♪ California's top casino and entertainment destination is now your California to Vegas connection. Play at Yamaha Resort and Casino at San Manuel to earn points, rewards, and complimentary experiences for the iconic Palms Casino Resort in Las Vegas. ♪ Two destinations, one loyalty card. Visit yamaha.com/palms to discover more. Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less.

Today, we talk about credit cards. I didn't plan to do any more shows on credit cards for a while, but last Friday, I did a show on a credit card Q&A show. And in preparation for that show, I had written to my current students of my newest course called How to Borrow Money Safely and Never Pay Interest using credit cards.

I'd written to those students and I said, I'll answer all your questions, so call into the show. So I did the Q&A show, the call-in show. And after the show, I was looking at my email and I found several questions that I just missed. I don't know how I missed them.

I guess my email didn't download properly. Who knows, my fault. So I am today, I told my students I would do it. So today I'm following through and finishing another Q&A show. So I hope you've enjoyed these. It's been a great, I've enjoyed covering these topics. The things I haven't really seen addressed very much out in the world of personal finance and I hope you've enjoyed it.

I've had a lot of great feedback from people who have put some of these strategies into action and that's what I love. The most important thing to any teacher is to see a student actually doing something with what they have taught. Here's a tip to those of you who are younger and who are older.

The most powerful strategy, if you wanna be an effective student, the most powerful strategy for you to take as a student, be it in primary school, in secondary school, in upper university education, advanced education, is ask your teachers what their advice is, what they want you to do, and then do it.

And then go back to the teachers and tell them how you did what they told you to do. What they told you to do. Because almost nobody does that. But if you do that, you'll quickly become the teacher's pet. Just like that. I mean, it's a can't lose strategy.

If you actually do what your teachers recommend, you are such a weirdo, you'll be on their radar screen. Here's a part number two for those of us who are not students, or excuse me, those of us who are not formally enrolled in formal student teacher relationships necessarily. If you wanna bring yourself to the attention of an important business leader, a wealthy person, it's very simple.

One, ask for advice on something that's actually relevant and specific to you. That advice can be as simple as, what do you think I should do with my money in this circumstance? Or what do you think, what book do you think I should read? Or what do you think I should be studying right now?

Or what should I be paying attention to? I don't know. You ask for advice. One, ask for advice. Two, do what you're told. If you do what you're told, and then three, go back and tell the person that you did what they told you to do, you are such a weirdo, you will stand out on anybody's radar screen.

So tip for you. Back to credit cards. I love to hear people taking advice. Let me give you an example. On the most recent Friday Q&A show, sorry, the most recent Friday credit card Q&A show, which was the second one ago, I had a listener, a student of mine who called in, and this student was asking about if they should refinance a portion of their mortgage debt onto a credit card in order for them to be able to remove the PMI, the private mortgage insurance, from their mortgage payment.

Their calculation is if they were able to refinance that portion of their mortgage debt to get them down below that 80% loan-to-value ratio such that they could get rid of PMI, if they could refinance that over onto a credit card, it would save them about $1,500. Now, they were also working hard to pay off their credit card debt separately.

And so we talked through the different strategies and options, and I recommended, yeah, I think it's a good idea if you can do it. Well, here was the feedback. Listener wrote in and said, "Joshua, thank you for the Q&A. "I got approved for two cards in about five minutes.

"I increased my available credit by 50% "even after including the mortgage principal payment "to get rid of PMI. "I also found a better daily use card, "an Amex Blue, which gives me 6% back on groceries "and 3% on gas, up to $6,000 a year. "Thank you." Now, here's the cool thing about it.

Number one, that listener is saving money. They're saving money two ways. Number one, they are removing the PMI payment from their mortgage. That's gonna save them 1,500 bucks. Number two, although they didn't tell me all the details of it, number two, they're actually gonna be saving money on interest because I bet their effective interest on these credit cards is cheaper than what they're paying on their mortgage.

So they're saving a tiny little amount of interest. They're improving their safety and their security, and they're improving their credit score all at once. And when you put all of these things together, it's going to help them to get out of debt faster, to get their credit card paid off faster because they're spending less money.

So $1,500 not spent on private mortgage insurance is $1,500 that can be spent on lowering credit card balances. And so that's what I call a win, win, win, win, win, or win, win, win, win, win, win, win, or however many wins you want to insert. Which brings me to my first letter that I wanna talk about with you that's not specifically related to a question from a student first.

Listener writes in and says, "Joshua, been a listener for a few years now, and I've truly enjoyed your podcast and your ideas. Two things I'd like to share though. First, I'm a little disappointed in your recent class regarding the benefits of credit cards. I didn't purchase the class, so I haven't heard all of the material.

