No. of Recommendations: 16
I paid off my debt a couple years back (over $35,000 in credit card debt, that I'd not bothered to add up, it was a real tear-jerker at the time, and this hyar message board sure helped out and I got it taken care of).

Then I spent a couple years with no credit card debt (but with a car loan that was at 3.9% interest and didn't seem worth bothering to pay off, and it's now nearly paid off), using the credit cards, and paying them off every month.

An idea that I got from a fellow board member has been a rallying cry: The rules of the game have changed, for me. Now, I don't pay them, they pay me!! I didn't say that, someone else did, and I hope whoever you are don't mind me borrowing the idea.

I'd been getting new credit card offers. At first they were ridiculous (the great rate of 25%, e.g.) but they improved over time until the offers were at 0% on purchases or balance transfers until x/y/z date. None were offering 0% on cash advances, only purchases and balance transfers. The first of those was for 3 months into the future, then they were until jan 1, 2004 (nearly a year), and in the spring I got one until Aug 2004 (well over a year) (I didn't apply for that one).

Anyway, the 0% offers I bit for. I figgered "heck, instead of paying the credit card bill, I can stash the money I woulda paid into a money market account". I use netbank, and the money market accounts are still paying 2% (?more?), and were paying even more last fall.

Well, at the moment I have over $15,000 on the credit cards, 0% until the end of 2003. However, I have a check in the mail to pay one off ($7800) to $0 balance, and therein is the tale.

Y'see, this game woulda worked out great if I'd've kept up-to-date with the minimum payments. However, one of the cards I (brilliant fool that I am) set up to not get paper statements, and then I forgot the online user ID to get the electronic statment. Without the paper reminder arriving in my mailbox, it turned out to be a case of "I forgot to pay the bill this month". I checked last night and found out they've been charging me interest and late fees for the past three months (er... I thought I was caught up with the payments), so the $7800 is in the mail to put a stop to that. Fingers are crossed that it will arrive by the due date ;-) ...

The other two cards involved in this mess, well, I've been getting paper statements, and they're up to date. Unfortunately I don't have enough in the money market account to pay them off right now (about $6000 short). But they're still at 0% until dec 31, 2003, so I have some time.

Besides the fiasco with not getting paper statements and forgetting to check the online statements ... having the 0% rate turned into a bit of a "oh boy, I've got a free ride" game. Not that I went terribly overboard, but obviously I haven't been stocking up the money market account at the same rate as my spending.

And ... all this so I could earn $20 per month (taxable) on a $12000 balance saved up to pay the credit cards that were at 0%. Cost me nigh on $300 in interest and late fees.

Doesn't seem like it's worth the hassle -- unless you like keeping track of things like this. My recommendation to others tempted to play this game? Don't!! I'm sure gonna stay away from it.

- David
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Yep,

That's why I'm pulling out too. Its not worth the aggravation.
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Ah, yes, discpline is the first requirement before using such tactics.

Of course, even with a moderate level of discipline, it's amazing how easy "something came up" and "i'll make up for it next month" creeps into the equation.


CPAScott
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Y'see, this game woulda worked out great if I'd've kept up-to-date with the minimum payments.

I have a similar tale, from way back in 2001 when I was trying to use the 0% offers to keep our heads above water after DH's layoff when I was pregnant. All was going well, everything was paid on time... but I misunderstood how they calculated the expiration date of the offer, and I didn't repay or transfer the balance before the 0% term ended.

Got hit with BIG finance charges. Biggest I'd ever seen. And not even tax deductable. That's when I transferred the remaining balance to our HELOC and it's it's been a losing battle ever since, until this year (finally) we've started seeing the balance on the HELOC move in a downward direction.

So I'd agree - if you can't stay on top of the 0% BT offers, don't even try them.

SS
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You said: Doesn't seem like it's worth the hassle -- unless you like keeping track of things like this. My recommendation to others tempted to play this game? Don't!! I'm sure gonna stay away from it.


