587-Credit_Card_Debt_Is_A_Very_Safe_Form_of_Debt
00:00:00.000 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,
00:00:04.040 | skills, insight, and encouragement you need to live a rich and meaningful life now, while
00:00:08.120 | building a plan for financial freedom in 10 years or less.
00:00:11.380 | My name is Joshua. I am your host, and today we continue our credit card series. I introduced
00:00:15.280 | the series last week with a discussion on credit cards, credit card debt. On Friday,
00:00:19.680 | we did a live Q&A entirely devoted to credit cards. I hope you really enjoyed that. I enjoyed
00:00:24.880 | the diversity of questions that we received. And today we continue that series because
00:00:29.520 | this is launch week for my newest course called How to Borrow Money and Never Pay Interest
00:00:35.120 | Using Credit Cards. Sorry, I can't even get my own title right. How to Borrow Money Safely
00:00:41.000 | and Never Pay Interest Using Credit Cards. You know, I struggled and struggled with wordsmithing
00:00:45.840 | on that course title. I don't know if that's the best. Maybe I'll be able to come up with
00:00:50.120 | another better title in the future. But it just encompasses the three things that I want
00:00:55.920 | you to be aware of, which is that credit cards can be a very safe way for you to borrow money,
00:01:01.680 | depending on how we define the term safe. They can also be a very inexpensive way of
00:01:07.720 | borrowing money with no interest payments, very low interest payments, if you know what
00:01:12.860 | you're doing. And of course, we're using credit cards. Now, those are some big ifs, but I'm
00:01:16.920 | very confident and I stand behind the validity of these strategies. They are carefully researched.
00:01:22.680 | They're things that I have done that I used to think everybody did. When I was in credit
00:01:26.720 | card debt, I played the zero percent credit card game and I thought everybody knew how
00:01:29.680 | to play it. And I learned over time, frankly, that nobody knows how to play it very well.
00:01:34.080 | Excuse me. I've only a very few people know how to play it. And so this course kind of
00:01:38.280 | synthesizes some things that I've never seen brought together before. An understanding
00:01:42.460 | of credit scores, how credit scores work, how credit cards are issued, and then an understanding
00:01:46.920 | of the legality of how to position yourself for maximum safety using credit cards. So
00:01:52.180 | this week we're going to be continuing this series and the bulk of this week will be dedicated
00:01:56.040 | to sharing with you excerpts and specific audio excerpts from the course. I'm going
00:02:02.680 | to have today in today's show is going to continue that. I have about a 10 or 15 minute
00:02:07.620 | sales pitch here for you at the beginning, which you'll find interesting. Stay with me
00:02:11.840 | because I really want you to buy the course, but I want you to have a good, solid understanding
00:02:14.920 | of it so that you can understand if it's right for you. And then towards the back end of
00:02:19.000 | today's audio, I'm going to share with you the first audio excerpt from the course, which
00:02:23.920 | is called credit card debt is a very safe form of debt. Sharing with you part of my
00:02:28.880 | arguments for credit cards. Tomorrow I'm going to be sharing with you an audio excerpt called
00:02:34.200 | credit card loans can provide a way to privately purchase goods and services. One of the benefits
00:02:38.800 | of credit cards. I alluded to this in the Friday Q and a show, but I'm going to give
00:02:42.440 | you the entire audio from the course, specifically from the course. Wednesday we'll, I'll share
00:02:47.480 | with you a segment called how to manage cash while you pay off your credit cards. I think
00:02:51.960 | you'll find that very helpful because unfortunately, if you don't know this in advance, what you
00:02:57.200 | wind up really getting hurt. Many people who wind up deeply in credit card debt, wind up
00:03:02.160 | there with no cash to their name. And that's a bad place to be. As you'll see in that,
00:03:06.720 | in that segment on Thursday, I'm going to be sharing with you a show called who shouldn't
00:03:10.720 | have credit cards or frankly, who shouldn't take my course because there are people I
00:03:15.680 | believe who shouldn't have credit cards. And I didn't, this is not part of the actual course.
