Be Brave Not Safe

There are a number of reasons why a young adult should acquire a (single) credit card:

• To begin establishing credit history (which will provide lower rates on loans and/or the ability to borrow at all, for a home, etc.)
• For “true” emergencies (i.e., my car broke down and I need to fix it so that I can get to work)
• To rent a car when traveling for business or pleasure (or if our car will be in the shop for an extended period of time)
• Etc.

For those considering dipping their toes into these waters, there are a number of factors to consider when determining which credit card / bank you will do business with.

Sharks (I mean credit card companies) have a number of teeth. Some, more than others.

For instance, a couple of teeth (I mean fees) to avoid related to credit cards include:

• Annual Fees – This is unnecessary, as there are no-fee credit cards available. Read carefully, as some will say (in small print) no annual fee for the first year. No, no, no – We don’t want an annual fee – ever! The reality is that, as much as the other benefits might be enticing, the annual fee (for year 2) will sneak up on us, and before we know it we’ve been bitten with the charge…
• Foreign Transaction Fees – If you travel outside the country (which is a LOT of fun) you’ll want to be able to use your credit card – without incurring extra fees. Many credit card companies add a fee to each transaction you make outside the country. If you do (or plan to do) any travel outside the country, you’ll want a card that doesn’t bite you with these…

Some benefits that credit card companies can provide, that you’ll want to look for / confirm, include:

• Cash Back – Receive a small % of cash back on purchases. In a prior post we covered how we can take advantage of shark tactics to earn “free money” via the disciplined use of a credit card assuming the complete payoff of the balance – EVERY MONTH. It actually feels good to be an “honest” shark 🙂
• Fraud Protection – If someone unlawfully uses your card (at some point, this WILL happen), most credit card companies will remove the transaction(s) from your balance. Make sure this is the case on the card / bank being considered.
• Auto Rental Liability Coverage
• Extended Warranties on purchases
• Etc.

Another feature that can be very enticing is the balance transfer option. That is, the ability to use your credit card to pay off other debt (i.e., loan, another credit card, etc.) for a lower (introductory period) interest rate. This “may” be a VERY good short term strategy to knock down the cost of debt. But, we MUST pay the balance off prior to the introductory rate expiring, or we will end up paying the extremely high percentage rate – outlined in the small print…

And, finally, an enticement that they may also include is 0% APR (no interest on outstanding balances) until a specific date in the not-to-distant future. To me, this doesn’t matter at all. Why? Because we are already paying off the balance EVERY SINGLE MONTH.

The shark tactics relate to the fact that the credit card companies are hoping that we’ll enjoy their card by buying some new clothes, shiny objects, taking a vacation, etc. Then, when it comes time to pay the bill, we will be unable to do so and they get to take their monthly bite (once the introductory period of 0% APR expires).

Don’t give the sharks the pleasure. Instead, bite back with the disciplined use of a cash back credit card 🙂

More to come!

Sharks come in all sizes, each with the objective of taking a proportionate bite (out of our cash).

The prior posts in this series covered what I would consider to be great whites. The topic of this post relates to a breed that takes much smaller bites, which, over time, can add up.

Here we go…

How many times have we signed up for a membership, with good intentions, only for the activity to fade away (we stop using the membership)?

First, I’ll say, if there is a membership that is key to our plan to achieve a goal, such as physical fitness, we need to discipline ourselves to use it (i.e., get our butts to the gym). And/or, find other means to achieve our goal (i.e., mine is mountain biking, since I hate being cooped up).

I digress…

The issue is that we sign up for memberships that we continue to pay for even though we aren’t reaping the full benefits. What if we could head this off at the front-end?

Since I can’t mountain bike (as much) in the winter, I’ve played racquetball to fill that void. The closest gym with a racquetball court offers an on-demand court rental fee. After a few visits (a number of years ago) I was visited by a shark who managed to convince me to become a member, doing some clever math suggesting that on a “per visit” basis I’d save tons of money over the course of the year.

The reality: The math worked in “their” favor. Especially, since I was a “seasonal” user at best…

Bottom-line: Unless we are absolutely committed to a long-term, consistent relationship (“at least” weekly visits over the course of a year) we may be better off avoiding these memberships.

Just to make sure we are covering the gamut on this…Other membership (or membership-like) programs that can take a similar bite out of our cash include:

• Massage / spa programs
• Lessons (music, languages, etc.)
• Associations

An option, in many cases, is to pay a per use fee and/or find another means to achieve the same objective.

That said, “if” entering into these long-term memberships is a catalyst to create discipline to get us to the gym (or whatever), then we should “just do it.” That is, get there, and make use of the investment 🙂

While it may not seem like much (let’s use $20 per month, to support our math illustration), the cost adds up over time.