The key phrase in there is "unless you like keeping track of things like this." That is absolutely the truth. I keep track of my finances so RELIGIOUSLY, some friends call me "Foolish" about it. ;-)

I keep all of my financial info (checking, savings, stocks, credit card balances) in Microsoft Money 2003. I balance my checking and savings accounts daily. I schedule my bill payments weeks in advance online using MSN Bill Pay. I double-check my credit card electronic statements online with my records at least weekly.

I've been doing it this way for five years now and while it was a pain at first, I've kind of made it a game for myself, and now it's just second nature. I know from one minute to the next what the balances are on all my accounts, and what bills are coming due in the next few days.
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... having the 0% rate turned into a bit of a "oh boy, I've got a free ride" game. Not that I went terribly overboard, but obviously I haven't been stocking up the money market account at the same rate as my spending.

Yeah, me too. For some of us, that "I'll earn interest on their money" cushion creates an inappropriate sense of wealth.

When I posted about this before, I was advised that it can also create an strong sense of responsibility, as in "it's not my money, I'd better be exceptionally careful with it."

We're all different, but I fall into the "hey, I must be rich" camp. I've just paid a $50 balance transfer fee to extend another 12 months because of overspending, and that severely cuts into the $160+ I will make on the cash I'm holding for 'em.

Good luck,

Bruce
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David,

I'm sorry to hear you got burned on these offers -- especially since that quote was probably mine.

Unfortunately, you did this to yourself. And it's guys like you that make the 0%BT game profitable for the credit card companies. Don't get me wrong, I do feel badly for you. But when you took on those obligations, you should have taken them more seriously.

Mainly, you should have set the cash aside so you wouldn't spend it -- it wasn't yours to spend, it was theirs. You should have made arrangements for at least the minimums to be paid even if you didn't see the credit card each month. And you shouldn't have lost all your online access to your account -- of course if you had a credit card or an old paper statement you could have called to the automated number to check your balance and get a payment address.

These games work for me because I'm a bit anal and I'm paranoid about my finances. If I weren't my XSO would have ruined me financially many, many years ago.

I never spend the cash I borrow from these 0%BT offers and I've borrowed two to three times what you're borrowing right now. How do I do it? It's easy:

1. Check my accounts daily.
2. Set up a schedule of automatic payments to repay the balance well ahead of the offer expiring.
3. Never, ever spend that money - not even any interest - until the balance is repaid.

Follow these simple rules and you can play this game successfully. Violate them and you're playing with fire and are likely to get burned. As you can see, make one simple mistake and a month or two's interest payments can cost you the earnings you could make from the entire game.

And it is a game. That's the way I treat it. It's a game I can, have and will win. I can because I have confidence in myself and my plan and because I'm playing by their rules, not mine. I have, because I've already played out two sizable 0%BT offers. And I will, because I'm working on one now and plan to continue playing them as long as they make profitable offers.

It's a game. It's even a bit like gambling. But with this game, if you know the rules and don't make stupid mistakes, it's one you can win at every time. If you're careless, at the very least you'll loose all the money you've won at the current hand and possibly a good deal more.

If you still don't trust trust your financial skills and your financial discipline, then maybe you're right. Maybe this isn't a game for you.

- Joel
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Doesn't seem like it's worth the hassle -- unless you like keeping track of things like this. My recommendation to others tempted to play this game? Don't!! I'm sure gonna stay away from it.

Personally, I have not used the cards to my advantage in this fashion but it is something I am considering and plan on doing.

In my opinion, and Joel and xraymd can probably claim with more certainty, you "broke" a few of the key aspects of making something like this work.

First, you spent some of the money that you stashed into your money market account to earn you free money. The idea is to put that money aside and forget you even have it. If you think you will even be tempted to spend the money, this is not the game for you to play. As you have found out unfortunately.

Second, you did not maintain the appropriate level of attention to ensuring each bill was paid on time. The key to playing this game is to never miss a payment. As you discovered, if you do miss a payment, you will quickly erase any earnings you have made with late payment fees or other fees. The credit card companies are banking on people making mistakes, which is why they will give the large BT checks. Many people do not have the discipline to have a large amount of cash sitting around without having some temptation to spend it.

I am sorry that this experience resulted in you being out money but in my opinion, the "game" is still valid and can be very beneficial if you play by the rules. If I am not mistaken, Joel earned close to $1000 last year in free money. Not too shabby if you ask me.

