Post: #1

To be honest, I haven't had a zero credit card balance in over 2 years.

Its not that I spend a lot of money, but I use it mostly for travel. I will let my balance float from $1000-$4000, and when it gets near $4K thats when I will start aggressively paying it down...

But my question is, is credit card debt really that dangerous??

Financial guru's talk about it like its the black plague, but if you can use it to fund vacations for the next 50 years of your life then maybe its worth it.....

Just as long as you are going to inherit at least $10K, then why go crazy over it? Just selling one of my parents cars after they croak will get me $10K right on the spot.

And if you drop dead yourself who cares? My future kids will get my 401k and life insurance minus my credit card balance...

I usually keep my balance on zero percent balance transfer cards anyway : )

Post: #2

because you have no idea what you will actually inherit, especially considering you have no idea what their future medical expenses will be that will cut into their assets, if not completely drain them.

and the interest you are paying over that time frame also adds up 7quite a bit.

Post: #3

Your parents are going to live much longer than you think they will. If you're lucky, you won't be supporting them. That's a big if.

If you're using credit cards to travel, then play the sky miles game - the million mile secrets blog.

I got around $2,500 over the past 12 months in sky miles/hotel rewards.

Post: #4

I'm rocking the american express starwood rewards for hotel points, and I have my balance on a chase slate zero percent....

Post: #5

BTW: I'll get a couple $$......They cant conviscate my mothers jewelry, that's 10K right there...

Post: #6

(06-20-2013 08:19 PM)TheCaptainPower Wrote:  I'm rocking the american express starwood rewards for hotel points, and I have my balance on a chase slate zero percent....

I have multiple Chase cards.

You can have more than one account. Right now there are some amazing deals on Southwest Cards. 50,000 miles cards.

Like I said, check out that blog. Too much there for me to summarized here.

You might be able to get a business card, too, adding another 50,000 miles ($800 approximately in flights) to your stash.

Post: #7

You have $100k in cash and you're paying interest on credit card debt? I hope you mean you have never paid interest on those debt amounts. If you make any interest payments on a credit card you are straight fucking up if you have the cash to pay off balance in full you're basically floating a 9% rate on a monthly basis.

Paying interest on a credit card is such a bad idea I stopped watching the game to type this out.

If you run that math it's ugly over multiple months, people don't realize a x% cut down is worse than that same x% cut up.

Everything you buy should be paid for on a credit card, get a rewards card, pay off all balances 100% of it. Float 3 cards so you float the payment 59 days, now you got interest on interest.

Mileage cards are only good if you cancel before the payment date, or else you just went negative on your net ROI. You have to run the math, generally on a y/y basis cash back cards linked up to bank accounts net higher Roi's over a ntm basis.

I even pay for $2 double shot espressos with a credit card. If they let me pay my rent I would also do that on my credit card.

You've got a great savings habit but based on your posts you are not good at running percentages and managing your assets. You still have student debt running you higher rates than the ROI on your cd's and you don't realize paying off the debt would save you thousands over the long run. Don't know hat to say, you're basically emotionally attached to your $100K number.

Run the math. It gives you the truth. Numbers don't lie. I repeat run the math.

On one side note I find it a bit disturbing that you are analyzing your parents death. That is straight up low life thinking, you should want your parents to live a happy life. Not croak so you can get a $10K ring and car...

Post: #8

Someone told me he's not paying his credit cards because he doesn't ever plan on buying a brand new car or house.

Post: #9

If you don't pay your card off each month, they add on interest and that's how the banks get rich.

In fact, if you pay your card off each month and participate in a bonus points program (if your card has one), you can make money off them because a lot of cards give you cash back when you earn enough points.

IMO there is no need to make these legalized loan sharks richer.

Post: #10

^^ I agree with most of your post but calling it legalized loan sharks is a joke though. You literally just typed in your post that yes you can in fact make money off banks if you get a free rewards card and pay off the balance in full.

So the bank is giving you 1-3% for FREE and you have a negative relationship with your bank? Come on now get real.

Otherwise I agree.

Post: #11

I'm not paying off my credit cards because I'll be a millionaire in 3 years. What's the point?

