Tuesday, April 19, 2016

ATTACKING CREDIT TO FREE UP CASH FOR INVESTING

Although I've always read, you're better off to pay down debt before investing, because the money you save on servicing high interest debt is likely to be more than you'll earn from investments, I've always found it more appealing to buy income producing assets than paying bills.  However, while reviewing my finances of late, I've taken more interest in reducing debt, in order to free up cash for bigger investments.

I'm ashamed to admit, I had no idea exactly how much each of my 5 revolving charge accounts are charging me in interest.  So that was the first thing I looked up.  While I don't have the money to pay them off immediately, I can target the higher interest accounts with bigger payments to reduce balances and save on interest charges.  I also discovered what a strong incentive knowing your interest charges are to get you to stop or at least slow down charging.  Although I love Amazon and my Discover card, I'm afraid they're the big losers as far as interest rates.  Amazon is my favorite place to shop, but my charge account with Amazon has an interest rate in the nose bleed section.  So I won't be ordering anything from Amazon for quite some time, unless I'm paying cash.  Discover is not far behind Amazon with the high interest rate.  I recently emailed them about reducing my rate since I've been a very good customer for several years now.  Apparently they've not joined the internet age because they told me they couldn't address that type of request through email, even though it was on their secure website.  I have to admit, I was a bit miffed about that.  After all, they can send me endless emails about everything else and I was using their website, so what's the problem???

Anyway, not picking on Amazon or Discover in particular.  If I didn't really like them, I wouldn't have accounts with them.  I'm going to keep my accounts.  Just won't be using them until my balances are paid off or I get a good reduction in interest rates.  As for the other 3 charge accounts, I cancelled one because of their annual fee.  I don't pay anyone else an annual fee, so I'm not going to pay one to them.  My Paypal charge I haven't been using anyway, so it's no big deal to not use it and the balance is decreasing nicely.  Capital One, my longest held credit card has the best rate of all my open accounts, so if I have to charge, it will be with Capital One, but I'm going to work on getting that balance paid off as well.

Paying off the balances on all my revolving charge accounts would free up $500 per month!  An extra $500 per month which I can then put to work building my dividend stock portfolio.  This doesn't even include the astronomical amount I'll save on interest by paying off debt.  I'm excited to put my debt payment plan into action!


1 comment:

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