Once I have the time to sit down and plan out the game, I plan on taking advantage of my ridiculously high Bank One credit limit that is sitting with a $0 balance. The key is finding the offer that waives all of the transaction fees and will distribute a check.

dt
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I've been doing it this way for five years now and while it was a pain at first, I've kind of made it a game for myself, and now it's just second nature. I know from one minute to the next what the balances are on all my accounts, and what bills are coming due in the next few days.

If I didn't know better, I would think I had a twin!

dt
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Bweaver,

You wrote, Yeah, me too. For some of us, that "I'll earn interest on their money" cushion creates an inappropriate sense of wealth.

When I posted about this before, I was advised that it can also create an strong sense of responsibility, as in "it's not my money, I'd better be exceptionally careful with it."

We're all different, but I fall into the "hey, I must be rich" camp. I've just paid a $50 balance transfer fee to extend another 12 months because of overspending, and that severely cuts into the $160+ I will make on the cash I'm holding for 'em.


This describes my XSO's view of both cash and credit for the majority of our marriage. Her reasoning secretly went something like this:

-----
If we have cash in our pockets or in the bank, or if we have credit on the credit cards, we must be rich. If we're rich, we're doing better than everyone else. Being rich is bad, so we'd better spend it or give it away because I don't want to be bad.
-----

She did a lot both.

This sounds like a childish over-simplification; but I would swear on a stack of bibles that it's an acurate representation of her though processes. What's more, she would admit it too, if I pressed her.

I'm the polar opposite. I have a clear picture of where I want to be financially in the future and it scares me a lot that I may never get there because I married this woman and I lack the financial means to compensate for it. I have a comfortable cushion of cash in the bank and I have a few tens of thousands in retirement and non-retirement assets. I also own a good percentage of my home. But it's no where close to being enough to retire on. What's more, I only have 26 years to go! (I plan to retire no later than age 65.)

By my definition, I'm poor.

- Joel
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By my definition, I'm poor.

Being an avid reader of your posts, I have absolutely no doubt that you will not only dig yourself out of this hole, but will also retire a wealthy man. You are discounting the power of compounding! How unlike you!

At a mere 8% annual interest, $20,000 will grow to about $148,000 in 26 years. If, say, you add only $5,000 to your nest egg of $20,000 each year, it will grow to $542,700.

Joel, we're in the same boat you are, but I see no reason to lose hope. By setting aside only $500/month, each year you'll increase your savings by $6,000. Without even taking the monthly compounding into account, this brings your wealth after 26 years to $621,700.

Mind you, 8% is my "magic number." If you have more confidence in the stock market than I do, use a larger number. Likewise, less confidence, smaller number.

But, as with a debt, the earlier you can add money to your stash, the bigger it will grow.

Right now, we are adding about $600 to our stash each month and our debt, while not falling fast, has at least stopped growing.

Good luck to you. You WILL retire wealthy, I know it.

SS
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SoftSimp,

You wrote, At a mere 8% annual interest, $20,000 will grow to about $148,000 in 26 years. If, say, you add only $5,000 to your nest egg of $20,000 each year, it will grow to $542,700.

Yes; but I don't think $542,700 is nearly enough for retirement. My minimum acceptable number is $1M, and that's only if I retire lonely and alone. Anything less would be a poor compromise.

And yes, $1M is assuming Social Security survives mostly intact for my retirement.

Besides, don't you want to have the option of retiring before 65?

- Joel
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Joel wrote,

Yes; but I don't think $542,700 is nearly enough for retirement. My minimum acceptable number is $1M, and that's only if I retire lonely and alone. Anything less would be a poor compromise.

Joel, is that minimum number what you think will be needed or have you run numbers using an average safe withdrawal rate of 4%? Also, if using a SWR, to what degree of certainty did you calculate. By that I mean, did you calculare with 100% as the goal to have enough funds for your anticipated length of retirement or did you use a lower number?

Also, are you planning to "earn" a lower salary during your retirement years or do you desire a similar salary? That can obviously play a very large role in how much funds you will need to support your retirement.

