you need advice on applying for credit cards, visit your bank or credit union and someone can usually recommend a good card for you and help you with the application.

Continue reading for tips on choosing the right card and a few tips for safe and responsible credit card use.

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