Tag Archives: donotconform

Reginald

I wasn’t going to write about this for today, but something strange happened the other night when I was hanging out with Reginald.

We call him Reggie for short, but I’m considering calling him Reg (not like reg in regular but with a j sound) at times when I don’t feel like talking so much.

Maybe I just wont’ call him any of those because it isn’t his real name.

Anyway, Reggie and I found this website:

http://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx

And if you have a mortgage right now, I want you to use it!!!

Ever heard of amortization?  Well it’s dumb.  All it means is the loan officer takes as much interest as possible first.  They just named it something fancy so we wouldn’t bother with understanding it.

I wasn’t and still am not sure if amortization schedules are uniform throughout the banking/credit union world, but this website seems to think that they are.

So go to this website if you have a mortgage, and figure out how to pay that bad boy off early.

I’m not going to give you my information, but I’ll tell you a little bit of that won’t give anything away.

If I paid the minimum on my mortgage for the entire 30 years, I would pay over $140,000 in INTEREST ALONE.

I don’t want anyone to ever do that.  If you need to get a 30 year mortgage that’s fine.  It’s more attainable than a 15 year unless you want a tiny house with minimal payments.

But if you get the 30 year, go into it with the expectations of paying it off early.  This website will help you formulate a plan.

We recently started paying 15-year type payments on our 30-year loan.  According to this website, that will reduce our mortgage payments by almost 13 years!

As I played around with the calculator, Reggie says, “I know what you’re next blog post is gonna be about.”

Oh Reggie….

You don’t even know me.

Everyone else should be excited.

In my case, if we paid just $20/month extra towards our mortgage, we would pay our mortgage off a year early and save nearly $6000!!!

In the grand scheme of things, that isn’t a ton, but it’s still 6 thousand less than what the bank wants.

Seriously, if you have a mortgage, use the link.  Get excited about it.  Formulate a plan, and implement it.  I want you to pay your house off early.  As early as possible without living in misery.

Short and sweet this time.  Just use the website.  Stop giving the bank money.  When you’ve finished your house payments, I want the bank to say

Well dang… we didn’t make any money off of them.

Do not conform.  And screw debt.

 

Cash is King?

My friends in 1776 (we talk on the phone all the time) would have some words for those of you who say cash is king.

King’s didn’t fly so well with these guys.  They made it clear.  And red.  And white.  And blue.

You know who rules the finance world?  The rich man.

You know who doesn’t know what it’s like to be poor?  The rich man.

You know who says cash is king?  The rich man. And the middle class who use the rich man’s context in their empty pocket lifestyles.

I’ve been spending a lot of time reading about and hearing from people who have the perfect plan for building wealth and paying off massive amounts of debt and so on and so forth…

You know who they are?  Rich people.

Now, I’m not saying cash is a bad thing.  I just want to rearrange the way we think about it.

In most cases across the country, the common folk will be taking out a loan at some point or another.  I hope it isn’t for anything silly, like a hamster or a trailer hitch, but I can’t tell you what to do.

Just don’t do that.

When you decide to take out this loan, though, I need you to listen to me and not your financial guidance person, whether it’s your real estate agent, your loan officer, or your dear sweet mama.

First, and foremost, I hope you have money to pay down on the loan.  That means that I hope you have cash.

But wait, you say, all smugly and uppity-like, I thought you said forget about cash!?!

Hold your horses.  I don’t know where that phrase came from…

Just hold ’em!

Secondly, I hope you have enough cash to pay a significant amount on that down payment.

What?  Is that not profound?

Third, pay more money every month than your minimum payment, another recommendation that requires cash.

So what’s the difference in my cash and banks’ cash?

1.  Down Payments

You will need a down payment on a significant loan (mortgage).  Once upon a time, you needed a significant one to avoid stupid wastes of money.  Now, however, banks will gladly let you borrow $300,000.  If you don’t have money for a down payment?  They’ll let you borrow a second amount for whatever you need for the down payment!

The banks’ cash is money they want you to keep in order to pay them more in the long run.  My cash is the money I want you to spend in order to not have to pay more than you have to.

2.  Significant Down Payments

Your bank will tell you that you want to have some cash left over.  And I agree that you do not want to deplete your savings.

But the more you put down up front means the less you will pay in interest.

But sir, you say again, a $200,000 mortgage vs a $210,000 mortgage only affects your monthly payment by like…. a little bit.

Dude… I have the mortgage formula saved on my phone.  I know exactly how much a mortgage costs every month in any given situation.

The banks don’t even know the formula.  They just plug numbers in and POOF! out comes this magical piece of paper that says you owe them crap loads of interest.