I am still learning quite a bit about making it to retirement but have been reading quite a bit over at the Retire Early board, all while maxing out my tax deferred savings vehicles. The numbers I have run for myself resulted in a higher amount than I originally thought but based on my projections, I am on track.

From what I have learned, a good rule of thumb is that for every $1000 you desire in retirement income, you will need $25000 saved. Therefore, if you want an income of $50000 per year, you would need a nest egg of $1.25 million.

dt
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dsemmler,

You wrote, Joel, is that minimum number what you think will be needed or have you run numbers using an average safe withdrawal rate of 4%? Also, if using a SWR, to what degree of certainty did you calculate. By that I mean, did you calculare with 100% as the goal to have enough funds for your anticipated length of retirement or did you use a lower number?

I've never considered a SWR. For almost the last 10 years, I've just used the financial planner at Quicken.com as a reference ( http://www.quicken.com/retirement/planner/ ). It actually says I need about $700,000 in today's dollars in retirement assets by retirement age and a little over twice that in 2029 dollars when I retire. BTW: That assumes income from Social Security.

Right now, I'm hoping to have an income of a bit more than $50,000/yr in today's dollars. That's already substantially less than I earn today; but I do understand that I won't have as many expenses and I won't be setting aside money from that income for retirement.

According to Quicken's planner, I could make my goal; but I have to tweak the return rate up to 10% on my investments or increase my savings rate substantially. I'm hoping that when my kids are grown that I'll have significantly more money to throw at retirement; but until then it's quite worrying.

That's not to say I'll be destitute in my old age. It's just that I may not have the kind of financial freedom I always assumed I would. I honestly don't think people will hire me as a programmer past 65. Shoot, I bet they'll start thinking twice about me in another 10 years. I've been at a plateu with my earnings for nearly that long already. Mostly I consider myself lucky now to exceed inflation. From what I know of the industry, I imagine I'll be viewed as an old-timer after I get into my 50s and my relative earnings will actually start to decline. My post-retirement age income potential is fairly minimal by comparison.

Of course you can't really model these types of things in one of these retirement planners. They assume income increases are fixed, income is stable and rates of return and inflation are consistant.

You also wrote, From what I have learned, a good rule of thumb is that for every $1000 you desire in retirement income, you will need $25000 saved. Therefore, if you want an income of $50000 per year, you would need a nest egg of $1.25 million.

These numbers don't seem quite right to me. If you withdraw only 4%/year with no increase in your principal, you will have 25 years worth of income using your numbers. Of course inflation will reduce that number.

Let's suppose you have an inflation rate of 3%, a withdrawal rate of 4% and an average rate of return of 7%? In this case, your principal will last indefinately because your principal will continue to increase at the rate of inflation. Personally, I don't care if my kids become millionaires at my expense, so I expect to use some of that principal for my own pleasure.

Of course you might be expecting only a 6% annualized rate of return. In that case the principal balance would decline at a rate of 1% in the first year and accelerate in each year following. You'd get a bit over 20 years out of the balance in this case.

Personally, I'm projecting a 9% rate of return before retirement and 7% after using the Quicken planner. I actually expect these to not be static numbers. More realistically, I expect a very volitile number that ranges on average from 10-12% up until about 10 years before retirement. (That's only 16 years from now. Or only 2 more bull market cycles at best.) After that, I plan to start placing all new contributions into bonds and fixed income securities. Also, I'll probably start shifting assets into safer, lower yield securities as the market warrants.

By the time I'm 75, I expect I'll have all but maybe 10-15% of my assets in bonds, mortgages and money market assets. That remaining 10-15% I'll probably trade in and out of the stock market until it becomes apparent that I'm going to need to conserve cash. Except for possibly owning my home, I'll probably be bankrupt before I reach 85.

Of course you know what they say: Hope for the best; plan for the worst. Of course for me the worst would be that I drop dead at 65 and the kids get it all. :-) Speaking of which ... I have little if any hope of ever seeing an inheritance. My father is already 67 and still has at most half of the money he needs to retire in even modest comfort. I suspect he'll be working another 5 years at least.

- Joel
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Besides, don't you want to have the option of retiring before 65?

