I have two credit cards (one is mine the other my wife). They are both 0% until july next year. I haven't charged anything on them for the past year. I also plan to shop around for the same teaser rate when July comes around (transfer balance) I also have a loan with 1 year same as cash. the balance is very low and will be paid in April. No finance charges. My home has a market value 185,000. the balance is 155,000.
2006-12-08 07:54:44 · 5 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
Why do you want to become debt-free? Avoid high interests and keep low (preferably) zero-interest debt. It will allow you to invest in things you can't invest in without borrowing. In finance it's called leverage. Imagine - you take 10,000 at 0%, invest about 9,500 (you need cash to make minimum payments) for one year at 5% (ING or HSBC online savings rate). One year later you repay the credit card debt and end up making with roughly $ 500 before taxes.
I think you're doing things pretty much right. Just make sure that if you fail to secure another 0% loan, you'll be able to repay the credit card debt before high interest rates kick in (I simply invest money in CDs with the same maturity as the time of repayment as the end of 0% loan, just to avoid temptation of spending this money.
One piece of advice - when you'll need to really borrow money, remember that mortgage interest is tax deductible, while other loans' interest is not. Having 6% mortgage can be better than 5% ordinary loan
2006-12-08 08:16:39 · answer #1 · answered by hec 5 · 0⤊ 0⤋
I caution against using debt as a tool. Most people mess up and that debt converts to very high interest rates. Why else would the companies offer the teaser rates? They are making a killing and most people get trapped. My all means, dump your debt and then you can start saving and building wealth!
Remember: Debt is dumb. Cash is king!
2006-12-08 17:49:12 · answer #2 · answered by Patrick C 3 · 0⤊ 0⤋
pay off all the credit cards as soon as possible and close the accounts. begin using cash and debit cards for purchases. studies show you will spend less and save more by switching to cash and debit only.
save your money to pay cash for everything except the house.
don't be a slave to the creditor. live free!!!
2006-12-08 16:11:00 · answer #3 · answered by more than a hat rack 4 · 0⤊ 0⤋
To become debt-free, you must pay off all debts. I'm not really sure what you are asking.
2006-12-08 16:03:12 · answer #4 · answered by Shannon 6 · 0⤊ 0⤋
yes it is a very smart move to become debt free.
2006-12-08 16:03:18 · answer #5 · answered by aaaaaaaaaaaaa 3 · 1⤊ 0⤋