In the first two parts of the deeper dive the positive side of the rule was explored. Now I’m going to do a quick look at the dark side of the rule of 72…
In my previous article I went over some low hanging fruit items including ask for a lower credit card rate on your current card. That is an OK kind of tip but, it was thin. So in order to thicken up the help on this I wanted to break this down a little deeper. If you know a little bit about the credit card company and how they make money you can be better prepared when you ask for a new rate.
Why be minimum be Maximum. Max out your life not your debt. Debt is a tool but, like a knife it cuts both ways. You can get a house with debt or you can get a boat with debt. You can live in a house and having debt to acquire one may be a good deal (you have to live somewhere). Acquire debt to buy a boat seems to me to be a bad deal (unless you live in your boat). Using a debt card to buy a want rather then a need is a bad deal. I’d buy a text book for school over a comic book but, I would prefer not to buy with debt in the first place.
A credit card is a Debt Card*. It gives you debt, it tacks interest on that debt in a self replicating fashion, often it charges service charges creating more debt, there are late charges creating more debt, on top of that it creates more interest debt on all that previous debt. There is no such thing as a credit card there is only a debt card.