All of the points you made and the portions you shared on the podcast are legitimate. However, the last thing Americans need is a reason to use credit cards. There's more than enough debt in this country. I didn't realize it at the time, but when my wife and I carried credit card debt, it stressed me out and it stressed our marriage.

I have to go with Dave Ramsey on this one and argue that debt is generally not good for your health. I'm not angry, I'm just surprised that you took this angle and felt like I should give you that feedback." Now, this is a great letter, and I know that I have no problem with it.

I responded to my listener very clearly, and it's not a problem in the least, but I've received other communication. I know that there's a good chance that you've probably thought exactly the same thing. Just a couple of quick comments. Number one, I tried to be clear, and I try very hard to be clear, that there are people who should not take my credit card course.

And those are people who don't have a credit card, don't have credit card debt, and will never, ever, ever have a credit card or go into debt. Now, if that is you, you are not wrong, but you are very rare. I repeat, if you don't owe any money, you don't have a credit card, you will never borrow money in the future, you'll never get a credit card or any other form of debt, no matter what, you are not wrong, but you are very rare.

I encourage you, maintain your convictions. It's going to be very hard for you to get into trouble. I can design a few circumstances in which things will not work out as well for you as they might for other people, but I could also design other plans that would help you to avoid them.

For example, I was working with a client the other day, and we were talking about asset protection planning, and I was talking about equity stripping. And one of the valuable ways of doing asset protection planning is to remove equity from certain assets, especially assets that are not otherwise protected, in order to reduce their economic value or to reduce their attachableness by a creditor.

There are three overall basic asset protection strategies. One is exemption planning, two is asset titling, making sure that all your assets are titled on some form of protective entity, and then number three is equity stripping or encumbering an asset with debt. Now, that's a very useful tool in the hands of a good planner to say, "Hey, here's an asset that is exposed "to the claims of creditors.

"Let's encumber this asset with debt "so that if a creditor were to attack this asset, "there would be no equity for them to get. "And then let's take that equity "and let's move it over into another space." I was working on this the other day. And the point is, in this strategy, you can say, "I'm not gonna borrow money." But at the end of the day, if you're not going to strip that equity off the asset, you've got to use some other plan and some other approach.

And you can usually do that. So I commend to you that if you're not gonna borrow money, great, I support that. I encourage you in that, but you're very rare. Now, the next thing is to know this. Ignorance of how things work is not necessarily a virtue. For example, I recently, I shouldn't even, I should be a little circumspect about that.

Let me put it this way. I read things about things that I will never do, but I still wanna know about them. I still am interested in them. And I still feel like the strategies or the ideas are applicable. And so that's one of the things that I always hold to with education.

Ignorance is not, it's not a virtue. Just because I know how to screw my creditors out of debt, out of all the money they've lent me, doesn't mean I'm going to do that. But I also need to know how the systems work so I can be protected no matter the circumstance.

Because people who are ignorant are usually spit up, chewed up, and spat out to die in a financial system that preys upon them. One of the things I'm most hoping can happen from this newest course that I built is that you will take the information that you are learning and you will go and help that person who will never listen to me.

Most people will never listen to me, but you can go and you can help them. And you can help them to be on the defense because here's the reality. Most people bumble into credit card debt. They don't have a clue what they're doing and they get eaten up and destroyed because they don't know how to defend themselves.

Please let that not be you. Now let's answer some questions and here's some info for you. We begin with a question from from Mario. Mario writes in with a question. I'm going to simplify, he gives a lot of data. Hold with me, I'm gonna simplify the data for verbal audio math.

Mario's working with some clients who live in Florida and he's trying to help them. They owe a total of $7,200 of credit card debt across three cards with 11 1/4% interest, 24 1/4% interest, and 24 1/2% interest dividing with the different payments. They're making minimum payments, but maybe just a little bit more.

They also owe $16,000 on a car where they owe more money on the car than it is worth. They owe $16,000 on the car. They're paying a 7 1/2% interest rate, $306 a month. So they owe more money on the car than it is worth. They also have a mortgage on their house of $144,000 with a 3 1/4% interest rate and an equity loan on the house with a $60,000 balance and a 3 1/4% interest rate.

And they're earning about $6,000 per month. The challenge is that their expenses are the same as their income, so it's difficult for them to pay down the credit. And then Mario clarifies that this family owns, they own two cars. One is paid off and of course the other has the debt and it's carrying extra debt, an extra $2,000 from the car that is already paid off.