Forget about cash, and forget about monthly payments.  When it comes to applying for a mortgage, look at the interest.  Fight the interest.  It is not your friend.

The banks’ cash is money they want you to keep in order to pay them more in the long run.  My cash is the money I want you to spend in order to not have to pay more than you have to.

3.  Monthly Payments

Interest that you pay is NEVER your friend.  I don’t care who says otherwise, if they are billionaires, if they have multiple finance degrees, if they are world renowned philanthropists…  I don’t care.   They’re wrong.

There is not one single thing that will benefit you from paying interest that will overshadow the fact that you are paying interest.  Not one.  Nope.  Not even that.  Whatever it is you’re thinking.  Nuh-uh.

You know what happens to interest the next month after you’ve overpaid on your loan?

It goes down.

It’ll take some time and effort to alter the pattern of your mortgage interest, but it is possible, and if you intend to pay all the interest they’re asking of you on a 30 year mortgage, you’re being robbed.

If you can afford it, make the sacrifice, and pay off your home early.  I’m telling you, the minimum payment is making somebody rich, and it ain’t you.

The banks’ cash is money they want you to keep in order to pay them more in the long run.  My cash is the money I want you to spend in order to not have to pay more than you have to.


Again, not profound?

I just told you to spend more of your money upfront and every month… when the world tells you that cash is king.

Am I leading you astray?

I wonder why the bank is telling you that cash is king…

Because they profit on your interest!

It blows my mind that the same people telling you that cash is your best friend are also people telling you that you need one of their credit cards.

Spare me.

Paying more now saves you later.

I’m seriously not saying to not have cash.  You need available money at all times that you can grab when you need it.

If I’m ever rich, I will max out at least 2 bank accounts with money that I never intend to invest, that I can take at any time.  (I said if I’m ever rich… which means other money would certainly be tied up in investments).

The rich people don’t tell me to do that even now.

I really don’t understand that.  If I need a car, I’m buying it and leaving with the title.

If I want to invest in some real estate, I’m closing as an owner, not a borrower.

It’s impossible to do these things when financial advisors are constantly telling us to write them a check so our wealth will grow (which, again, I’m all for building wealth, but their ideas are contradictory).

So I want cash.

But while I’m entering a mortgage or I’m already in one, interest is overwhelmingly more evil than cash is good.

I know you’ve all heard it said, The borrower is a slave to the lender.

SLAVE!!

There’s no need to look for hidden connotations behind the word.  It is spelled out clearly for us.

An example:  We need a car loan.  We get one.  The loan officer DEMANDS full coverage insurance.

Nothing wrong with full coverage insurance.  Nice peace of mind.  Not un-affordable.  Cool.

BUT they demanded it.  We cannot have the loan with them without full coverage insurance.

Slavery.

Another example:  We need a house.  We got one.  Needed a loan because we don’t have 200 grand lying around.  The loan officer DEMANDS a termite bond.

Nothing wrong with a termite bond.  Nice peace of mind.  Not un-affordable.  Cool.

BUT they demanded it.  We cannot have the mortgage with them without a termite bond.

Slavery.

The loan officer controls the entire situation.  You have no word in the matter once the papers are signed.  You don’t own the car.  You don’t own the house.

Did you know that the bank can, at any time throughout the life of your loan, demand that the balance be paid in full?

It’s true.

And… freakin’ scary.

Slavery.

Please don’t misunderstand what I’m saying.  You need cash, I’m only challenging the way the world worships it as all sovereign.

Again, I hate interest way more than I like cash.

And, as my friends in 1776 would say, We recognize no sovereign but God, and no King but Jesus!

Do not conform.

Listen to Me

Remember Darla?  She married Quasimodo, who is one of those people who is good at everything.  He always wants to compete in as many things as possible and doesn’t understand why nobody else wants to join in.  It’s because he’s the only one in the group who would be good at it.  It’s so miserably annoying.  I honestly don’t know what she see’s in him.

Just kidding.  He’s alright.  He’s actually one of my best friends, that Quasimodo, and it’s his fault I even started a blog.  So… he can stay, I guess.

Now, Quasimodo got his first credit card when he was in college, an acquisition I do not recommend at all under any circumstances.  His thoughts upon acquiring this devil tool?  I can golf whenever I want.  I can eat Wendy’s every day.

He, like the stereotypical credit card getter, ended up accumulating a very significant amount of debt.  He has grown up since then (sort of), but this type of behavior transcends age, gender, race, social class, and education.

Sort of like the black plague.