00:03:20.280 | This is just going to be a standalone podcast. And then on Friday, I'll be bringing to you
00:03:24.360 | one more live Q and a call, which will be all about credit cards with specific questions
00:03:30.160 | and answers and specific strategies for anyone who has purchased the course that that particular
00:03:35.840 | live Q and a call will be available to anybody who is a student of the course. If you'd like
00:03:39.680 | to get on that, we'll have as much time as you want to talk about your situation, brainstorm
00:03:43.720 | ideas and strategies that will help you. Now, I'm going to give you here about, like I said,
00:03:48.680 | about 10 minutes of discussion on the course. And here's why I have a challenge with being
00:03:52.760 | a podcast host. And the challenge is you're listening to me at a time where it's not easy
00:03:59.360 | for you to go and send me money. You're listening to me while you drive down the road and you
00:04:03.640 | can't pull over, well you could, but you're unlikely to pull over and take out your credit
00:04:08.560 | card and sign up for my course on your phone. You're listening to me while you're running
00:04:11.720 | through the local park, getting your morning exercise or pumping iron in the gym. And so
00:04:16.080 | I need to give you enough information here so that you'll be incentivized this week to
00:04:20.320 | go and to buy my course. And I really want you to do that because I believe this will
00:04:25.120 | serve you and it will help you save money. Really, really feel good about the value that
00:04:30.560 | I have created for you. So who should buy this particular course? Well, very simply,
00:04:36.960 | if you currently have a credit card of any kind, or if in the future you think you might
00:04:45.040 | ever have a credit card of any kind, I recommend to you my course. Now, this is not hyperbole.
00:04:53.640 | I'm not engaging in puffery here. I'm sincere about this. I want to deliver huge amounts
00:04:59.760 | of value in everything that I do. If you've listened to the show, you know that one of
00:05:04.160 | my things that I try, do my very best is to deliver far more than I ever charge. And I
00:05:09.800 | have put that same theory, that same impetus into this course. Most of us bumble into credit
00:05:19.640 | card debt. Most of us don't approach the prospect with any forethought. The way that most of
00:05:27.800 | us wind up signing up for a credit card is out of a place of convenience, as in, "Hey,
00:05:34.160 | I'm 18 and they started sending me credit card notices. That was my first credit card."
00:05:38.720 | Or out of a place of need, as in, "Hey, I just lost my job." Or, "Hey, I want to buy
00:05:44.880 | something and I don't have the money, so I'll just sign up for a 0% introductory rate credit
00:05:49.200 | card." Or worse, we're just deeply in debt and trying to figure out how to get out. And
00:05:54.360 | we usually bumble in. I've hardly met the person who could accurately explain to me
00:06:01.360 | the benefits and drawbacks of a credit card. What happens is, depending on our own experience,
00:06:07.640 | we tend to highlight one thing versus another. For example, some people say, "Well, I love
00:06:12.080 | using my credit card because I get all kinds of airline miles and airline points. I've
00:06:16.560 | talked to so many people and studied their spending, and I'm convinced they spend so
00:06:20.240 | much more money on their credit card than they ever get benefit from their airline miles
00:06:25.960 | and their cashback points. There are good studies to demonstrate that, to show that
00:06:31.400 | the actual value that most people receive from those types of programs is very, very
00:06:36.640 | low." Now, it doesn't have to be that way. You could compare people like I've sat with
00:06:42.040 | who have one credit card and it goes for their favorite airline and they just use it for
00:06:46.360 | everything and that's their goal. If you compare that with somebody who's very strategic
00:06:50.560 | about the credit card churning game and applying for 10, 15, 20, 25 credit cards per year in
00:06:56.520 | order to get the airline points and the hotel points, there's no difference. Sorry, there's
00:07:00.520 | no comparison between the benefit that these people get. But what makes the difference
00:07:04.540 | is the plan and the strategy. So there are people who are in that situation. But then
00:07:09.160 | there are also people who wind up deeply in credit card debt with very high interest rates
00:07:13.880 | and they're so burned by the industry that they swear, "I'm never again going to borrow
