Very well written post. Many of the things you list and suggest I have actually been doing myself for years.
Many people can not grasp the simplicity of it all however. For instance, many people have no idea how to live life without credit cards and lines of
credit to make larger purchases such as cars. I live my life with a very very simple outlook. If I do not have the cash to buy it outright, then I
can not afford it. Would I like a new car?? Of course I would. Will I spend $45,000 for a new car? Absolutely not. What I have done, and made a profit
from, is I buy used cars. I usually find them for around $2500 which I can pay for in cash. I then spend some of my time fixing up these used cars and
making them nice. I once bought a 1993 Mazda MX6. I fixed it up, added a body kit, painted it, drove it for 2 years then turned around and sold it for
$15,000. In my opinion, that is much better than spending $45,000 only to watch the value drop the second I drive it off the car lot and never being
able to get back from it what I put into it.
Going back to credit cards... I have always kept 2 secured cards. Grand total between both cards in credit? $500.00 which I would only use in case of
Emergencies. I am currently preparing to close those secured card accounts now in favor of the new "Greendot card". For those who do not know, you can
buy these at Walmart, Walgreens, or Radio Shack. It is a prepaid credit card. For the cost of $105.00 I instantly have a $100.00 credit limit.
However, it is already paid for. Outside of the extra $5.00 I do not have to worry about interest rates, I do not have to worry about making payments.
I do not have to worry about being robbed by a credit card company.
Let us make no mistake about it, credit card companies are robbing us blind and we are willingly allowing them to do so. My last card had somewhere
around a 12% interest rate. I came upon a situation a year ago that I did not have the cash to get out of. I needed $1500.00. Someone offered to loan
me the money and 5% interest.
Now by law the person who offered the money to me would be called a "loan shark" and it is illegal because he is charging me interest to repay the
loan. He could go to jail. Yet the rate of this criminal "loan shark" was clearly better for me than to use the legal method at 12% interest. Now the
numbers can't lie..5% vs 12%... you tell me who is really the criminal and who is really the "loan shark"?
One thing I would like to add to your list is Auto Insurance. If your smart and able, buy a motorcycle and get out of paying outrageous rates for Auto
Insurance. I have always drove a car until last year. My cost for auto insurance was $150.00 per month. If I had no accidents, usually your rate
remains the same. Sometime it will still go up. I was shocked when I bought my motorcycle. Not only did I spend $10.00 every 2 weeks in gasoline
compared the $100.00 every 2 weeks for my car, the insurance (which I must have by law) only cost me $250.00 per year.
I think it is pointless for me to say, but I have not driven my car since I bought my motorcycle. It now sits parked in my driveway, uninsured, and
has not moved in a year.
edit on 2-6-2011 by MrWendal because: (no reason given)