As I’ve said before, there is one way and one way only to use a credit card.  I cannot stress the importance of doing exactly as I say in every single category listed below.  I know many experts would say to never get a credit card.  I was once on board with them, and I still agree to some extent.  It is safer to not get one, period.  But there is a way to do it.  It is just imperative that you LISTEN TO ME!

Smokin’ Hot Wife and I made it through our debt without a credit card.  We built up my credit without a credit card.  We bought two different vehicles and got excellent interest rates without a credit card.  We bought a house and got an excellent interest rate without a credit card.

Nobody needs a credit card.  You can do without it and be just fine.  More than fine.  You can be better off than most.

I’m not telling you to get a credit card.  I’m telling you how to use it if you get it.

Before I begin, an important Disclaimer:  If you are currently in debt, do not get a credit card.  If you currently hold other credit cards with a balance on them, do not get another credit card.  Pay them off, cut them up, start over if you must.  Do not let the world’s way sweep you off your feet and drown you in it’s pictures of wealth and prosperity that only lead to ruin.

1.  REWARDS

If you don’t already know, rewards, or points, are accumulated according to how much money you charge to your credit card.  Your points can then be used in place of money on later purchases.  Ours converts 100 points to 1 US dollar, or more in certain situations.  For instance, if we use our credit card towards travel expenses, 100 points is like 1.5 US dollars.  But it never drops below 100p=$1.  AND, if you want to, you can shop for different things through the credit card’s website and find products that will reward you greater than they would in store or elsewhere online.  Pretty neat.

There is no point in getting a credit card that does not offer rewards (Yea, I know.  Raise your credit, blah blah blah.  Gold Credit, Green Credit…).  If you have a card now that doesn’t offer rewards (I don’t even know if they exist), pay it off and shred it.  It’s useless.

Shredder.

There are many rewards cards out there; you can search for which one best suits you.  If you travel often, get one that offers double points on travel, etc.  We got the exact one Quasimodo has (he’s now free from credit card debt) because I didn’t feel like searching for the “right” one.  And he got like 10,000 points/100 dollars just for referring us through email.  Kinda selfish.

Most of these rewards cards will have an annual fee, but the first year is normally free, and if you do it right, you can just use your points to cover the yearly fee and never have to pay a dime.

Well, you will.  But they will be free dimes that you got from your rewards.

If you listen to me, you will receive free money from your credit card.  Actual.  Free.  Money.

2.  DON’T SPEND WHAT YOU DON’T HAVE

You’re familiar with using your debit card for every purchase.  It’s the only card you have in your wallet, and you wouldn’t dream of over-drafting your bank account.

What?  You still carry cash?  I don’t believe you.

Keep that mindset when using your credit card.  You’re already budgeting (if you aren’t, you need to get the eBook; it’s on my website; just do it).  You have a limit on what you can spend every day or every week.  Don’t lose that mentality just because you get a credit card with a $5000 limit.  DO NOT SPEND UNLESS YOU HAVE THE MONEY IN YOUR BANK ACCOUNT!!  That $5000 limit doesn’t mean you all of a sudden have $5000.

If you don’t listen to me here, I will be angry with you.  If you do not use a credit card my way, you are losing.  My way is proven.  Listen to me.  Your credit card isn’t with you so that you can go buy whatever you want.  You have it so that you can obtain a little bit of free money and raise your credit WITHOUT adding to your debt.

The way your credit card provider wants you to use your credit card is NOT the way you need to do so.  Listen to me.

I don’t think I’m making myself clear enough.  If you only had a debit card last week, and you were scared to spend $100 throughout the week, be equally fearful of spending $100 this week even if you have a new credit card.  You do not have free money just because you have a credit card.  Listen to me.

Home Slice, you have to pay that money back.  And just in case you weren’t paying attention when you signed up for it, you have to pay it back plus 25% interest.  No, I’m not exaggerating.  And they’ll make your minimum payment low enough to make you think you’re doing just fine.  Nope.

If I haven’t already told you, if you pay your credit card bills the way the credit card giver wants you to, you’ll never pay it off.  They know that.  They don’t care.

Oh, you have a family?  They don’t care.  You’re behind on bills?  They don’t care.  You didn’t realize what that $5000 limit was?  They don’t care.

They.  Do.  Not.  Care.

Listen to me.  If you miss this point (point #2: don’t spend what you don’t have), just don’t get a credit card.  Ever.  And, please, don’t associate your recklessness with Screw Debt.  I don’t need a bad reputation.  Let me actually have a reputation before there’s a chance to ruin it.