00:07:19.200 | money on credit cards." Well, I'm sympathetic to that position, but don't think that it
00:07:24.800 | was necessarily either/or. Part of the reason why you have very high interest rates is because
00:07:31.600 | you're simply ignorant of how the industry works. You don't know how to make the industry
00:07:37.160 | work for you. So instead of you being able to exploit the credit card industry for your
00:07:42.840 | own benefit, you are being exploited. You don't know the rules of the game. You don't
00:07:48.480 | know what goes in your credit score. You don't know how to improve your credit score. You
00:07:52.200 | don't know how to apply for credit cards in a way that will actually serve you. And because
00:07:56.040 | of that, you wind up being abused by the industry. And I want to help avoid that. So I want to
00:08:03.360 | give you the education that you need to avoid being abused by the industry and also possibly
00:08:08.200 | to help other people. Now, a lot of times by the time people admit to you that they
00:08:12.720 | need help, frankly, it's too late. Now they can improve situations. And I should note
00:08:18.160 | this, even if you've done everything poorly up till now, you can always improve. The credit
00:08:22.200 | card industry is a very responsive industry. You can make major changes in your credit
00:08:26.200 | score in a relatively short period of time. Over a period of a few years, you can make
00:08:30.640 | dramatic improvements in your credit score. And the more you improve your credit score,
00:08:34.000 | the more offers are available, the more the industry exists for you. It's a multi-billion
00:08:38.880 | dollar industry that just wants to lend you money at cheap rates, but you need to know
00:08:42.840 | how to use it. Now, this particular course, again, it's called How to Borrow Money Safely
00:08:48.880 | and Never Pay Interest Using Credit Cards. This course currently has about 45 lessons
00:08:53.760 | in it. These lessons are anywhere from 6 to 12 to 15 minutes long. I would guess I didn't
00:08:58.080 | go back and measure every minute, but I think it's about four hours total of audio instruction.
00:09:03.460 | This course is very carefully edited. There's no time wasting, there's no rambling, there's
00:09:07.200 | no repetition. It's very carefully edited with what I thought is the most important
00:09:12.360 | things for you to know and to implement in your life. The course is a series of video
00:09:17.200 | and audio lectures. The video and audio are together, and there are detailed written outlines
00:09:21.600 | that you can have to refer back to as well to make a very efficient use of your time.
00:09:26.600 | This course will equip you with the knowledge you need to be competent in the credit card
00:09:33.440 | business. I'm selling the course for $39. $39 is the standard retail price. I am hosting
00:09:40.320 | a one-week promo introductory period. For the next week, I'll give you a $10 discount
00:09:45.880 | on it. So for the next week until Monday, October 15, 2018, this course, you can buy
00:09:55.000 | it for $29. There's no question in my mind that you'll get multiple, more than 10 times
00:10:01.840 | value out of your expenditure of the $29. Consider this, many people will pay on their
00:10:07.560 | credit cards about 18% interest. That's not uncommon. Now, of course, you can get credit
00:10:11.880 | cards that are lower, but most people will wind up, if you actually look and read the
00:10:16.120 | terms on your card, most people will wind up with a credit card that pays about 18%
00:10:20.880 | interest. $29 is equivalent to one month's interest payment on a $1,933 credit card debt.
00:10:33.000 | So let's just round up for easy verbal math, $2,000. $29 is equivalent to one month's
00:10:37.960 | interest at 18% on a $2,000 credit card debt. Now, if you study the numbers on the amount
00:10:44.100 | of debt, a credit card debt that the average American household holds, the median debt
00:10:49.140 | per household of all households is $2,300. Now again, remember, median means 50% of households
00:10:56.200 | have more than this number. 50% of households have less than this number. This is not a
00:11:01.560 | number that's skewed by the big balances. It's the median number, which is usually the
00:11:05.360 | most realistic, accurate number to work from. So the median debt per American household
00:11:10.360 | is about $2,300 on credit cards. Now, the mean debt, the average debt per American household
00:11:15.920 | is $5,700. But if we take out all the households that don't carry credit card debt, the average
00:11:23.040 | for credit card balance carrying households is about $9,300 in the United States. $9,300.
