Archive for March 2015
Common Question About 0% Balance Transfer Credit Cards
Many people look at 0% Balance Transfer Credit Card offers and wonder, “what’s the catch?” So let’s dive into this question.
QUESTION: Is the interest rate really 0%?
The answer is, “YES!” Many of these offers do, however, have a small transfer fee – usually around 3%.
Let’s use an example to see how this works.
Suppose you transfer a balance of $5,000 from a card that has a 21.99% interest rate. You apply for a 0% balance transfer credit card. This offer comes with a 3% balance transfer fee, but it also provides 0% for 18 months.
Upon acceptance of your application, the 3% balance transfer fee ($150) will be applied to your balance on the new credit account making your total balance owed equal $5,150 ($5,000 balance that was transferred PLUS the $150 balance transfer fee).
Now comes the good part! You now owe 0% interest for the 18 month period – as long as you make all of your payments on time, of course. Let’s see how this plays out while making $200/month payments – 21.99% credit card vs 0% balance credit card.
The I Was Broke. Now I’m Not. Team keeps a running list of 0% Balance Transfer offers HERE.
0% Balance Transfer credit card offers
Just by making one decision that takes less than 15 minutes, you can make a HUGE difference with your finances!
What 5 Questions Should You Be Asking? Part 3
When it comes to spending money, we all need a little guidance sometimes so I’ve put together 5 questions to ask before spending! It’s my hope that this series will provide you with practical questions to ask when preparing to spend a substantial amount of money (or any amount of money). Hopefully, these practical questions will help you truly understand the enormity of the decision and help you make the decision that is best for you and your family.
Let’s review questions 1 – 4:
QUESTION 1: Is this a want or a need purchase?
QUESTION 2: Will this item INCREASE or DECREASE in value?
QUESTION 3: Do I have the money to pay CASH for this item?
QUESTION 4: Will this purchase generate or take away income?
QUESTION 5: Will this help me achieve my future plans, hopes, and dreams?
I believe the number one reason that people fail with their financial plan is a lack of organization and lack of a plan. Without a long-term perspective, it becomes extremely easy to fall into the trap of living for the minute and immediately spending everything we earn. As one develops a long-term perspective, it really helps us recognize that spending all of our money right away will rip our future dreams away from us!
When my family first started improving our financial future (December 2002), I noticed that we started looking ahead a few months. Now, twelve years later, my entire perspective has shifted. You see, I want to leave a legacy for my children and community. I want to start a university. I want to leave a huge inheritance to my family, church, and others. My wife and I want to give our children a paid-for-college education. We desire to teach them to manage their finances, recognizing that it’s not just for them but it’s FOR THEM TO HELP OTHERS!
Statistics say that I’m already halfway through my life. Time is short. Too short to spend all of our resources on stuff that does not support our plans, hopes, and dreams.
What are your future plans, hopes and dreams? What purchases will help you achieve these?
What 5 Questions Should You Be Asking? Part 2
When it comes to spending money, we all need a little guidance sometimes so I’ve put together 5 questions to ask before spending! It’s my hope that this series will provide you with practical questions to ask when preparing to spend a substantial amount of money (or any amount of money). Hopefully, these practical questions will help you truly understand the enormity of the decision and help you make the decision that is best for you and your family.
Let’s review questions 1 & 2:
QUESTION 1: Is this a want or a need purchase?
QUESTION 2: Will this item INCREASE or DECREASE in value?
QUESTION 3: Do I have the money to pay CASH for this item?
It’s a great feeling when you can pay cash for an item and not have the weight of debt, financing or interest looming over your head.
I wrote the “I Was Broke” part of my book, I Was Broke. Now I’m Not. (you can check out all the details HERE), by always financing things. My car, truck, next truck, engagement ring, wedding ring, honeymoon, credit cards, college student loans, furniture, and many other things were all financed because I didn’t stop and ask myself this question. The day I started asking myself this question, my family moved one step closer to winning with money.
If I do not have the cash to pay for it, I’m not buying it UNLESS it’s a house or an asset that will increase in value (like a business, rental house, etc). Even then, the answer is still usually “NO!” unless I have all of the money available to pay cash.
QUESTION 4: Will this purchase generate or take away income?
What an incredible question to ask – and what a difference it will make in the way you think about money! I used to earn money and then immediately begin pondering which fun item I was going to buy. I rarely (if ever) thought about the fact that I could use the money to buy in to a small business, purchase stocks and mutual funds, start a small business or purchase a rental home.
Even more, I didn’t truly realize the ACTUAL cost of many of the items I had purchased. I had purchased a new car (a smokin’ hot Chevy Cavlier) and I only thought of the bank loan as my “cost” to purchase. In actuality, I also added the costs of insurance, property taxes, license tags, maintenance, repairs, and additional gasoline consumption.
Before spending money, just stop and ponder the options available to use those resources to generate more income for you in the future.
Questions 5…TOMORROW!
What 5 Questions Should You Be Asking? Part 1
When it comes to spending money, we all need a little guidance sometimes so I’ve put together 5 questions to ask before spending! It’s my hope that this series will provide you with practical questions to ask when preparing to spend a substantial amount of money (or any amount of money). Hopefully, these practical questions will help you truly understand the enormity of the decision and help you make the decision that is best for you and your family.
QUESTION 1: Is this a want or a need purchase?
This might seem like a basic question but do you really need this item? As a “spender” I can get caught up in the “I WANT THIS!” mentality and never stop to ask, “Is this a want or a need?”
My garage is full of “I want this” items that we never use. EVER! This includes a RC Airplane (it’s cool – but I don’t use it), bike (never ride it), tennis rackets (once every 3 or 4 years), and many other items.
Pausing to ask “Is this a want or a need purchase?” can prevent a lot of poor spending decisions. I’m not saying that I never purchase things that are pure “wants”. I am saying that when I ask this key question, I make much smarter overall decisions.
QUESTION 2: Will this item INCREASE or DECREASE in value?
Asking this simple question can also help prevent a lot of poor spending decisions!
Chewing gum goes down in value. So do cars, 4-wheelers, refrigerators, swimming pools, and clothes. Business can go up in value. So can houses, land, antiques, mutual funds, company stocks, bonds, and intellectual property (patents, licenses, etc).
Here’s what I know: Not all of your purchases can be for items that increase in value, but if ALL of your purchases go down in value – something isn’t right!
Join me tomorrow for questions 3 and 4!