So his question is, are there any other credit cards or things that can help them to lower their interest so they can focus on paying faster and avoiding more interest on their credit cards while they're paying off their debt? So here is the answer for a household like this.

So for way of review, three credit cards, 7,200 on the credit card, $16,000 of debt on the car and a mortgage and an equity loan as well. Now the credit cards have the highest interest. They are at 11 1/4% and almost 25% interest. A total of about $4,500 of the debt is at 25% interest.

That is insane. And then the car of course has 7 1/2% interest. So here is what you need to do in a situation like this. The problem is they're earning as much as they're spending and because their expenses are the same as their income, they're not making progress. And that is a terrible place to be.

To feel like you're not making progress is brutal. There's an old kind of self-help success quote that success is the progressive realization of a worthy goal or that's the progressive realization of a worthy ideal. I think it's probably Orson Swett Marden or someone like that who initiated that. And I think that there's a lot of value in that, that success, the feelings of success are largely based upon the fact that you know you're making progress in a positive direction.

And so it's fine to be in debt if you feel like you're making progress in a positive direction towards that freedom. But if you're not making progress, it feels really brutal to be totally stuck. It feels really miserable to not make progress. So when you're in a situation like this and you're stuck, you've got to say, what can I do to get unstuck?

So what are some options? Well, you first need to analyze your income. Is there something that can happen or is likely to happen with my income that will help me to be unstuck? Am I on track for a promotion? Am I on track for a bonus? Are we expecting some kind of windfall?

Is there something that I can do to significantly increase my earnings? See, if you could just make a 20% change in earnings by working extra, taking an extra job. So instead of $6,000 per month, you're earning $7,200 per month. That's an extra $1,200 that is freed up towards these goals.

Now we only have $7,200 of credit card debt. So if we could increase earnings and go from and put that full $1,200 towards the debt, in six months, we could have the credit card debt knocked out that would save a huge amount of money and interest to have that gone in six months.

And then at that point in time, you can continue on the car payment, probably have that knocked out in another six months. So the first thing I would look at is to say, can I increase income? You have to increase income as much as possible. So can I increase income?

If you can increase income by working more hours at your current job, taking overtime, taking side work, figuring out how to some way to create more income that will help you get unstuck. And as long as you have a timeline as in, hey, we'll be unstuck out of this in six months, you can gut through and make progress.

Now, the second thing you can do is decrease expenses. Reality is you don't have to spend $6,000 per month. $6,000 per month is $72,000 per year, which is about $20,000 more, yeah, $20 to $25,000 more than the median household income. So you could moderate in a few areas. And some of the least painful moderation might be the cuts that don't result in big public changes.

You can cancel your TV. You can change your grocery buying habits. You can figure out how to save money. You can temporarily cut some expenses without any big public changes. If you could cut $1,000 off of your, well, let's just stick with the 20%. If you could make a 20% decrease in your expenses and drop down to $4,800 a month, which I'm so sure you could do.

If you could make a 20% decrease in expenses, we could all make a 20% decrease in expenses, unless you're living on $400 a month. You could all make a 20% decrease and drop you to $4,800 a month. Then that will free up an extra $1,200 a month to pay towards debt.

Now, the cool thing is this. Let's say you do both of those. You've now freed up $2,400 per month. You've increased your income by 20% and you've cut your expenses by 20%. Well, now in that situation, you've only got $7,200 of credit card debt. If you can apply $2,400 of that, then in three months, you're out of credit card debt.

And at $2,400 a month, a $16,000 car loan is paid off in six and a half months. So let's say it takes you three months to be out of credit card debt, and then it takes you an additional five months to have your car loan paid off. Well, now eight months from now, today is October.

So by June of next year, you're out of debt, except for your house. Now that's powerful. All it requires is a 20% increase in income and a 20% decrease in expenses. Now, perhaps in your situation, you can't do those relatively easy things of increasing your income or decreasing your expenses.

Perhaps you are caring for your frail and elderly parents and two disabled children. And most of your expenses are for medical equipment and medications for your frail and elderly parents and for your children. And you can't afford to hire caregivers, and so you can't afford to work more, and your job is the only one that works for you.

So now you can't increase income or decrease expenses. Well, what would you do then? The only solution here is to sell the car. You have to sell the car. Because the credit card payments are relatively negligible in terms of the total monthly amount. The interest stinks, but the monthly amount is not all that much.

Usually the way that credit card payments work is you will pay 1% of the balance plus your current month's interest charges. So assuming you're current on everything, one of your cards has a $2,600 balance. So we know that 1% of a $2,600 balance is going to be $26. And then we got to figure out what the interest payment will be.