Absolutely. That's why I've been hesitant to touch our investments, and have instead put living expenses on the HELOC temporarily, until our earnings go back up. It's also why, even through the really tough times we've had over the last couple years, we've continued to sock money away in those investments.

Right now we have $34,000 invested in stock and bonds and about $20,000 in a rental property. It took us 6 years to do that, but considering how bad the market's been I'm pretty happy with it. In addition, we're adding $600/month to those stock investments. As DH gets raises or we earn additional income through other means, we will increase that monthly amount. I started buying individual stocks this year and it's fun.

Like I said, I think 8% is a reasonable return for the stock market investments. Have you looked at scenarios using other interest rates? Or a larger monthly addition? While you're not fresh out of high school, you still have time on your side.

Allowing for a modest amount allocated for maintenance, our rental property is currently returning about 6% annually on our cash investment. It's also been appreciating at about 13% annually, but I wouldn't expect that to continue. Part of that appreciation was due to improvement work that we did, which we took out a loan for. Prior to taking out that loan, we were earning about 21% annually on our cash investment, and expect to do at least that well when the improvement loan is paid off (in 10 years).

The improvements we did were: new roof, siding, insulation, windows, and gutters. Other than the boiler, I can't think of anything major that would need to be done in the next 30-50 years (we put on a 40 year roof).

Our current plan is to continue to invest aggressively in the stock market while paying down our HELOC, taking a bit out of the market here and there to acquire more real estate. I really like being a landlord.

So, I guess you could say I'm diversified and I'm still investing quite a bit, considering our income. I don't mind a little debt for real estate, as long as the property is paying for itself. I just don't like debt on OUR home.

We're heading over to the rental tomorrow to do some yardwork and painting. It'll be me, DH and stepson. Should be fun. :)

SS

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Of course for me the worst would be that I drop dead at 65 and the kids get it all.

This is how I found TMF. My dad died in November of a heart attack at 61. I found a Motley Fool book in his things and saw a bill either on his cc statement or in his email. It looked interesting, so I checked it out. I needed a crash course in the stock market, so I could help my mom manage her investments. I was even able to find my dad's old posts. He didn't post very much.

My mother is well looked after, thanks to my dad's investments, pension and life insurance. It's just a shame that he didn't get to enjoy the money.

SS
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Doesn't seem like it's worth the hassle -- unless you like keeping track of things like this.

Greetings, David, what you said above is the key to the enterprise. If you borrow the credit card company's money to babysit you MUST feed it per cycle on time - no exceptions! If anything, it calls for hypervigilance. Some have advocated setting up the minimum payment as an automatic deduction to keep themselves out of trouble.

I still do the 0% thing but I am waaay anal - I pay the minimum online the day after the statement cycles, not near the end of the cycle and I keep a list of all of my online credit card accounts plus passwords in a convenient place as well as a notation on my calendar for when the statement will cycle. It calls for extreme attention but has worked out for me in that the actual effort involved in paying down, then paying back, the 0% balance is fairly minimal compared to the returns from the interest earned. But timing truly is key and I do my ING transfers back to my main checking account a full week earlier than I absolutely have to because I don't want to shave things too closely.

This is not a strategy for anyone who feels like this kind of attention to detail is just too compulsive, or for anyone who tends to be forgetful or distracted. My fiance likes what this "babysat" money earns but he admits it would drive him crazy to try it for himself. My sympathies on the credit card bite out of your hide; I know it has to hurt.

xraymd
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Joel,

I originally wrote, From what I have learned, a good rule of thumb is that for every $1000 you desire in retirement income, you will need $25000 saved. Therefore, if you want an income of $50000 per year, you would need a nest egg of $1.25 million.

To which you replied, These numbers don't seem quite right to me. If you withdraw only 4%/year with no increase in your principal, you will have 25 years worth of income using your numbers. Of course inflation will reduce that number.

Let's suppose you have an inflation rate of 3%, a withdrawal rate of 4% and an average rate of return of 7%? In this case, your principal will last indefinately because your principal will continue to increase at the rate of inflation. Personally, I don't care if my kids become millionaires at my expense, so I expect to use some of that principal for my own pleasure.


