Never, ever pay interest. Or “fees.”
When the bank says “You have good credit,” think of Count Dracula complimenting you on your “especially tasty blood type.”
When the bank says “You have poor credit” they’re saying that they don’t believe they’re going to get their money back, and they’re probably right. It’s their business to know, and they’re very good at it. You should say “Thanks!” because they have saved you from disaster.
Paying interest is like taking a fist full of $20 bills out of your wallet, arranging it in a neat stack in the middle of the street and setting it on fire. Every month. Forever.
Take a look at my credit card bill. Every month it says “$0.00 Interest”. It says this because I pay it in full, every single month. And I’m nothing special. I’m just a guy who decided he didn’t like being fleeced.
Before the card comes out of my wallet, I make sure that I have money in the bank to cover the purchase. This isn’t some sort of “future money” like “I’ll get paid next week and the bill comes in 4 days later.” This is actual money that’s been in the bank for months.
My bank hopes I won’t be able to pay within terms. If I don’t pay, they get 10% interest. Or 18%. Or if I’m late, 30% plus “late fees.”
However this will never happen to me because I’ve already been-there/done-that and will never do it again.
Before I got married, I was just like you. Then one day my soon-to-be wife saw my credit card bill on the table and said “Are you insane???” I was paying more than $500/month for the minimum payment and interest. I’d be collecting Social Security before the card was paid off.
So I made a choice: I stopped charging everything and I stopped buying everything.
My car had rust holes the size of my hand and looked like hell, but I didn’t care. If I couldn’t live in it or cook it, I didn’t buy it. Every nickel went to the credit card company. In less than two years, I was completely debt free.
You need food, water, shelter, clothing. You don’t need an iPhone, iPad, Kindle, flat-screen TV, cell phone, 4-wheeler, snowmobile, jet-ski, boat or anything sold on television.
The purpose of advertising is you sell you stuff you don’t need. Generally speaking, if they need to advertise it, you don’t need it.
Never buy anything you don’t have the cash for. In the bank. Right now.
Still Reading? This is most impressive part. I will now read your mind!
Using my highly tuned Internet Extrasensory Perception, I can hear your thoughts:
Q: But what about unexpected expenses?
A: This next part is compliments of my brother, who probably doesn’t remember telling me. 😎
You may not know what is going to happen, but as sure as God made little green apples, something is going to happen and you’re going to need to pay for it. Keep cash in the bank so the next time an “Unexpected Expense” comes up, it won’t be “unexpected,” you can cover it and won’t be in debt again.
Having a hard time keeping cash in the bank? Buy less crap. Cable TV is optional. See above about “cook it or live in it”
You can’t begin to imagine how much actual cash suddenly becomes available when you’re not giving the bank piles of money for absolutely nothing. It’s like getting a second job, except instead of working, you can be playing.
Just do it. Being completely debt-free will change your life in ways you can’t begin to imagine. When you stop sending the bank hundreds of dollars in interest and fees, it’s free money. Go get some for yourself!