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2 Controversial Money Moves That Actually Make Sense | The 3-Minute Guide - YouTube
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Hi! I'm Erin from Broke Millennial for
The Financial Diet welcome to the 3
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Minute Guide brought to you by
Skillshare. It's easy for personal
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finance experts to say, "You should never
have credit card debt!" or "You should
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never spend more than you earn!" or any
other cliched trope of the genre. Problem
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is shit happens and there is lots of
shades of gray when it comes to your
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personal finances. Today I'm going to
overview two controversial money moves
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and when it might make sense for you to
employ them. Number one:
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Whether or not you actually have
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debt you've probably received a piece of
snail mail that says something along the
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lines of "0% APR for 18 months". These
deals are commonly known as a balance
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transfer. Aptly named because you
move the balance from one card to
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another. That might sound insane to you.
Why would you move your debt to another
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credit card and tempt fate like that by
opening a new credit card?
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Well that 0% interest rate could help
put a huge dent in your repayment plan
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if, and this is a big if, you don't screw
up. The average interest rate on a credit
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card is just shy of 17 percent according
to creditcards.com which is why it
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feels like it takes forever to get out
of debt but if you move the balance to a
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0% rate then every penny that you're
putting towards your debt is actually
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going to pay off the principal balance
which helps you get out of debt much
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faster. Even though the balance transfer
cards typically charge a fee of around
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three to four percent of the balance the
amount that you save paying off your
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debt at 0% makes the fee worth it. It
sounds like a miracle cure but of course
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it's not. You have to be very careful to
follow the rules in order to avoid
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losing the 0% promotional rate. You
always need to pay your bill on time.
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You usually have to roll over the balance
within 60 days of doing the balance
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transfer and remember if you don't pay
off the debt in full by the end of the
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promotional period then any remainder is
going to get charged the regular
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interest rate. You also shouldn't be
using this balance transfer card to make
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any purchases. Just focus on paying down
the debt. Before you do any of this be
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sure to carefully consider why you're in
credit card debt in the first place
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If opening a new credit card is going to
tempt you to spend more and create more
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debt then it's really not worth the ris.k
Controversial money move number two:
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Personal finance experts
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myself included harp on the importance
of contributing to your employer match
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401k. It's free money we say! While saving
for retirement and maximizing your
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employer contribution
are both important there are times when
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it just might not make sense to take
advantage of your employer-sponsored
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401k. For example, you can forego
contributing to an employer matched 401k
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if it's a crappy program and you know
you probably won't be at the company all
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that long. For instance, your employer
might not even start matching your
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contributions until you've been at the
company for one or two years or maybe
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the company has a cliff vesting schedule.
A vesting schedule is the amount of time
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it takes before you can leave the
company and take your employer
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contributions with you. A cliff vesting
schedule usually means that you can't
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take any of your employer match until
you've worked with a company for five years.
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Reminder you can always take your
contributions with you. To top it all off
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perhaps you looked at the investment
options and the fees and realize, "Meh, I
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can do better investing this money
myself instead of using this program.
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Besides I'm probably not going to be
here for two years let alone five". Don't
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use this as an excuse to forgo planning
for your future. If you take this tactic
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and don't contribute to an employer
sponsored 401k plan then consider
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investing for retirement by yourself
through an IRA. One move that's never
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controversial is investing in yourself
and improving your resume skills. You can
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learn to do this and many other skills
using classes on Skillshare which
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provides an easy and affordable way to
expand your talents. Every week we're
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featuring a different Skillshare class
we think you guys will love. This week's
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class is Excel For The Real World: Gain
the Basic Skills of Microsoft Excel
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hosted by Excel trainer and coda
evangelist Al Chen this class will help
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you learn to navigate your way through
all the necessary functions of the
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software, understand practical
applications, and gain the confidence to
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use it for your information needs. As
always though Skillshare offers a huge
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range of high-quality classes on
must-know topics from writing to fitness
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to business and it's all about what you
want to learn at an affordable annual
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subscription of less than ten dollars a
month and since Skillshare is sponsoring
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this video the first 500 people to use the
promo link in the description will get
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their first two months free to try it
out risk-free. Click the link in the
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description to check out this week's
featured class or any of the other
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classes Skillshare has to offer. Have a
money question you want to learn more
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about? Then leave your topic idea in the
comments section below
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I'm Erin from Broke Millennial for The
Financial Diet and don't forget to be
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here next Thursday for a new 3 Minute
Guide
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