Post: #12

I know people in NY who bought multi-family properties, never made ONE mortgage payment, and they have been collecting rent for 5 years....

It takes so long to foreclose that by the time they lose the house they have $300K+ in cash stashed away.

@West Coast They don't teach you those hustles in Grad School....

I always pay my cards on time, and I have my balance on a zero rate card. I'm just not going to kill myself to get it down to zero.

Post: #13

Captain you are not making sense. I will run the math for you. let's say you have on average $3K spend on a card per month.

$3K at zero percent = $0 .... Great.

Now if you got a cash back card 1-3%...

$3K at 1% = $30.

So you have to be earning more than $30 a month with the float. Times that by 12 you missed out on $360.

Now with your history of consistent payments you likely have the option to get better cash cards. I get 1-5% back on all purchases average of 3.3%... Lets use 3% as the example

Now that's $36k*3% = $1,080... My returns on my credit card are higher than the returns on a CD because It's tax free.

Now lets layer in a sign up bonus of $200 times two cards a year you're looking at $1,480... That's actually a lot of straight cash. You just paid over a months rent for free based on your living expenses.

$1.48K/$36k = 4.1%... That's double the return of your cd earning 3% because it is taxed at 35%.

Banks reward healthy customers with better rewards because they borrow short lend long. Banks are not "waiting for you to fuck up" they want you to have more cash on the sheets. They want you to be richer because then you improve their opportunities due to the reserve ratio.

Post: #14

Lets say your friends invite you to a weekend trip up to Montreal.

You only have $300 in your checking account, and the trip will cost $1500. You are dying to go to Montreal because you heard the girls are hot.

You also know that you cannot pay off the bill immediately and will have to float a balance for 3-4 months.

Do you go on the trip? Or do you punk out?

My point is that you should go on the trip....

Yes, you might lose money on the credit card interest, but when you are on your deathbed you are going to be glad that you got laid in Montreal as a young man.

Post: #15

^^ okay but that doesn't apply to you because you already have cash.

Cash = bullets for opportunities.

I am not debating life decisions, people can do as they wish. I am just explaining how to manipulate the credit card system so you can make money off the banks. You personally can make money off credit cards because you have good credit. If you want to talk about life decisions then I misread your thread.

Post: #16

Can you charge an abortion? That would be funny, rack up airline miles for another trip : )

Post: #17

Seriously. If you have the cash to pay it off, why pay the bank's nut? I use my credit card for just about everything I buy and I haven't had a credit card balance at the end of any month in almost a decade.

The only time you should be running a balance up on your credit card is when you're about to file bankruptcy.

Post: #18

And you are certain you will vet laid in that one weekend????wow you can teach Roosh a thing or two. 1. Lay is never guaranteed. 2. Never pay for pussy. 1500 for a small chance to get laid is pretty bad. Don't we have French whores in NYC for under 200 bucks???just saying.......never spend more hoping to get laid than the true cost to get laid. When I am older if I had that same trip and got laid with some drunk skank.....I would look back in old age and say" shit I spent 1500 for a slutcthat I could have paid 200 for".

Post: #19

This mentality and process of planning is what separates poor people from the rich people.

One group looks at what they can afford. "I have $50 in my pocket, if I go to the Hockey game I can afford 6 $8 beers. The value of what they're buying doesn't come into the picture.

The other realizes that $8 is an obscene price to pay for one beer, so they only have 1 or 2 and drink at home before.

Same thing here. Yes you could do that. It works, no problem, but money wise it makes no sense and is incredibly wasteful. The goal isn't to end up to 0. You're looking at this from a "what can I afford" perspective. Any rich person I think would agree that 18-28% is an obscene amount to pay for money when the interest rates are at historical lows. What's prime? like .25%?

Here's what a rich person would have done. lets say your average balance is $2k, and max was $4k. 5 years ago, bit the bullet, and put together an extra $4k. Now instead of hovering between 0 and -$4k, you'd be hovering between +$4k and 0. Instead of average balance of -$2k, you'd have an average of +$2k. So over 5 years, you have paid on average $4-500 a year in interest, or $2k-2500 total. Compare this with the alternative, if you had an average of $2k in the bank, you could have made say 7% over 5 years. So you've basically lost out on almost $4k of money because you didn't want to front $4k, 5 years ago.