00:11:32.080 | So if you run the math, I'm trying to give you a killer of a deal because I really want
00:11:37.040 | you to buy this course. If you run the math, $29 will save you potentially a lot of money.
00:11:42.200 | If you can cut that interest rate from 18% to 0%, to 3%, to 5% by understanding what
00:11:49.360 | you're doing and how to play the credit card game, I can save you huge amounts of money.
00:11:54.200 | I really want to encourage you. So here's how you buy. All this information is in the
00:11:58.200 | show notes. Very simple. Just one link. But I want to give it to you here verbally so
00:12:01.720 | that when you're done driving or when you're done working out, you actually go sit down
00:12:06.600 | at the computer or pull up your phone and buy the course. Go to radicalpersonalfinance.com/creditcardgaming.
00:12:10.960 | Again, radicalpersonalfinance.com/creditcardcourse. That'll take you directly to the registration
00:12:21.560 | page. Registration is fast, simple. Use an email address. Of course, as with anything,
00:12:25.520 | you should use, anytime you register, we go over this in the course, you should always
00:12:29.880 | use a standalone email address. You should always use, I don't care what name you use,
00:12:33.440 | but go right to radicalpersonalfinance.com/creditcardcourse. Register for the course. Use the coupon code
00:12:39.160 | creditcard10, all spelled out in letters. Creditcard10, C-R-E-D-I-T-C-A-R-D-T-E-N.
00:12:48.960 | And in the next week until October 15, that promo code will save you 10 bucks, bringing
00:12:54.120 | your total cost down to $29. If you're a patron of the show, make sure that you go and check
00:12:58.760 | the Patreon page because there is a higher discount available there for you as a patron
00:13:04.080 | of the show. Go and do that. And as with anything, I stand 100% behind everything that I do and
00:13:12.360 | I guarantee that you'll be satisfied. On this course, I give you a full unconditional 30-day
00:13:17.960 | money back guarantee. So check the course out, try it, buy it, watch every segment.
00:13:22.960 | It's about four hours, like I said, to go through the entire thing. If you watch all
00:13:26.440 | four hours and say, "Eh, Joshua, it wasn't worth 29 bucks," I can't imagine how you would
00:13:29.960 | do it. But if you do, just send me an email. I'll give you an unconditional money back
00:13:33.200 | guarantee for 30 days from the date of your purchase. So again, go to radicalpersonalfinance.com/creditcardcourse.
00:13:41.600 | Use coupon code creditcard10 during the next week until October 15 to save 10 bucks. Your
00:13:46.840 | total cost is $29. Please buy the course. It will help you. It will serve you. I will
00:13:53.640 | answer your questions. If there's anything that you have questions on, there are many
00:13:57.240 | more modules that I could create. The challenge with creating a course is my mind always goes
00:14:01.760 | to the extreme of everything that I could teach and I have to try so hard to whittle
00:14:07.640 | things down. But if you have questions, anything that's unclear, we'll interact with that.
00:14:11.480 | You'll post your questions there in the course software. I'll answer those questions carefully.