You are correct. With the numbers I presented, the principal would remain intact depending on your rate of return and inflation. As you mentioned, this is not a concern to some people.

Personally, my biggest fear right now is getting to the point where I am retired and running out of money. Therefore, my goal is to shoot for a savings that would allow me to live off of the interest and keep the prinicpal intact for my children/grandchildren/etc. or myself if for some reason I live until I am 130 years old! :)

Thank you for sharing your thoughts on the matter. I know this has gotten a bit off-topic for the content of this board but I appreciate the discussion.

dt
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SoftSimp wrote, This is how I found TMF. My dad died in November of a heart attack at 61. I found a Motley Fool book in his things and saw a bill either on his cc statement or in his email. It looked interesting, so I checked it out. I needed a crash course in the stock market, so I could help my mom manage her investments. I was even able to find my dad's old posts. He didn't post very much.

My mother is well looked after, thanks to my dad's investments, pension and life insurance. It's just a shame that he didn't get to enjoy the money.


It is a shame you had to learn about the Fool under such circumstances but it sounds like your dad had his ducks in a row and was able to pass that along to you when you discovered the Fool.

I think it would be very interesting to discover this aspect of your dad that you did not know existed and to be able to read posts of his on these boards.

My condolences for your loss.

dt
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Doesn't seem like it's worth the hassle -- unless you like keeping track of things like this. My recommendation to others tempted to play this game? Don't!! I'm sure gonna stay away from it.

While I understand the problems -- and what happened to you could have happened to me or to anyone -- I have been playing this game for some months now.

I have a cash-rebate card from a bank with online access. 1% back on all purchases (anything that's not a cash advance) at the end of the year.

So every time I use the card I account for the amount of the purchase in my money market account. That way I have to be able to afford the purchase anyway -- I don't allow myself to cheat. So I'm not only getting the 1% cash rebate, which adds up to quite a bit now that I'm in home renovations and the contractor takes credit cards, but I also get 4-7 weeks of interest for the money I leave in my account until the bill comes due.

Yes, I pay the bill the day before it comes due, but that's because I pay it online, direct transfer; and since I'm totally obsessive about my finances (designed my own spreadsheet that budgets me day by day), I don't miss the deadline. But the trick, of course, is to pay it in full on time and not exceed the credit limit, triggering fees (I had a scare about that once).

I agree it's risky -- as I said, I could easily make a mistake -- but to me the rewards are worth the risk. And isn't that what financial planning's all about?

El
Card-carrying member of the "now they pay me" club
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Jhereg,

You wrote, While I understand the problems -- and what happened to you could have happened to me or to anyone -- I have been playing this game for some months now.

I have a cash-rebate card from a bank with online access. 1% back on all purchases (anything that's not a cash advance) at the end of the year.

...


I assume you do understand that using a cash-back card isn't quite the same? Of course you have to be diligent and pay them both before they acrue interest charges or late fees; but the damage from being late paying the minimum payment on a $20,000 0%BT is a bit more daunting than being late on a $1,000 statement balance on your cash-back card. If you mess up on the 0%BT game, you can easily get hit for $200 or more in interest. Make a mistake on a rebate card and your loss tends to be an order of magnitude smaller.

So why don't we just do smaller deals? Well, because in this interest rate market, only big BT balance for a fairly long duration are worthwhile in terms of the interest you can safely earn.

- Joel
Who wish he had a million dollar credit limit on his MBNA Quantum card. ;-)
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I find that I can trick my shopping brain into thinking I only have what's in my checking account, and so long as that balance never goes above $200, I feel okay. $201.57, suddenly I'm a big spender!


--Booa
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I think it would be very interesting to discover this aspect of your dad that you did not know existed and to be able to read posts of his on these boards.

Actually, I knew about his interest in the stock market. In my family, we're on a constant quest for knowledge about *everything*, so his interest in the Fool was actually no surprise, either. What did surprise me, though, was that he had invested a gob of money with a "professional" at Morgan Stanley. The pro did a fine job of losing more than 60% of the investment through active trading over the last 3 years, as well as charging a great big annual fee to do it. We're going to be moving the remaining money to Ameritrade (where he had some other stuff), now that we finally got it transferred into my mom's name.

