Jan 23, 2009
The Daily Poverty Post.
You are looking at Bossy’s accountant’s home office, and welcome to Apostrophe S Anonymous.
Bossy took much interest in her accountant’s home office, because a little bit she was like, “With financial advice as smart as his, why isn’t he living in the Ritz Carlton on Central Park South?”
But then Bossy’s husband pointed out that their accountant is paying college tuition for several children and Bossy was all, “ohhhhh.”
Anyway. Bossy’s accountant discussed another interesting strategy that flew in the face of the strategy Bossy adopted in the beginning of this Poverty Party, and it has to do with the dilemma over paying yourself first versus paying down your credit cards first, which Bossy has written about many times.
Bossy’s accountant said that because her one beefy credit card balance has such a low interest rate, 3.90%, it is actually preferable for Bossy and her husband to carry this loan, and instead put found money into their non-existant retirement funds.
And so Bossy was all, “But what if the economy gets even worse and credit card companies decide to call in their loans and then Bossy will lose her house.” And while the accountant thought this was a valid argument, he said that as long as Bossy doesn’t make any new purchases with her card, they will not be able to change the terms of her loan.
And as long as the terms of Bossy’s credit card loan don’t change, and as long as Bossy faithfully makes the minimum payment on that loan, her money is better served in an IRA.
This is one of those reasons Bossy thinks it’s wise to hire someone to look over your particular situation, which never exactly matches the Oprah guest that Suze Orman, for example, is confronting.
Now all Bossy needs is the found money part.
They’ll sure change the terms of your credit card if you are a day late with your payment!
Where in the bleepity-bleep-bleep did you find a card with a 3.9% interest rate? Wow!
I would love to know where one can find money?
Well said.
When my kids started working, I explained the importance of looking at their savings account as a monthly bill AND that is should be paid FIRST … yep even before their rent, utilities, cell phone, car ins., etc.
I explained, if you look at as a paid bill, i.e. your cell bill … it’s money GONE, you can’t w/draw it from your account … it will add up for use later, like a down payment on a house … not for a Wii or tickets to a concert.
‘Cuz, if you pay all you bills first and put into your savings account what ever is LEFT OVER … guess what? There is no such thing as left over money.
[stepping down from soapbox] << per my kids.
We do this. We contribute to our 401Ks before paying any bills whatsoever. Then we pay bills. Then we put extra money towards debt, up to our normal income. Lately, because I’m a little scared right now, I’ve been putting anything above our normal income (overtime) into a savings account. Once I feel comfortable again and comfortable with that balance, I will add the overtime money to the debt.
The thought of the economy getting so bad that credit card companies will start “calling in the loans” is VERY frightening to me.
I disagree with your accountant. First you’re increasing the cost of the goods purchased on the card by paying interest. Second, you have to decrease the return on your investments by 3.9% to offset the interest you’re paying on the card. Mutual fund returns right now are about -20% so that would drop it to -23.9%.
–>My Dad always preached to pay yourself first. At least something – - then pay your bills. It does work!
http://thaxtonfam.blogspot.com/
Holy CRAP. Bossy’s Daily Poverty Party has it all over any advice/info from Suze Orman. Plus? It has the added benefit of not making me feel like a dumb-a$$ like Suze does.
I also disagree with your accountant. The best solution, short of paying it off, is to roll it over with one of the zero percent offers we’re all getting in our mailboxes. Then divide the total amount by the number of months in the term of the zero-ercent offer (many are for a year) and CUT UP THAT CARD. Then just pay on time (you can set it up automatically via the internets) and voila, you are debt free-er.
Hey everybody, great points all. Now just so we’re straight, here is the story.
The card in question was a transfer offer, 3.9% for the life of the card, no transfer fee. The balance was transferred, the cards cut up, effectively making it a fixed rate loan, which is set up to be automatically paid each month.
All of the 0% interest offers I’ve seen now carry a minimum 3% transaction fee, and have time limits, usually 6 months to a year before they adjust to the “real” interest rate. To move the remaining balance into another of these 0% accounts would cost another 3%, and would probably begin to adversely affect the FICO credit score. So, it seemed like a good move! But what do I know! Not much!
BH
I never thought of credit cards calling in their loans. GAH!!! Now I have a new worry!!!!! And I’m so jealous of your 3.9% interest. Lucky Bossy.
Money talk makes me sleepy.
Is found money the change I find in my husband’s work jeans, in the couch cushions, and on the car floorboards? Or is it the $20 bills I keep washing with my jeans? What is this retirement fund of which you speak? IRWhat? 401Who?
“Found money.” I love that term. As if one day you’re just walking along, minding your own business and you look down, and….there it is! Retirement money!
Hey. It could happen.
I found some money today. It was in an emergency medical permission slip for my daughter……in 2001! YAY! Unfortunately, I didn’t use it to pay bills. We went out to dinner:/
Credit card companies calling in their loans?!? HA! I’d like to see them try! The term “you can’t get blood from a turnip” comes to mind. At least, I think that’s the term. Isn’t it? Anyway, if they think they’ll be calling me for any loans, then I’ll just be sending them turnips! That’ll teach ‘em.
Overheard: “When I looked at my Macys statement, I was Shocked to see this, “if you choose to pay less than the full balance by your due date, the annual percentage rate charged on that account is 51.84%”.
Too many numbers in comments above. Eyeballs are jerking back and forth erratically.
I created some found money once. Was broke(ish) in college and Sweet Mom slipped me a $20 bill. Then it slipped right on out of my pocket to … who knows where. Poor me. Lucky somebody else.
i think BOSSY should sell that rendering of BOSSY’s accountant’s home office to BOSSY’s accountant. that would be found money.