The Top 4 Things That Keep People Poor

Buying an Expensive Car: Contrary to popular belief, buying an expensive car is not “the cool” thing to do.  Not everyone in the U.S. makes payments on a car; typically just those that don’t understand personal finance.  To begin with, a car loses value incredibly quickly.  Second, having a super nice car and a crappy apartment is hardly impressing anyone.  In fact it typically gives off the opposite signal stating, “I have tremendous debt” or “My parents buy me stuff.”

You can buy a nice car once you are successful.  For now stay out of debt and buy a car with cash that you can realistically afford.  This will help you avoid a monthly payment and the insurance will be cheaper as well.

Smart Phones: Smart phones are expensive and unnecessary.  Most people have computer access at home and do not need a smart phone for the Internet.  Very few people can justify the expensive data plans associated with their phone plans.  This is a monthly payment that automatically comes out of your bank account before you even think twice.  I hear college students whine that they don’t have any money, and yet when they pull out their phone they always have the mobile device. 

With a basic phone plan you could be paying around $40 a month with some carriers instead of $100 (which is the average for most phones with data plans).  That means you could save $60 per month, which adds up to $720 per year in savings.  I know playing Angry Birds is addicting, however it doesn’t justify spending an extra $720 per year.

Stick with a basic phone plan for now, at least until you have savings put away.

Fast Food: Paying $5.50 for your daily fast food purchase seems like a steal, but in reality your just stealing away from your savings account.  Not only is this food typically unhealthy for your body, it is also unhealthy for your wallet.  $5.50 per work day adds up to $27.50 per week and $110 per month.  Think how many groceries you could buy at your local store for $110.

When you cook dinner, add extra portions to store in Tupperware for lunch that week.  This way it won't require any additional work and you will already have a lunch packed and ready for when you are rushing out the door to leave for work.

Tattoos:  People don’t buy tattoos when they are broke; they buy them with that extra bonus money they hadn’t accounted for.  The problem is, this extra money could have been put in an account for a time when you have an unexpected problem, like car troubles, a medical bill, etc.  Having emergency saving prevents small unexpected problems from becoming life-changing financial issues.

Wait to get the ink until you have some money tucked away for an emergency.

Cardilly.com - Scam or Deal of the Decade?

When I came across this deal online it seemed too good to be true, then again the best deals usually are pretty unbelievable.  My curiosity got the best of me.  I read the entire website, checked for a few reviews online by searching “Cardilly scam” on Google.  At the time it didn’t seem to be a significant threat, but I wanted to clarify their fine print so I chatted with a live rep to answer my further questions.  After saving a copy of this chat transcript just in case, I went ahead and made a purchase.  I figured the worst case scenario would be that I would need to cancel my order and contact my credit card company to dispute the charge.

Since placing my order I have seen several posts on the message boards such as Fat Wallet and Slick Deals claiming “scam” but I can’t validate these complaints yet as the terms of the site say, “we ask all customers to allow up to 4 weeks for the order to arrive,” as per their FAQ page at http://www.cardilly.com/index.php?option=com_content&view=article&id=101&Itemid=168.  I don’t blame people for being skeptical, but most of these people offer no factual information to back up their opinions.  I do appreciate the extra digging that went into the Better Business Bureau links and the posted chats with their live representatives.

I have documented my purchases on the site however I am neither posting my order numbers online nor the date of my purchases.  If you were running a scam I’m sure you’d want to send valid cards to the order numbers posted in online complaint forums so that they would state “I received my cards” and give the site more credibility and keep the scam going.  I want to give as objective of an opinion as possible.

The process of the site works as follows:
-You order the cards online at their site.
-You will receive a confirmation email.
-Later on the same day of purchase you will receive another auto-generated message that states your order has been “confirmed.”
-5 days after the purchase you receive another follow-up email that the order was “shipped.”

I can tell you the entire 4 weeks has not elapsed from the time I bought my first card, but I will make a follow up post next week with the results.

Thus far… no card.