I *am* a bit surprised that he didn't post more. He had been a member since 2000, but only posted 9 times.

It's funny that I'm reluctant to sell any of the stocks that he purchased himself (without the pro's help). I'm not sure why - maybe in the back of my head I think that the stocks he picked had some sort of significance.

My condolences for your loss.

Thank you.

SS
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Unfortunately I don't have enough in the money market account to pay them off right now (about $6000 short).

I don't understand why you are short...That money is just supposed to sit there earning interest--that's how the game works.

It sounds like you're playing THEIR game, like they wanted.
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Actually, I have been quite succesful at the "game".

I used NetBank as well, and I set up the payments to go automatically, and I set up the transfer from MM to checking the day before I set up the payment to clear the card back out right before the interest rate kicks up.

Then I just sit back and let it all happen.

I earn interest automatically, I make min payments automatically, and I transfer the funds and pay it off at the end, without ever having to think about it again.

Works great for me.
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dsemmler,

You wrote, If I am not mistaken, Joel earned close to $1000 last year in free money.

Just for clarification, when I mentioned that $1,000 estimate in that other thread, I was referring to the total combined benefit I've gained from using credit cards last year. Only part of that was from interest income from playing the BT game.

The breakdown is more mundane. I made a bit less than $400 in cash-back; I managed to receive a payment-in-full discount by paying an insurance bill upfront using my credit card (for timing reasons it had to be paid by credit card); and I made another $400+ from interest using 0%BT offers.

The insurance discount was actually about $530; but I was switching from another policy and the payment-in-full discount saved me about $250 over my previous carrier. Of course you could argue that I shouldn't count this discount; however, I had to make the payment before the insurance went into force, which would have been impossible if I paid by check, given the time remaining before my previous policy lapsed. Still, I could have paid by debit card, assuming I had such a thing, and still received the same benefit, so counting this discount is perhaps a bit questionable.

This insurance benefit will be even larger this year. Compared to my previous carrier, I suspect I'll be saving well over $600. I have four vehicles and two teenagers on my policy now and I live in a fairly high-risk part of the state. Premiums are up to just over $6K/yr vs. $1,600/yr two years ago when it was just myself, my XSO and 3 vehicles.

Unfortunately, I suspect I'll only see about $250 in cash-back this year because Juniper abandoned me back in April and I'm back using just Discover this year. Of course I don't count their doubled rebates, even though I get all my BlockBuster movie rentals half price through their scheme. If you did that, I'd probably have to add another $50-$80 to my estimate.

Cash earned from 0%BTs will also be less this year -- partly because I can only earn about 1/2 the interest I could last year. This year I've made about $250 so far. That includes part of a Discover card offer from last year and another MBNA offer this year. I project only about $400-450 from this type of interest this year.

All total, I'll probably receive less than $800 in benefit from credit cards in 2003. I'm sure that's largely an indirect result of the interest rate climate. Had I the same opportunities with last year's interest rates and rebate cards, I'd probably be talking about $1,200-1,400.

- Joel
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I've been doing it this way for five years now and while it was a pain at first, I've kind of made it a game for myself, and now it's just second nature. I know from one minute to the next what the balances are on all my accounts, and what bills are coming due in the next few days.

If I didn't know better, I would think I had a twin!

dt


Make that a triplet.

S.
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To correctly compute your retirement income, unless you are using after tax funds in a Roth IRA or equivalent, they are taxable as are the earnings on it. So if you earn 7%, I figure minimum 50% Fed & State Tax, which gives you 3 1/2% less inflation of 3% gives 1/2% less 4% withdrawal give -3 1/2%. In addition, to maintain you spending power, you need to increase the withdrawal by 3% a year! The net is about 27 years it would last. Historically though real bond interest rates have been only 1-1.5% over inflation, which would give you 23 year, about reasonable, any less would give you worries about how to pay your increased medical bills.
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Reikeman: it is not I "figgered" ... but I "figured" ...

madame butterfly

p.s here is what you said

"I figgered "heck, instead of paying the credit "
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