The Gift of Review

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Those who cannot remember the past are condemned to repeat it – George Santayana

As the year comes to an end, it’s good to review the year to find out how well you have done. Not only financially, but also with all of your other goals. My pastor said over this weekend, that “we must learn from the things we have done in the past. We get older, but will we get wiser?” It’s up to us to make that decision to be wiser as we get older.

Looking to the Past

I can tell where I am going by how I have been setting myself up in the past. There are questions that help me look back at the year are:

1. What were the high points this year?

  • Starting this blog to get my ideas out to the world. This has allowed me to be creative and start to put my ideas down to start a financial program of paying back debt.
  • Understanding that my passion is to share the ideas I have on personal finance to help people learn from my mistakes and victories.
  • Being honest with my financial circumstances, and making the changes to correct my mistakes.
  • Helping my co-workers start the process of tracking their expenses.
  • Setting up the payment plan on my debt.

2. What experiences do you wish you could have changed?

  • Start the blog earlier because there is value in what I have to share.
  • Stop feeding the fears and worrying about what other people would think of my ideas
  • Going through with a balance transfer on a card that is currently in use. (such a bad idea)
  • I wish I didn’t take money out of my retirement account to pay off debt because the compounding effect in the future would have been more than the interest I would have paid on the debt.
  • Start reading books on the stock market earlier, and invest in Vanguard index funds

3. What advice would you give to yourself at the beginning of the year?

Don’t try to beat the system of paying back your debt. There is no magic bullet to pay off your debt faster with limited resources. The overall best ways best ways to pay off debt is the debt avalanche (paying debt off with the highest interest rate first). There are ways to save a little bit more interest, but sometimes taking that extra bit of effort or chance might not be worth it.

4. What were the three biggest lessons you learned in this past year?

1. Read more, and retain the information. There’s nothing wrong with reading a book for enjoyment, but if there’s a lesson to be learned, take notes. Spending 30 – 45 minutes a day reading is a good habit to cultivate better ideas for the future.

2. If you have a bad feeling about a situation, especially financially, don’t go through with the deal. My brother wanted to buy two sets of high end knives that would have cost me well over $4,000. He could purchase for 65% off of the Manufacturer’s suggested price and resell them.

I thought it was a good idea at first because the knife sets were going to be discontinued, but there were circumstances where it did’t make sense. (I’m also not very educated in how sales in knives work.) He was a bad communicator when it came to the sale of the knives, profit margins relied on too many factors to make a profit, and there didn’t seem to be that great of a demand for the knives. So overall, I didn’t go through with the deal, and I feel better about it.

3. Setting up an automatic repayment plan for your debts and saving is by far one of the greatest tools you can have to build wealth for the future. Once it’s in place, do your best not to change the payment. It forces you to keep the “promise” of payment to yourself or your creditor.

I hope that you find some of these insights interesting, and that you can learn by asking yourself these questions as well. Please like and share if you found this interesting. I’d love to hear from you as well.

4 Things to Plan for Before Doing a Balance Transfer

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Photo credit: threeifbysea

In my experience there are advantages and disadvantages of getting a balance transfer. Of course you can save interest on higher end of the card if used correctly, but there are things to take into consideration before you go through with the credit card balance transfer.

1. Introductory Rate Period / Balance Transfer Period

In balance transfer, you will have an introductory rate period / balance transfer period.  You will need to make sure that you pay off your transferred balance before this period ends. If not you will be charged the current rate on remaining balance on the card. The balance can be anywhere from 10.99% to 19.99%. Typically the balance transfer period will be anywhere from 9 months to 15 months.

The interest rate free period is to lure new customers so that they use their credit card. This is so that the credit card company can collect interest on the balance of the card.

2. Plan to Pay off the Balance

Make sure to have a plan and stick to it. You will want to take your balance transfer amount and divide it by months when the 0% rate is active. This is so that you can stay on track to take full advantage of the balance transfer period.

If you don’t plan your payment schedule, you may end up paying more interest than you had thought. If you don’t feel confident that you can stick with the payment for 9 to 15 months don’t go through with the balance transfer.

3. Fees

Fees can come in different ways when completing a balance transfer.They can come as a minimum fee of say $10 and or a percentage of anywhere between 2% to 4% of the balance transferred. It also can be a combination of the two.

To make sure that you’re getting a good deal on your balance transfer, make sure you calculate the fees that you may incur and what you would have paid by paying down the credit card normally. You can easily go to Bankrate.com and use one of the credit card calculators to find out how much interest you would pay on your credit card.

4. Will you be Using the Card?

If you plan putting using the credit card you are that the balance transfer is going toward, think again.

Generally you lose normal benefits that you have with your credit card. The one that is most important to me is the credit card grace period. This is  where you are not charged interest if you pay your balance off in full every month on normal expense.

Another kick in the pants is when you make a payment on your credit card. Your payment will go to the balance transfer first before being used to pay the principal amount on your most recent purchases. This means that you will be charged interest on your purchases, and the interest will continue to grow as long as you have a balance on your “transferred amount”.

Side note: If you do have an personal loan or a debt that is not on a credit card, you can still do a balance transfer. All you would need to do is enter your checking account information and the credit card company would send a check to your checking account. I recently did this and received the funds after about two weeks.

Be careful before you take advantage of a balance transfer. Until next time.