• $20 x 12 (months) is $240
• $240 x 10 (years) is $2,400

This is a fine investment, when we are actually reaping the benefits. If, however, we aren’t making use of the membership there is only one course of action: kill it ASAP!

I know, I know…It is so easy to avoid that confrontational meeting and/or phone call to initiate the cancellation. Just think of our math illustration (above) and it will increase the pain level (create motivation), which will make it a much easier call 🙂

More to come!

Even though we have well-paying jobs we may wish to augment our income to step up the pace to achieve our financial goals more quickly than the daily grind might provide. If you are in that boat, good for you! That is the American Way!

You will soon find (if you haven’t already) that there are many “programs” available offering the promise of financial freedom.

These “programs” can include, but are not limited to, things such as:

• Multi Level Marketing
• Network Marketing
• Referral Marketing (these 3 are ALL the same)
• Real Estate Investment Training and Mentoring (by well known / mega-rich / real estate magnates)

You may proceed, but with extreme caution! These waters are chock full of sharks!

Yep, I’ve gone for a swim here too…All-in-all, I emerged “unscathed” — barely…

Would I do it again? NO! Am I glad that I did? Absolutely, YES, for two reasons:

1. I learned a lot (more like a TON) – Especially from my experience in network marketing
2. So that I can share my experiences to help others avoid the scars that can too easily be acquired

To be clear, I am NOT suggesting that these programs be avoided. In fact, if you read the post on my Boot Camp Experience, I’d consider that my time in network marketing served me quite well – as a solid business / entrepreneurial education! This resulted in dramatically accelerating my career (day job) as well as providing a foundation from which to launch my consulting business. All good!

However, we must be aware. These are NOT part-time endeavors, as much as the “pitch” would suggest. In order to succeed, they will require EVERY hour of EVERY day that you are not working your day job. This can be good, as it puts you through some SERIOUS training (which I happened to need, and am now reaping the rewards from).

And, you must be EXTREMELY careful, because where there is money (blood) flowing there are sharks!!!

For example…Some absolutely shocking advice my wife and I received was that you must give it all (your time, effort and money) to the business (read, your “up-line”) – to the point of personal bankruptcy. The stated reasoning: by doing so, you will be so desperate that you will do whatever it takes to make your (network marketing) business succeed.

If you’ve been reading this blog, you know that I’m all about DOING WHATEVER IT TAKES. But, not when it is STUPID!

Fortunately, when we heard this advice we gracefully left those shark infested waters and went along our way. My 10 +/- years in these marketing “programs” provided a significant education and I was able to exit without any permanent damage 🙂

Sadly, I cannot say the same for others…

There are other programs that will tantalize you with the promise of financial freedom, such as real estate investment training and mentoring offered by well-known / mega-millionaire / real estate magnates.

They draw you in as follows:

1. Get you to place your toe into the water – We will give you a free book authored by (well known / mega-millionaire / real estate magnate) if you simply attend this FREE seminar. Who doesn’t like free?
2. Seek the commitment of a limb – At the seminar they get the crowd all worked up in a frenzy with the potential of financial freedom and then float some bait: If you are TRULY serious about becoming financially independent you need to join our real estate investment program (a series of seminars to attend) — RIGHT NOW. A little blood (money) is drawn.
3. They go for the torso – Now that you’ve attended these 3 seminars (on 3 consecutive weekends) it is time for you to step things up by enrolling in our ongoing mentorship program and the monthly subscription to the necessary support system. At this point they aren’t just seeking a few thousand dollars. But, MUCH more!

It was at this point, when they were going for our torso, we decided to (again) gracefully exit these shark infested waters.

The experience made me think of a quote by Ralph Waldo Emerson, in which he acknowledges that there are those who would seek to inspire us (get us all worked up into a frenzy about some “program”), but cautions that we must be careful…

[Don’t] be warped by its attraction clean out of our own orbit

Ralph Waldo Emerson

That is, you have dreams, goals and plans. When you see something that looks amazingly attractive (maybe even a bit too good to be true) study it, before making a quick decision. Does it fit into or augment your plans? It actually “may” be worthwhile; or, it could turn out to be a shark attack!

In closing, I can honestly say that I am glad to have had these experiences (my wife isn’t so convinced 🙂 ), because I learned a GREAT deal.

Just be aware of the simple, step-by-step tactics that sharks will use to draw you into the water.

And, when (not if) a shark calls upon you, I hope this helps to give you an understanding of what you “may” be getting yourself in to.

If you choose to proceed, do so with caution.

More to come!