The world of personal finance can be so complex that it cannot be accurately represented with any rules or strict guidelines. This is why it’s so hard to give financial advice. Unless we know absolutely everything about someone else’s finances and personality, it’s nearly impossible to give them proper guidance and tell them what they need (not want) to hear. We can be as honest as humanly possible with our sincerest suggestions, but to think that we know what’s best for them especially if we haven’t been in their shoes, may be a bit vain. So I believe there is simply no such thing as universal rules when it comes to financial management. Every time we come across one of those “Top 10 Rules to investing,” or “…to get out of debt,” or “…to plan for retirement,” or whatever else, we must look at it as only rough guidelines, and nothing more 🙂
“The golden rule is that there are no golden rules. “ ~George Bernard Shaw
Rules are meant to be broken anyway. I break generally accepted personal finance “rules” all the time, like choosing to pay high bank fees instead of keeping the minimum balance in my account, or buying a car when I still had student loans, or using consumer debt to buy a $2,250 souvenir, or not having an emergency fund, or agreeing to purchase a property when I have no savings. Lately I decided to carry a $5,000 credit card balance, which is arguable another no no in the personal finance community, except I think I can be forgiven this time because my interest rate is only 1.9 percent 😀
Once in awhile I get these cheques from my credit card lender, TD. I can use them to spend on anything I wish. This was my last chance to get in on the deal because after this month they will not be sending out any more of these blank cheques :*( With no time to lose I wrote $5,000 on one addressed to myself 🙂 and deposited it into my CIBC account. This works out perfectly because I need money for my farmland downpayment so by happenstance I’m now $5,000 closer to buying that property 😀 There IS a 1% transfer fee, so I paid $50 for this service but I think it’s worth it in the end 🙂
Following mainstream rules like credit card debt is bad, but student loan debt is good, will limit our options to raise capital and create wealth. By being more agnostic to what others say and focusing on our own situations we can achieve so much more 😀 There’s no such thing as rules, only suggestions.
“If I’d observed all the rules, I’d never have got anywhere.” ~Marilyn Monroe
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Random Useless Fact: 3 – 4 cups of green tea each day can boost your metabolism by 4% which burns 50 to 100 extra calories a day.
I have done the same several times, with 0% balances and a 3 or 4% transfer fee. Just repaid a $7K one last month. It is great for responsible people to get cheap and hassle free credit, however for most it can be a really risky move.
I wish mine was 0% too. That would so great. And if I put the money in a 1% savings account, then at least I’ll have $25 of free money with no risk at all 🙂 Yup, this strategy only works if we’re financial responsible.
I say that if you can make it work for you and you know what you’re doing then go for it. Leverage can be a great thing if you can make it work in your favor…which you are. The problem, at least in my opinion, is when someone tries to leverage something and has no clue what they’re doing. It comes down to being smart about it and looking for opportunity I think.
I agree, it’s about understanding the risks and acting accordingly 😉 The real estate market is picking up again in the US, especially in the Midwestern areas led by strong land prices. Just a few years ago the average price of an acre of farmland in Iowa was $5,000. Today it’s over $7,000. But investors only make up less than 20% of buyers, most buyers are farmers. This is the reason I feel comfortable leveraging my new property. Just about any kind of real estate in North America right now, especially in the US is a great opportunity. But for those with no clue about what the market is doing, it’s much better for them to pay off their debts instead of investing like you said because at least it’s the equivalent of making a guaranteed return 🙂
Hi Liquid,
Thanks for the mention.
In fact, i am more than a pro, I am the Queen of credit card balance transfer, among other 🙂
Hah, c’est brillant :03
Good advice. Thinking outside the box can find you solutions that you wouldn’t always find. Who can argue with 1.9%?
Yup, my highest interest costs right now is 5% so it’s like saving 3.1% on $5,000. Might as well use it even if it’s only for a short period of time 🙂
I’m getting 0% rate with 1% transfer fee for $22500 for 12 months from three different credit cards. I use those money to invest in stocks and pay them back using margin loan, then rotate from credit card. Collecting dividends from high quality companies without investing a single dollar. I know it is very risk, but risk is reward.
Exactly the way I see it too. You can’t earn the reward if you don’t take the risk 😀 I had to pay a 1% transfer fee as well, so $50 on the $5,000 transfer.
I got a 0% balance transfer from MBNA Smart Cash, but they charge you 1% for the balance trasnfer fee. So I actually paid $80 on a $8k loan for the next 9 months. Stupid me, I charged some of my grocery and gas to the same card… that $200 balance will be charging at the rate of 14.99% till I pay the entire balance transfer off. Another thing, if you miss a minimum payment, then you will lose your promotional rate.
Thanks for the warnings Agent Fang 🙂 I’ll be careful not to miss any minimum payments :0)
I can’t say I agree with your methods and rationality completely, but I agree that it’s your money and I haven’t been a saint either, breaking rules left and right.
We break rules in different ways but our end goals are still the same 🙂 or maybe they’re different lol.