3.  DEFINE EMERGENCY

Unfortunately, many a person will consider an emergency as a new dress or golf club set that’s on sale.  Terrible, terrible ideas…

How you gonna play golf in a dress?

Even a doctor bill or a trip to the ER isn’t an emergency, monetarily speaking.  Hospitals set up payment plans like it’s going out of style these days.  AND THERE’S NO INTEREST!

Don’t use a credit card for an emergency.  I’ve found that the best place for an emergency fund is a simple, fluid account of some sort.  Yes, I know they don’t always accrue you a bunch of interest.  Yes, I know you want to invest.  Blah blah blah.

How much money are you saving?  If you have 50 thousand dollars, go for it.  But why the heck are you reading this?  If you invest $3000….. I mean do whatever you want with that, but it isn’t worth the effort.  That 3 grand is tied up; you can’t retrieve it whenever you want, and I doubt your return is as much as you think it is.

But what do I know?

Your savings account isn’t there for getting rich.  It’s there to be safe and ensure that you have money for a true emergency.  I realize that there are better options than a regular savings account, and that’s fine.  Use it.  But make sure your money is fluid and that there is no risk involved.  I’m not telling you not to invest.  Just don’t invest every penny you have and not be able to grab some when you need it.

I’ve heard some money folks say it’s good to have 3 months of whatever it takes to live for 3 months saved up for an emergency fund.

Well… I’m not so sure how doable that is.  That’s a pretty significant amount of dollars for most people.  If you or you and your other have steady careers, and you know exactly what your income is and how much it takes to live month to month, then I can understand this method.

But if you’re like me and my wife, who do not have guaranteed money and were once at a point where our savings account had $5 in it because that’s what was required to open one, this method certainly isn’t a set in stone approach.  Gotta get creative.  Discuss and determine how much you need for an emergency fund, and decide what  a true emergency is.

For those of you keeping count at home, I’ll offer my own definition of an emergency:

A payment for myself or an immediate family member that MUST be paid in full and at once to avoid any and all types of interest or late penalties.

You’re welcome.

4.  USE IT EVERY DAY

Again, this credit card is your new debit card.  Use it for everything.  You may not ever need to use your debit card again.  In our case, our stupid credit union requires a whole bunch of stupid stuff every month in order to not have a $5 fee charged to us for using their debit card.

Most people don’t have that issue, and we will change our situation soon.  We have to use our debit cards at least 10 times per month.  It used to be 5.  Apparently it changed to 10 without me knowing about it.  There’s a way around it.  We just use them on purchases that are less than $5, but it would just be so much easier to only use one card at all times and not have to think about it.  If you are in the same boat, follow our method if you must.  Just beat the system.

Otherwise, just use your credit card.  They have chips these days which protect from identity theft more efficiently, they look cool, and they fit perfectly in your wallet.  Crazy, right?  Who knew?

5.  PAY IT OFF EVERY WEEK

Every week? you ask?

Yes.  Every week.  Or at least regularly and more than once a month.  There is a grace period of at least 21 days from the time you make a purchase on your credit card until it begins to accrue interest.  But we will NEVER ACCRUE INTEREST ON OUR CREDIT CARDS.

I will deny you as a follower and swear that I never knew you if you don’t listen to me.  You have my permission to make a payment every 2 weeks, but no longer.

Every Friday morning I pay off my credit card’s CURRENT BALANCE which will be everything I spent money on the past week less a few pending transactions.  Those will be paid off the following Friday.

Got that?  Every Friday morning, before work, pay off current balance.  Not minimum due.  Not other amount.  CURRENT BALANCE.  If you do this, you will not pay a penny in interest.  You also won’t overdraft because you didn’t use your credit card this week without having the funds in your bank account, right?

right? right? RIGHT!?!?

I’m telling you, people.  Do as I say.  Do it.

6.  USE YOUR POINTS

We’ve had our credit cards for such a short amount of time that we have not used our points.  But we certainly intend to.

You can do it however you like, rack them up and pay your bills for a month once a year, use them once a week on a meal out, use them for a new dress to play golf in, whatever you want.

There’s just no point in accumulating rewards if you aren’t going to use them.

The card we got actually allows the rewards to increase in value when used for travel.  So we intend to use it for trips that we haven’t taken in a while.  Fifth anniversary?  Credit card points.  Boom.

Also, don’t forget that you can also cash in your points and they’ll send you a check.  Mmm.  That sounds good.  I’ll have that.


Debit cards are sooo 2012.  All the cool kids are getting credit cards.  But they ain’t cool unless they win.  And they don’t win unless they

Listen.

To.

Me.

Do not conform.