To southernhorizons:
I would never look down on a person like you, I don't know enough about you and I truly hope your financial circumstances become much better in the future. I was talking about some of my neighbors where I live. I mean the ones who leave all their outside lights on all night and, when we compare electrical bills, find that theirs is 3 times as high as mine. No idea about what they do inside their homes but, considering their bills, it must be just as wasteful. Some who have 2 cars and a pick-up truck, none of which are paid for, a cell phone for husband, wife and 2 of the kids. Credit card debt with enormous interest payments, and then they cry about the fact that they don't make enough money to live from month to month, even though the husband and wife both work.
As for me, yes, I had to work pretty hard in the Army, and we put in some pretty long hours, but, like I said, I don't work anymore. I'll give myself credit for that and for the fact that I've been very financially responsible my whole life. As far as my present circumstances, I'm just a fortunate beneficiary of fortuitous circumstances. My brother, in Germany, wanted to open a second business and he asked me to come over and manage his first business, a bowling center, and he paid me a generous salary. I rented out the townhouse where I lived and I didn't need the rent money or my military retirement pay over in Germany. Rent is cheaper over there and I was able to shop at a nearby US commissary and PX where prices were about 60% of what they are on the German economy, so I ended up with hundreds of dollars left over every month, in spite of the fact that I traveled all over Europe and was living pretty well over there. Additionally, the business paid for my car, car repairs and my cell phone. That all left me with a good amount of monthly cash that I didn't need for anything else so I was able to pay off the remainder of my first mortgage in just a little over 2 years. Now I had that rent, retirement pay and extra from my job, so I was able to accumulate over $50,000 in about 2 years. With that, I flew back to the US and used most of it as a down payment on a second townhouse, which I immediately rented out. Of course, now I had 2 rents, retirement pay and extra money from my job in Germany, it wasn't any great challenge to pay off that second mortgage in less that 5 years. Now, for my remaining (almost) 3 years in Germany, that income just accumulated. I don't need to tell you how much money can pile up if you have several thousand dollars every month that you don't need to use. Knowing that I was coming back to the US, I didn't buy a 3rd property, but it wasn't any problem to pay cash for 2 cars, put in about $30,000 for maintenance and improvements on my properties, buy some furniture, a desk top computer, 2 laptops and all electrical appliances and still have a comfortable amount of money left over. (I had to leave all my electrical appliances in Germany, they're useless here, they have 220V over there and it's 110V here.)
So you see, there's no wizardry here, these are all things that fall into the category of those things that "any dam fool can accomplish." I just got lucky with these circumstances, and I truly wish the same luck for you.
Thank you very much for the very nice wishes. I'm sorry if my posts seemed harsh. I'm glad you had good circumstances and sense enough to use your resourses wisely. My attack on using credit cards wasn't meant to be absolute, I know there are exceptions to every rule. But many people, especially if they are living paycheck to paycheck, would be better off not using them. Even if they budget well, and keep up with the payments, one unexpected medical bill or other financial emergency can very easily start the downward spiral to unmanageable debt.
By the way, I don't think my assumptions were too presumptuous. Judging from the way I was brought up, and even my current situation, you are well-to-do, even though you aren't "rich." Everybody I guess has different ideas of wealth. You admitted yourself that your situation was unusual in the US. I certainly don't begrudge your situation, in fact I'm happy that you were able to do that well. But for the majority of people probably on this forum, trying to copy your credit card spending would only get them into trouble, so I was just trying to point out that you were the exception, not the rule. A lot of times it is people's own fault, but a lot of times it isn't. I know I'll never be able to retire early, or maybe not at all with the social security mess, but I do hope to be able to buy a house and pay it off early. I try to save as much as I can; right now I'm living in my parent's house; I pay rent, and some groceries, as well as insurance, and utilities, but at least I don't have a full grocery bill, and some other expenses. So I can't complain, I'm really not that bad off. I just don't have the income to save as much as I like. One thing that put me behind was being laid off for almost three years; I used up all my savings and started borrowing money, so when i finally got a job, I had to pay off all that, plus get another vehicle since mine was on its last leg. So finally I'm able to start saving again. At least I avoided credit card debt, though. My vehicle is decent, but it's got 130,000 miles on it, so I know I'll have to start putting money into it. I always say you don't have any money when you have a vehicle, even though of course a vehicle is necessary to get to work! I just wish they weren't so expensive to maintain!
I didn't detect any harshness from you, I wasn't offended by your comments. "Well-to-do" is a relative term. I would describe my situation, with all due modesty, as "comfortable."