Well, we would do $2,600. And on this one, the interest payment is 11.25%. So that's $292 per year, but we would drop that into monthly, divide it by 12, and that's $24. And so the payment on that card is going to be 1% of the balance, $26, plus $24 of interest in this month.

So that's going to be 50 bucks. And then the other cards, again, let's do one of the cards that has a $3,800 balance. So we know that 1% of the balance is going to be $38 for the principal balance. And this card, let's do $3,800, has a 20, let's call it 25% interest.

So 25% interest is $950 per year. Divide that out to monthly, it's $79 in a month for this month's interest, if you're paying that much interest. Now you add this all together and it's significant. It's not insignificant, but it's not the only thing. So what do you do? Well, you can work with the credit cards.

I would sell the car, because if you sell the car, you free up $300 a month. And there's cars just about everywhere. Now, you owe more money on the car than it's worth, you have to borrow more money, but I would personally try to sell the car and live on one, one car.

Many families could get by with a little bit of thought, a little bit of planning, many families could get by with one car and occasional Uber rides. Uber and Lyft and et cetera, these services are so inexpensive now that really using them occasionally for a can't miss meeting or a morning when we've got to go in opposite directions is very reasonable.

And if you could free up with one decision to sell the car and you can free up that $306 a month, that would be so valuable. Because with one decision, you can move massive amounts of money over to the credit card and getting rid of the credit card. And you can always buy another car.

Now, what car would I not sell? The only reason I wouldn't sell a car is if that car were somehow very important to your family, as in it's the only minivan that you have and you have four children. Or if you had done something like purchased that car new and it's well suited for you for the next 10 years.

It's not just some mediocre, normal car, you bought it used, you could replace it very easily. Rather, it was a brand new car, it was carefully selected, it was a good deal when you bought it. And if you just have it for a few more years, it'll serve you for another 10 years.

If the car is uniquely valuable, then okay, we'll work on another plan. But I think a lot of times, if you just sell the car and use the one car that you've got that's paid off and supplement it with an occasional Uber ride, my opinion, that's one of your easiest decisions to do, to free up your cashflow.

And then don't ever buy another car like that. The thing about a car is, for you to own a $16,000 car, you need to be earning $160,000 per year. So your car is already, I mean, it's not stupid, but that's the way I got there was with that 10% number.

Anyway, I would sell the car, but cars are easily replaced unless it were uniquely valuable, you bought it new, et cetera. Okay, fine. Now, to the credit cards, what do you do with the credit cards? Well, depending on the credit score, you wanna start by applying for as many new credit cards as you can.

There is no reason for you not to make new credit card applications. So you wanna apply for as many new credit cards as you can. And you want to refinance this debt as much as you possibly can. So the easiest credit cards to get are going to be credit cards that will offer you a 0% introductory period.

So you apply for a new 0% introductory credit card. And then you move all of your household spending that is possible over onto that card. And then you divert all of that excess income over onto your other credit card. I don't care whether you go with the lowest balance or the highest interest rate, just do whatever's gonna keep you focused and moving.

And your goal is to increase your available credit as much as possible so that you can refinance all of these cards. Now, if you can do a balanced transfer card and you get approved for a balanced transfer card, go ahead and move to that. The key is to get your total available credit as high as you possibly can and to keep your total debt owed as low as you possibly can.

And so there should be no reason. As long as you've paid previous credit cards consistently, there should be no reason to be paying interest rates of this high. Now, here's the key. I've just discussed four different ideas and strategies that can be applied. Strategy number one was increase income 20%.

Strategy number two, decrease expenses 20%. Strategy number three, sell the car. Strategy number four, focus on refinancing these credit cards to lower interest rates. And let me add some math to credit card number four, or strategy number four. Total interest payments right here, $2,600 at 11.25% is $292 per year.

We've got a $3,850, let's do it, $3,800 debt at 24. Let's call it 25% interest, $3,800 at 25% is $950 per year. And we've got a debt of $737 at 25% interest, which is $184 per year. If we add 184 plus 950 plus 292, we wind up with total annual payments of $1,426.

That is the annual interest on these cards if they're not being paid down. And currently, this person is just paying their minimum payments. That means on a monthly basis, we have $118 per month of interest on credit cards. If we can make these changes, you can move $118 off of the balance sheet, sorry, off of the income cashflow statement, off of the cashflow statement because of eliminating the credit card interest.

That saves $118, which can be put to principal repayment. If you can do that through refinancing, through 12-month and 18-month 0% offers, that will save a significant amount of money. That's $1,426 over the next 12 months that can be applied not towards credit card interest, but towards lower amounts, sorry, lower balances.