00:14:15.480 | I'll create new modules, whatever needs to be done to make it awesome. It's already really
00:14:20.640 | good, but to make it awesome, I will do that and serve you. Please go to radicalpersonalfinance.com/creditcardcourse
00:14:27.200 | and buy the course. Now, do that now because I want you to save the money, 29 bucks. But
00:14:32.400 | if you'd like more information, continue listening. I'm now going to play for you one module from
00:14:38.600 | the course. The audio, which is called Credit Card Debt is a Very Safe Form of Debt. This
00:14:45.120 | audio comes with both audio and video in the course with a detailed outline, but you'll
00:14:49.780 | just hear the audio here. It's called Credit Card Debt is a Very Safe Form of Debt. Enjoy
00:14:55.120 | this particular module, which is an excerpt from my case for credit cards in the very
00:15:00.200 | beginning of the course. What about credit card debt? Because of course, many people
00:15:07.640 | use credit cards and never accumulate credit card debt. They just simply pay the balance
00:15:11.840 | in full when it is due. Well, credit card debt is a very safe form of debt if you consider
00:15:17.800 | the actual fundamental attributes of the type of debt represented by credit card debt. First,
00:15:26.040 | most importantly, credit card debt is unsecured debt. This means that there is no specific
00:15:34.380 | collateral tied to the debt. It's unsecured debt. Other types of debt are indeed issued
00:15:42.440 | with direct collateral. For example, if you purchase a car using a car loan, the terms
00:15:50.880 | of the car loan that you agree to with the lender will indicate that the car is to serve
00:15:56.820 | as collateral for the financial loan. And in that debt agreement with the lender, they
00:16:05.120 | have the right, if you don't make your payments as agreed, they have the right to send the
00:16:10.240 | repo man to hook up the car in your driveway or in the parking lot at work and drag it
00:16:15.460 | back to them. And they don't have to go to a court or get a judge's approval or have
00:16:19.960 | any interaction with law enforcement. They don't have to notify you in any way. They
00:16:23.540 | just send the repo man and the car disappears. That's because the car is serving as collateral
00:16:29.600 | for the debt. Another example, of course, would be a mortgage. If you don't pay a home
00:16:37.040 | mortgage as agreed, the lender has the right to foreclose on you fairly quickly. And if
00:16:45.520 | they foreclose on your house, they can evict you forcibly from the house, repossess the
00:16:51.080 | house and sell it because the house serves as collateral for the debt. That's very
00:16:57.580 | different than credit card debt because credit card debt is issued with no direct collateral.
00:17:04.120 | It's a naked promise to pay. If you default on the debt, well, the items that you purchased
00:17:12.120 | with your credit card are not directly attachable by your creditor. They can't show up and
00:17:18.880 | because you swiped the card and used it to buy a backyard fire pit, they can't send
00:17:23.840 | the repo man in the middle of the night and take the backyard fire pit right out of your
00:17:27.520 | backyard. There is the opportunity at the end of a long line of legal dispute where
00:17:34.800 | they can come after you if they have a legal judgment and seek to take your property as
00:17:41.040 | settlement and payment for the money that you owe them. But that is not a direct relationship.
00:17:49.040 | If you are late on your credit card debt or if you don't pay your credit card debt,
00:17:54.560 | they can't automatically come and take the items that you purchased. This is a significant
00:18:01.560 | measure of safety that many people just simply ignore. If I were choosing to buy a car and
00:18:08.360 | I didn't have the cash to pay for it and I were offered the ability to either take
00:18:13.680 | out a five or $10,000 car loan or to take a five or $10,000 cash advance on a credit
00:18:22.080 | card, either way I could buy the car. But I personally would choose to take the five
00:18:28.320 | or $10,000 cash advance on a credit card because if I run into financial trouble and am unable
00:18:34.400 | to pay that debt in a timely manner, I have a much greater safety with the credit card
00:18:42.200 | debt because they can't send the repo man to take the car. So at least I will still
00:18:46.880 | be able to use the car to get to work to earn the money that I need to earn in order for
00:18:51.800 | me to be able to ultimately pay back the debt instead of all of a sudden finding myself
00:18:56.000 | in a difficult financial situation and now the repo man took my car so I can't get
00:19:00.600 | to work. Now the major caveat here as we will discuss is the potential risk and the potential
00:19:08.380 | higher interest cost of credit card debt versus car loans. But that's what this entire course
00:19:13.380 | is about because if you have good credit, you can purchase that car using a cash advance
00:19:19.400 | and pay a very, very low, almost 0% effective interest rate. Credit card debt, because it's
00:19:28.120 | unsecured debt, is very, very safe. Additionally, credit card debt is a type of debt that can
00:19:35.560 | generally be fully discharged in bankruptcy. Now the specific details of a bankruptcy court
00:19:42.480 | will depend on the specific situation of the debtor and the complex mix of assets and the
00:19:48.280 | type of bankruptcy protection being sought by the debtor. But of all the types of debt
00:19:53.200 | that you could have, mortgage debt, car debt, private loans, credit cards, credit card debt
00:19:58.000 | is some of the safest debt because it can generally be fully discharged in bankruptcy.