Profiting from Junk Mail – How to Make Money with Credit Card Offers

You may have easy money just waiting for you in your mailbox and not even know it.  Typically after collecting the mail you end up with a pile that gets shredded without even reading it.  Three weeks ago I found a credit card offer that I couldn’t resist.  (I would have posted this deal sooner but I always have to verify the deals myself before I post them to my blog)

Chase recently offered the following deal:

-          0% APR Balance Transfer Checks (To pay off another card, a wedding, etc.)

-          No transaction fee (Typically there is a 3% fee)

-          Can write a check for a maximum of $3000

Here’s how you make money with this promotion:

Write the check to yourself for the max amount of $3000.  Deposit the check into your interest-bearing checking account and let it make you money for a year.  At the end of the promotional period either pay off the card with the money from your checking account or look for another balance transfer offer and transfer the balance to another 0% card.  $3000 @ 2.75% (People’s Community CU) will make you $82.50 for the year in interest.

*Keep in mind you will still have to make a minimum payment each month or you will default on the 0% rate and it will jump back up to the standard percentage.

*Also note that if you currently have a balance on the card, do not write a check that will exceed your credit limit.  This works best when you have multiple credit cards so you can stop using this card for purchases for the year and just use it for the interest-free money.  Your other purchases will still have to be paid off on time.  Thanks to the new Credit Card Act any payment the rules are now in your favor if you have two different APR’s on your card.  The law states that any payment over the minimum payment will be applied to the balance with the highest interest rate.

Can You Pay Off a Student Loan with a Credit Card?

Unfortunately the Student Loan lenders won’t let us play ball on this one, yet.  Most lenders only allow payment of a student loan with a debit card which does not benefit our cause.

Why would you want to do this?
The main idea is to pay with cash back or airline miles credit cards to obtain rewards.  Combine this with the use a 0% intro balance transfer offer (with no transfer fee) and you could have a stellar deal where you can utilize that money for free for a whole year before having to pay it back.  The money could generate extra cash in an interest-bearing checking account for one year and then be used to pay off the balance at the end of the promotional period.

The argument against this method is that “you must read the fine print and that banks can be tricky.”  It is true that banks can be tricky, but the reality is, fine print is just a rule book that they distribute in small print to intimidate the customer.  If you have student loans you went to college so I am assuming you CAN read (If not I hope you kept the receipt for that college education)… therefore read the fine print and if you think you can make money on the deal, go for it.  Watch out for things like “3% balance transfer fees,” short-term balance transfers (typically less than 6 months), and offers that are not at 0% APR for the intro period as these terms will make it more difficult to be profitable.

How to Make Money with a College Loan

This is an advanced strategy about how to use OPM (Other People's Money) to generate income for yourself.  This is only for those that have extreme discipline as you must be able to resist the urge to spend these large sums of money.  This is valuable for someone serving in the military and can use tuition assistance or if you have an alternate method of paying for school and don’t need the loan to pay for tuition itself.  Student loan money is paid directly to the student and in some cases does not accrue any interest while you are in school (These are the offers we are looking for).  This money can then be deposited into an interest-bearing account where it will earn money for you for the duration of the time you are attending school.  Once the deferred interest period is over, pay off the principal loan amount to avoid paying any interest, and keep the money that your account generated. 

The only loans that are worth attempting this with are Stafford Subsidized Loan, or a Career Starter Loan through the military.  These loans both DO NOT accrue interest while the student is attending school.

Subsidized Stafford Loan
Subsidized Stafford Loans as of this post have an interest rate of 3.4% after graduation.  Your amount of “need” will dictate the amount of money you can receive for your loan.  Note this is not a grant; it is a loan and the student will have to pay this money back.  $10,000 is a realistic figure for your 4 years of school but will vary depending on the college.  $10,000 @ 2.75% earns $275 annually.  Over 4 years of college this would be in excess of $1100; not a bad graduation present.  At this point in time pay the loan in full and pocket the interest.

Career Starter Loan
This is a loan only available to those entering officer training programs for the military.  Generally this loan is obtained at the beginning of your senior year of college.  Upon commissioning as an officer in the military, a Career Starter loan raises from 0% to a 3% interest rate.  This loan is available through USAA.  The amount is generally significant, totaling up to $30,000.  $30,000 @ 2.75% is $825 for the year.  At the end of the year, use the money to pay the loan in full and pocket the interest.