If you can get rid of the car, that's $306 per month of payment that can be gotten rid of. Now, if you can get to one car quickly, and if you owe more on the car than it's worth, then you'll need to take out an additional credit card or a personal loan.

If you can't borrow more money on credit cards, which you should be able to, especially if you're current, but if you can't borrow more money on credit cards and you take out a personal loan of some kind with somebody to have enough money to pay off, to sell the car, pay off the difference and pay off the debt, you can do that however you want.

But if you can get rid of that, that's $306 per month. And then if you can make a 20% increase in your income, that's $1,200 per month, and a 20% decrease in your expenses, that's $1,200 per month. Now, if you add all these together, we've got $1,200 times two, 2,400, plus $300 per month, plus $120 per month.

That is now $2,820 per month of difference. The power of getting out of debt is when you make a plan for $2,820 per month, instead of a plan of $50 per month, by doing all four of those things simultaneously. So fast forward, our total debt here was about $7,000 of credit card debt.

Well, if you can make over the next month or two, these changes, you can have the credit card debt paid off in two or three months. You would have the car debt eliminated as quickly as you can sell the car, as quickly as you can save the money or borrow the money and sell the car.

So let's call it six months to have all this stuff done. Now you've got $2,820 freed up. That's again, the $118 that you're not spending on credit card interest, the $306 a month that you're not spending on your car payment, and the $2,400 a month that comes from a 20% increase in income and a 20% decrease in expenses.

And you turn around and you apply that to the $60,000 home equity loan. And that is now paid off in (keyboard clicking) 21 months. Now at that point in time, you are debt-free except the primary mortgage on your house, which you're paying 3.25% on with $144,000 balance. It's probably fine to keep that and just to save money like crazy.

So now if you do all four of these things, a couple of months from now, you're out of credit card debt. A few months from now, you're out of credit card debt and car payment debt, depending on the order that you approach it. Less than two years from now, you have the home equity loan paid off.

And you have a rate of $2,800 per month of cash available, which if you start saving is $33,000 of cash in a year, which means one more year and you can go and buy the $30,000 car. Now along the way, you'll probably get another car and you'll adjust these things a little bit.

But the point is, if you put these strategies together, that's where the power is. And if you focus on aggressively putting these things into practice, increasing income, decreasing expenses, aggressively paying down debt, making these big lifestyle moves, you'll save a lot of money, get out of debt pretty quickly.

Now another student of mine writes in and says, "Joshua, I purchased and listened to the course first." Thank you, it's great information. "I'd like to do the live call-in tomorrow, "but I have to work." So here's my situation. My credit score is about 608. I have 99% on-time payment, 65% utilization, 12 years length of credit.

I have a total of six credit cards with a total line of credit of $14,950, total debt of $9,979, with an APR between 12.5% and 29.99%. I have a plan to have the credit card debts paid off by July, but I wanna confirm if I'm on the right path, as well as ask questions regarding student loans, both old and new.

I have older student loans that I had from my associate's degree completed in 2004. I had to put it into deferment for 10 years due to a horrible financial situation with my now ex-husband. We filed bankruptcy in 2009, and I have been rebuilding my credit ever since. I began making payments on the student loan four years ago.

I have been working on finding a better job for the past year or so, and discovered that while my work experience is fairly extensive, prospective employers won't look at me without the bachelor's degree. So this July, I finally made the decision to go back to school to get my degree, business project management degree.

Since I'm now enrolled, I put my existing loans and auto debits into deferment. I'm taking advantage of this by using the funds that were allocated to those payments and putting them toward paying off my credit cards. I'm on target to have the credit cards paid off by July. The question, once that's done, what do you recommend regarding those new student loans that I'm amassing with my current school?

$2,400 per quarter. I estimate completing my degree by May of 2020, and my existing old student loans, a scary amount of $38,000 at 7%. I'm actively seeking a better paying job and not waiting until I finish my degree, but I have my expenses reduced to be within my current income.

Per your course, I will also be applying for additional credit cards to improve my utilization ratio. Thank you in advance for whatever guidance you can offer me. Now, in this particular situation, I don't see any major changes other than what is already done. Well, the first thing is, you have to cut those interest rates down.

You have to seek to refinance those credit cards actively and aggressively. If you have credit card debt, you should always be continually seeking to refinance them. And that's a constant, ongoing, incremental method of improvement. If you focus on this every couple of months, you apply for new cards, every few months, you see what else you can do, you can make incremental improvements, and incremental improvements matter.