00:20:05.560 | One of the most infamous types of debt that cannot be discharged in federal bankruptcy
00:20:10.400 | court is student loan debt. If I owe $10,000 in student loans and I go through bankruptcy
00:20:18.000 | court, on the other side of bankruptcy court, I will continue to owe that $10,000 in student
00:20:23.120 | loans. So if I were personally choosing to go to school and I were choosing to borrow
00:20:32.160 | money to pay for my school expenses, I would rather put those school expenses on a credit
00:20:38.440 | card versus a student loan because the credit card debt, if I were in a worst case scenario
00:20:46.560 | and forced to declare bankruptcy, that credit card debt would be fully discharged in bankruptcy
00:20:52.640 | whereas the student loan debt would not be discharged. These are examples of why credit
00:20:59.920 | card debt is a very safe form of debt.
00:21:06.320 | The credit card default process is a very reasonable process when you actually look
00:21:12.900 | at the details and you are able to enjoy a significant amount of protection as a debtor
00:21:19.080 | in this process. First, if you default on your credit card debt, you won't immediately
00:21:24.600 | face legal problems. You will merely face significantly higher borrowing costs and a
00:21:32.040 | civil dispute with your credit card company, but you won't immediately face legal problems.
00:21:38.400 | You haven't broken any laws by being late on a credit card payment. You've simply
00:21:44.200 | broken the contract and now the credit card issuing company will respond by assessing
00:21:50.520 | penalties and fees. But it's important to be able to stay out of court and as we'll
00:21:56.640 | discuss in a moment, because the credit card process of settling that dispute is very long,
00:22:02.040 | you'll have ample time to be able to settle your problems with your lender while still
00:22:07.840 | being able to stay out of court.
00:22:11.160 | Credit card issuers are frequently reasonable and willing to reduce the penalties and fees
00:22:17.760 | they've levied upon you for being late on your debt and often they're even willing
00:22:22.680 | to settle that debt with you when you're able to make significant payments to them.
00:22:28.500 | So in a worst case scenario where you have defaulted on your debt, you can reasonably
00:22:34.280 | expect to work with those credit card issuers and settle the affair out of court. As you're
00:22:40.440 | able to put together the money and pay them what you owe, you can settle that out of court,
00:22:45.680 | which is helpful.
00:22:47.360 | And very importantly, given the nature of credit card debt collections, the pathway
00:22:53.600 | through a lawsuit and potential legal judgment is a very long pathway, which gives you ample
00:23:01.720 | time to generate the money that you need to repay your loans and settle with your creditors
00:23:08.480 | out of court, thus avoiding legal trouble.
00:23:13.080 | So the actual process of default, in addition to your having significant legal protections
00:23:18.120 | because it's unsecured debt, the actual normal process is very reasonable and it gives
00:23:24.920 | you the time that you need in a worst case scenario to put together the money and pay
00:23:31.040 | your creditors, thus being able to avoid legal problems. And along the way, you can continue
00:23:36.640 | to use the assets that you've purchased or the services that you've purchased with the
00:23:40.520 | credit card in order to help you stay out of court and to help you put the money together
00:23:48.680 | in order for you to be able to pay your debts.
00:23:53.120 | So the credit card debt itself is a very safe form of debt.
00:23:59.320 | That was the excerpt directly from the course. Now, please go to RadicalPersonalFinance.com/creditcardcourse.
00:24:07.600 | Sign up, buy the course. It's usually 39 bucks. Do it in the next week until October
00:24:11.600 | 15, 2018. Use the coupon code creditcard10. 10 is spelled out. T-E-N, creditcard10. Save
00:24:17.880 | 10 bucks, brings your total cost down to $29. Thank you.
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