Step one to becoming rich is not aligning your wants and needs with how much money you have (live below your means). Even if you're a billionaire, it doesn't make sense to pay $100 for a regular #2 pencil. Yes, you can afford it, but its financially reckless, and if you continue overpaying for things like that, your fortune will be gone. Same thing here. No amount of money or inheritance will make paying 18-28% for money a smart move. They're two completely independent things. Money in bank and value. Yes if you are reckless now, then inherit money you can pay off your spiraling CC debt and end up back at 0. Why not front $4k now, which remember is basically free money, you'll be $4k richer in 5 years because you haven't been paying any interest, and then when you get your $10k inheritance, you'll have +$14k, compared to 0.

Yes you can do it, but with very little effort and a little short term sacrifice you can have $14k with no other effort. That's how people get rich, it's a collection of smart financial moves.

Post: #20

^ yep.

Only part I disagree with is the billionaire part, at that level your time is worth so much money you should pay premium prices to save you effort. Plus we can't be giving advice to billionaires anyway.

Otherwise great post. Run the math, the financial system is your friend if you are smart

I actually enjoy fixing people's finances because you can quickly turn people around within a year or so. Problem is financial advisors get paid like shit so not worth it.

Post: #21

Quote:But my question is, is credit card debt really that dangerous??

Well not so much Credit card debt, but all forms of non-deductible debt are the worse thing. You pay off debt with after tax dollars if it's non-deductible. it's the worse entry on your balance sheet.

Quote:Financial guru's talk about it like its the black plague, but if you can use it to fund vacations for the next 50 years of your life then maybe its worth it.....

They point to credit card debt being bad because it usually incurs the highest interest rate.

Post: #22

fuck it, just kill them now and get it all

Post: #23

(06-20-2013 10:17 PM)WestCoast Wrote:  Only part I disagree with is the billionaire part, at that level your time is worth so much money you should pay premium prices to save you effort. Plus we can't be giving advice to billionaires anyway.

Haha, I see your point, but I stand by mine. One of my pet peeves was when people say things like 'if Bill Gates dropped a $100 bill, he would lose more money by stopping to pick it up than he would if he kept going, because he makes $10m or whatever per day'

He isn't a day labourer, he doesn't clock in and get paid by the hour. He gets paid for the quality of the decisions he make, something completely independent of time worked or not worked. Whether he picks up that bill or not, all else is most likely going to be the same.

If a lottery winner wins $100m, and they drop $100 on the way to pick up the check, does it make sense for them to stop and pick it up? Yes. Because there is no opportunity cost associated with the 5 seconds it takes. Same with Bill Gates.

Post: #24

(06-20-2013 11:12 PM)Seadog Wrote:  

(06-20-2013 10:17 PM)WestCoast Wrote:  Only part I disagree with is the billionaire part, at that level your time is worth so much money you should pay premium prices to save you effort. Plus we can't be giving advice to billionaires anyway.

Haha, I see your point, but I stand by mine. One of my pet peeves was when people say things like 'if Bill Gates dropped a $100 bill, he would lose more money by stopping to pick it up than he would if he kept going, because he makes $10m or whatever per day'

He isn't a day labourer, he doesn't clock in and get paid by the hour. He gets paid for the quality of the decisions he make, something completely independent of time worked or not worked. Whether he picks up that bill or not, all else is most likely going to be the same.

If a lottery winner wins $100m, and they drop $100 on the way to pick up the check, does it make sense for them to stop and pick it up? Yes. Because there is no opportunity cost associated with the 5 seconds it takes. Same with Bill Gates.

not to mention you can use that money to leverage better deals on goods and services. you can pay up front for a better rate as well.

rich people didn't get rich and stay that way by being wasteful with money.

Post: #25

To be honest, if a weekend trip would put you in the red you should save more.

I have utilized credit when I was in college but when you start earning and become a real member of society you should have a lifestyle that fits your means.

Living paycheck to paycheck and monthly payment to monthly payment is a good way to end up underwater with just a minor emergency.