For example, you currently owe about $10,000. You may get approved for a new credit card of $1,000 this month. Well, move $1,000 over from 30% interest to 0% interest, and then use that freed up cashflow to pay down the other balances. And then as your credit score goes up, you then again, do it again.

So it's an ongoing process where you may do $1,000 this month, another two or three months from now, maybe another $4,000 you can get. And to the point where six months from now, you can have cut your total debt from $10,000 to $6,000, and that all that $6,000 is at 0%.

And that is a big savings when it gets to interest cost. So 10%, sorry, $10,000 at, let's say an average of 22% interest here, is $2,200 per year, or $183 per month. So the value is if you understand how the refinancing game works, and if you can remove those interest payments, that's an extra $183 per month that you can apply towards paying off the credit card debt.

So what about the student loans? I wouldn't make any changes with the student loans at this point in time. They're in deferment while you are in school. And so I would keep them in deferment until you have the credit cards paid off. What I would do is actively and diligently increase your total available credit, and actively and diligently increase the amount of money that's available to you on credit cards, so that if, when you get out of school, and you get yourself into a position of where you're working consistently, and your income is high, et cetera, that if you want to refinance them from student loans onto credit cards then, then you have that option.

I don't think this is a super high priority. And the thing that you have to be careful here is the numbers are gonna be tough. The ratio of the total amount of student loans as compared to your current borrowing ability is out of whack. So you currently owe $38,000, and that's at 7% interest, and you're accumulating a new quarterly amount of debt, of $2,400, and if you're estimating completing your degree by May of 2020, let's call that with now in 2018, let's call that, let's call it seven quarters.

So we're talking about $2,400 times seven of another $17,000 of student loan debt. When you add that $17,000 on top of the $38,000 that you already have, this is a significant amount of student loan debt, that's $55,000. So for you to be able to successfully and effectively refinance this debt, you would have to massively improve your available credit over onto credit cards.

And I would be very careful, and I would not, it seems very dangerous to me to try to do huge chunks of that, because if you were to get yourself in a mess, and you weren't able to float that debt using the 0% credit card game, you could have very problematic situations.

If you were to go from 0% to, and you're unable to refinance it 'cause you owe too much, onto 12, 15, or 30% debts, that would be very, very problematic. So what would I do? I would focus on keeping those student loans in deferment so that I can not pay those.

So I would keep those in deferment. I would pay off the credit cards as quickly as I can under your current plan. And then I would stop borrowing more money on student loans in order to minimize the total exposure to student loans. And I would just pay cash for school expenses.

That's important to do to make sure that you're doing a good job of managing your actual expenses. One of the big dangers of debt of any kind, credit cards, student loans, it can easily facilitate excessive borrowing. Credit cards are the most dangerous with regard to excessive borrowing, but student loans are also dangerous because instead of bargaining with the school for a lower tuition payment, instead of choosing a cheaper school, instead of moving from this college to the other college, 'cause you can cut your costs down to $1,000 per quarter instead of $2,400 per quarter, there's a tendency to just to borrow more money on this idea that, well, in the future, I'll have more income because I'll have this degree.

Well, here's what's better. So if it's good to have student loans and a higher income in the future, here's what's better, to have a higher income and no student loans. Because then instead of spending the first few years after your degree, using all that excess money to pay for the schooling, only then to finally get a little cash in your pocket, you can have no debt and have all that cash in your pocket.

So I would work on paying some cash down as time goes on. The only distinction to that would be if you don't have any cash currently, I would marshal cash. Now, if you decide to refinance some of your debts over from student loans over to credit cards, I would be very careful and I would only do that only in small chunks.

So maybe if you wind up owing $55,000, maybe you do this in chunks of $7,000 at a time. So you refinance 7,000 bucks over to a credit card, use that 0% while you're accumulating the cash to pay it down. Once that's paid off, you do it again. The student loans are valuable because they are stable, they're at fixed interest rates, and you can put them back into deferment if you needed to.

If you faced a financial crisis, you could put them back into deferment. So the power is when you understand the risks of the credit card game and the risks of the student loans, and then you use them together. And I would do it in chunks at that point in time.

Last question for today's Q&A call comes in from another student, Joshua, he writes in, "Joshua, I just purchased your credit card program "for my personal growth, "and I hope to help my small three-member staff "with the information too. "Maybe we can change lives together. "I'd like to call in tomorrow to discuss "how I use credit cards for my small business.

"We spend two to $4 million per year "on inventory through credit cards, "and there have been some real ups and downs along the way. "Twice we have had to close an account "and make a payment plan with a carrier. "We currently are in a better place "and enjoy paying the card off several times a month.