I'll tell you how I play the credit card game, I'm convinced you're smart enough to understand. In February of this year my brother came over from Germany, He owns 3 properties in this area and one of them was unoccupied and needed maintenance. I charged all supplies, a carpeting company and a clothes dryer on my Discover card and he paid me cash for those charges. That month I had total charges of $3951. They were also running some kind of 5% cashback bonus then, I don't remember what, so I got just under $50 cashback credit. In March my brother, my wife and I all flew to Seattle from Baltimore, my brother and I used to live in Seattle. I charged airline tickets, hotels, car rentals, restaurant meals and everything else possible on my card. When we got back, my brother had additional purchases, clothing, toys for his kid, a little more maintenance costs on his property, all on my card which he paid me for in cash. I had $6027 in charges that month, but with the 5% bonus, I got over $70 cashback from Discover. Additionally, the credit union I've been banking with for many years allows me 2 balance transfers per year and pays me 1% for those balances. Of course, they hope that I'll convert debts to their institution and start paying them interest, I've never paid any interest on any credit card. So I transferred that "debt" of $6027 to my credit union and then paid off my bill a few days later by transferring that sum from my money market account. That particular month I made over $130 cashback bonus from 2 credit/banking institutions.
This month I had to pay city taxes and water usage fees for one of my properties and one of my brother's properties, a total of $2199.80, that transaction alone will give me just under $22.00 cash back. (That city accepts the Discover card with no fees or charges, very unusual.) I'll get some of that money back from one of my brother's rent checks, made out in my name because I manage his properties. Additionally, Discover is running a 5% bonus for gasoline until the end of September, I'll fill the tank on both cars before the month ends, that will bring my total up to about $32.00 and I'm sure I'll have at least another $1000 in routine charges, so that will bring the total cashback to about $42.00. With the large tax charge and a total credit card bill of over $3500.00 for the month of September, it's a good time to use that second per annum balance transfer benefit from my credit union and get another $35.00 from the 1% cashback that they give me, that will get me almost $80.00 cashback from both institutions. Next month (Oct, Nov, Dec) Discover is offering a 5% bonus for any department store and internet purchases, guess who you know who isn't making any of those kind of purchases until 1 October. They have a limit of $1500 for a total cashback of $75 for those 3 months, but I can pretty well guarantee you that I'll find a way to get the full $75 benefit.
I estimate that I get at least $600, probably over $700 a year cashback from my credit cards. All you have to do is make sure you never have any interest charges. I understand this doesn't work for everyone, but it works very well for me.
Some of you may be able to use this information.
I haven't done this nearly effectively enough, there's much more money to be made, I should have done this much more effectively years ago.
I was always doing balance transfers during the months that I had the highest credit card bills, now, checking on this with my credit union, I found out they send a paper check as a balance transfer. I always "assumed" they did an internet transfer and I know I can't transfer funds for any amount higher than the balance owed, Discover Card doesn't allow you to transfer a higher amount than you owe, I don't know why that is. Since they send a check, there's no restriction on any amount they send. Because I have a $10,000 limit on my Visa card with that credit union, I told them to forward a check for $10,000 to my Discover card. My credit union gave me an immediate credit of 1%, $100 for that balance transfer, a very easy $100 made for a visit to my credit union and a phone call. Two days later I transferred the remaining $9,900 that I owed from my money market account to my Visa account in my credit union to eliminate that debt. I don't know, but I'll find out, what Discover will do with the extra thousands of dollars my credit union sent. Some years ago they sent me back a check. It doesn't really matter to me, if they don't send me a check, I'll just keep charging and not have any monthly bill until the extra amount is used up.
The next thing I did was to contact my credit union and request an increase in the credit allowed on my Visa account. The maximum amount they allow is $30,000, so I requested the full amount. I'm hoping for the full $30,000, whatever the amount, I'll do two more balance transfers next year and collect the 1%. It's very easy money if you have enough cash to pay off any balances before you have any interest payments.
If my credit union grants me the $30,000 in credit, with two balance transfers per year, that will give me an extra $600 income per year. Not a lot of money, but very easy money for doing almost nothing. If they give me a lower limit, I'll transfer the maximum amount to Discover twice a year, whatever that amount may be. If I keep paying off the transferred amount two days later, which I can easily do, they'll eventually give me the maximum limit of $30,000.
The next thing I'm doing is researching other credit cards and balance transfers to see if this is possible for moving money around and making the 1% with a number of other credit cards.
Community Forum
Topic: cash or credit (Read 8330 times)
September 30, 2009, 09:55:13 am