"I hope to hear your thoughts on some good practices "for a small company to maintain the growth of inventory "by spending while not burying ourselves in debt." Thank you. This situation is one that some people have access to, and it's a powerful opportunity for you to consider. So number one, you must, must make sure that you never, ever again in your life are ever even a moment late paying your monthly payment.

You must never have a day when you're a moment late paying your monthly payment. So use the instructions in the course to establish the infrastructure that makes sure that you're never late, because you must have the best possible credit score. You have, with this much spending, legitimate spending, you have huge options to use credit cards in a powerful way for your own benefits.

But you've got to make sure you don't screw it up by messing up your credit score. Now, here is what's cool. There are very few untaxed fringe benefits available in today's world. But one of the best ones is credit card points. And in your case, you should use what I have taught you, what I have to teach you, but you should also go out and make sure that you become an absolute expert at the points game.

And by points, I mean, the practice of applying for, applying for credit cards in order to take advantage of mileage bonuses and mileage offers. Where when you go and you take out the new credit card and they give you 40,000 miles, if you have, you know, a few thousand dollars of spending on the card within a certain period.

The biggest problem that people face in that world is figuring out how to get enough spending on their credit card in order to make those minimum payments. Sorry, in order to make those minimum spend requirements. Because many people struggle, if they require, they apply for a new card that gives them 50,000 airline miles.

And they apply for a new card and they have to spend $6,000 within the first two months. Many people struggle to do that. There are, in my opinion, two basic reasons why people struggle to get the spending necessary first. If you're committed to frugality, then minimizing expenses is gonna be a better move for you than getting bonus points.

Just if you're just talking about household spending. You know, many families could cut their expenses significantly by a couple thousand bucks per month if they wanted to, to save money and build wealth. But then that makes you feel like, well, I'm not maximizing the bonus points. So first, is frugality is always your first step.

The second thing is it's hard for many families to get the payments onto a credit card for their big expenses. It's one thing to put your groceries and gas on a credit card, but come on, groceries and gas is a thousand bucks, 1,500 bucks for many families. Meanwhile, the big expenses, as in mortgage payments and car payments, those are hard to get onto a credit card.

It's possible sometimes, but hard to do. And if you do, you wind up paying extra fees through using some of the intermediaries which will take a credit card payment and send out the money. So it's hard to get those expenses there. But if you've got two to $4 million per year and your vendors will take credit cards for that inventory, and you can do that, I mean, this is a golden opportunity.

You should be accumulating millions of miles per year and huge numbers of cell phone points because, sorry, hotel points, which are the easiest to get. Yes, you can consider the cash back, et cetera, but you should be accumulating miles and hotel points. Now, what's cool about miles and hotel points is the benefit of them is not taxed to you.

And this applies if you are an employee and you're working for a company and you're getting airline miles and hotel points, even though it's your business's card. And if you own the business yourself, this is wonderful because you can take deductions on the debt if you had to even, even if you owed interest and you took your business interest deduction.

But even if not, you're still being able to deduct all the cost of the inventory as your cost of goods sold. And then you get these extra tax-free fringe benefits. There is no reason, if you have this kind of business, there is no reason that you and your family should not be taking multiple exotic vacations per year with first-class airfare around the world, first-class five-star hotel stays.

You should also be doing this for your staff. With two to $4 million of spending, you have plenty of available spending to accumulate huge amounts of airline miles and hotel stays for them that you can transfer to their account so that they can go and take advantage of these stays so that they can go on exotic vacations as part of the fringe benefit of working there.

That's wonderful because it doesn't cost you a dime out of your pocket. It's not taxable income to them. And it's a very valuable fringe benefit that they and their families will really enjoy and it'll increase your employee loyalty. And then, you know, if you still have more left over after you've taken care of your employees and your own family, you can use these for your own goodwill within your extended family.

You can use these airline miles for others. I would probably be cautious. You could sell them to family members at a discounted rate, but what I would probably do is just keep it all with non-financial transactions. Gift the miles to their accounts, let them book tickets using your frequent flyer accounts for their family vacations and hotel stays, gift them to them, but I would not, and then let them, you know, reimburse you in some other way that's not a financial transaction.

Let it just be a gift and get your benefit in other ways. You have a golden opportunity here. When you can put millions of dollars per year of spending onto credit cards, you owe it to yourself, your family, your staff, to become a master of the mileage game and of the hotel stays game.

There are plenty of good teachers who will help you. There are plenty of good courses and membership sites where they get you the best deals, get on Flyertalk, get on all the forums, make sure that you know what you're doing, because the fact that you have a business where you can buy inventory and such with this is, well, it's truly wonderful.

So I think you've got a huge opportunity. Just make sure that you keep your credit score high, make sure that you think about what you're doing, make sure that you manage the business, that you're not spending excess money, not buying excess inventory, but look forward, one of the fringe benefits of your business, look forward to many years of first-class airfare and exotic hotel stays, thanks to your vendor's willingness to accept credit cards for payments instead of checks.

Now, I guess the last point I think would be appropriate. Always see if you can negotiate a cash discount. I think that it's well within many vendors' interest to negotiate a cash discount, because they're paying the processing fees. So don't forget about also minimizing your leverage. If you can cut, let's say, half a million dollars of your inventory costs go and are paid in cash instead of with credit cards, and that lowers your expenses by five, you can negotiate a 5% cash discount on that half a million bucks, that's $25,000.

So if that $25,000 should basically be pure profit, 'cause we're saving a pure expense, that $25,000 should put some extra profit in your pocket and then make up the miles with the other million and a half of spending, make up the hotel stays with the other million and a half of spending.

So don't forget about the nuts and bolts of always making sure that you're spending the lowest amount of money, paying the lowest cost, et cetera, even though you are getting those benefits. I don't think even as valuable as the airline miles and the hotel game can be, you still don't wanna pay very much for it.

And I think if you can negotiate cash discounts, that'll always be a better move. And it's good for you to practice doing that. So go for it and I hope that the course serves you. Thank you all so much for listening. I hope that you've enjoyed this Q&A. If you haven't purchased the credit card course yet, I'd encourage you to do it.

Go to radicalpersonalfinance.com/creditcardcourse. 39 bucks is the cost. Again, radicalpersonalfinance.com/creditcardcourse. You will save potentially hundreds or thousands of dollars and also set yourself up very, very well. And credit cards, if you know this stuff, let me give you one more example, actually two more comments that I need to add.

Forgive me, I didn't have these on my outline. One, last week I neglect or in a previous Q&A, I took a question from a listener who was talking about closing credit cards to avoid annual fees. And I had a couple of listeners that wrote in with some suggestions on that.

So if you have a credit card with a company, and especially this happens if you're playing the mileage game, you've applied for a Premier card and they'll waive the annual fee for the first year and give you a 30, 40, 50, $60,000 mileage bonus for taking out the card.

But then the next year you're looking at a $300 annual fee. If you close that card, the problem is you'll lose that available credit. That lowers your overall credit, that increases your utilization ratio, that'll lower your credit score, that'll shorten up the length of your credit history. So if you keep that card open, it'll improve everything.

There's no reason to close it except for that $300 annual fee. Well, many, what listeners told me, and I didn't even think to cover it, but if you call a credit card company, you can often call them and either A, they may give you another promo year on the fee, or they'll downgrade you to another one of their credit cards that doesn't have an annual fee.

So you keep the account open, you keep the history going, you keep the positive reporting of all those things to the credit bureaus, but you are able to do so without paying that annual fee. So if you have annual fees, check on that. Now, here's what's cool about having excess or larger amounts of debt.

One of the questions that I received from a student in the course, they had a rental property and they had a partner in the rental property and their partner wanted to cash out of the rental property. And so this particular student had in excess of six figures of available credit, they were gonna put about $75,000 of debt onto the credit card so that they could cash out their partner from the property.

Now, that is an example of a good use of credit cards, because as long as you have other cash and a significant credit score and a significant available credit, so you don't run the risk of the credit cards cutting you off, lowering your credit limits, I gave them some specific advice of how to minimize those risks, they're substantial, but you can do things like using an unsecured debt like a credit card to cash out a partner out of a property, you wind up being able to give the partner the money that they need, you keep the property, the property is unencumbered by a secured loan and you're able to borrow the money at low rates, unsecured debt, there's so many cool things available for you.

So that's just an example of how students are applying the concepts. If you're getting out of debt, I can help you get it faster. If you think in the future, you might ever borrow money, we can do it safer. Safer and cheaper is the goal. So go to radicalpersonalfinance.com/creditcardcourse, sign up to buy the course, I think you'll be glad you did.

Try it free for 30, I mean, sorry, not try free, try it for 30 days. If you review the content, take you about four hours to watch all the videos, listen to all the audio. If you don't like it, you don't think it was worth the money, just ask for a refund, no big deal.

Thank you for listening and I'll be back with you very soon. - With Kroger brand products from Ralph's, you can make all your favorite things this holiday season, because Kroger brand's proven quality products come at exceptionally low prices. And with a money back quality guarantee, every dish is sure to be a favorite.

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