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Credit card juggling?
Athenor
Battle Hardened OptimistThe Skies of HiigaraRegistered User regular
Battle Hardened OptimistThe Skies of HiigaraRegistered User regular
I've got my heart set on an ultrabook convertable, specifically the Thinkpad Yoga. Configured the way I want (to have native support for virtual machines, the memory options I want, and having a built in digitizer), I'm looking at $1800-2000. This is a little bit of a vanity purchase as I've never owned a laptop, but I really am tired of being chained to my tower AND I can make a very solid work usage case for this.
The problem is, naturally, that I don't have that kind of money. I've also got a decent amount of credit card debt already, although none of it is unmanageable. I also got approved for a $3000 line of credit to Best buy, but sadly they don't carry this model of laptop -- I was originally looking into a Surface Pro 2.
Now, I know all the arguments against buying this, and I'm not going into my specific budget. I will mention that I have 3 credit cards now - a Target store card with a $500 limit and a 22% APR, a Bank of America Visa with a $1000 limit and a 22% APR, and the Best Buy store card with a $3000 limit and a 20% APR if I don't pay it off fast enough.
I can probably pay $200-300 toward my debt every month if I push myself, and more if the stars align in the next month or two. So I'm not worried about paying off these debts long-term for the moment.
The question I have is.. I've heard of people swapping around their credit cards to take advantage of introductory APRs and the like. Is this viable for what I'm intending to use my money for? Alternatively, Lenovo offers a 6 month "bill me later" plan that is through Paypal, but I don't know if I would be approved for that so soon after getting the Best Buy store card.
So should I go for another 3k card or something and shift around my outstanding debt? Or would that slam my credit rating and the like?
The problem is, naturally, that I don't have that kind of money. I've also got a decent amount of credit card debt already, although none of it is unmanageable. I also got approved for a $3000 line of credit to Best buy, but sadly they don't carry this model of laptop -- I was originally looking into a Surface Pro 2.
Now, I know all the arguments against buying this, and I'm not going into my specific budget. I will mention that I have 3 credit cards now - a Target store card with a $500 limit and a 22% APR, a Bank of America Visa with a $1000 limit and a 22% APR, and the Best Buy store card with a $3000 limit and a 20% APR if I don't pay it off fast enough.
I can probably pay $200-300 toward my debt every month if I push myself, and more if the stars align in the next month or two. So I'm not worried about paying off these debts long-term for the moment.
The question I have is.. I've heard of people swapping around their credit cards to take advantage of introductory APRs and the like. Is this viable for what I'm intending to use my money for? Alternatively, Lenovo offers a 6 month "bill me later" plan that is through Paypal, but I don't know if I would be approved for that so soon after getting the Best Buy store card.
So should I go for another 3k card or something and shift around my outstanding debt? Or would that slam my credit rating and the like?
He/Him | "We who believe in freedom cannot rest." - Dr. Johnetta Cole, 7/22/2024
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Most "No interest for 6 months!" stuff has the clause that it's no interest if you pay it off in six months. If the seventh month hits and you owe them a penny you will now also owe them whatever the interest would have been.
If you're talking about transferring the cost partway through paying it off you're looking for "Balance Transfer" offers and they are rarely at very low rates.
Also whatever you do calculate what you're actually paying for the thing if you pay it off at 200 a month. Then look at that now much larger number and decided based on that.
Personally, I've never done the cc juggling thing, though I've known people who have. I suppose if you can do it and be sure to do it correctly it's not a bad idea. But, I'd be wary of going into more debt for a vanity purchase.
@Cauld: The model of Thinkpad Yoga I'm looking at has been out for 2 weeks and costs, at minimum, $1200. It's a good idea, don't get me wrong, but everyone seems to confuse the Ideapad Yoga with the Thinkpad Yoga.
Pay off your debt first, save up some money, and after the time it took to do that, buy the next model that you will undoubtedly desire. Say no to yourself now so that your finances are not ruined for future you.
To qualify for the rank of cards that give you a long enough 0% intro APR period to pay this off, you're looking at a minimum 690 FICO score according to Nerdwallet. I don't know your credit details, but this glimpse of your history suggests you might be below that.
If you can put away $200+/mo for a year, why not do that and just get the better one next year? At 22% on $1800, you'll save yourself almost 2 months of payments and get something better at the end of it.
Then get whoever is paying for your work to buy it?
The more I sit down and look at it, the more I think this is the wisest idea. But I am trying to figure out ways to pay off my debt faster in the process.
And getting my work to pay for a laptop is 100% off the table.
Edit: This thread likely is a case of me looking for someone to smack the sense into me, as I tend to talk myself into things and have way too many people willing to indulge around me. Rational thinking is winning out though, thankfully.
Paying off the minimum will wind up sucking an incredible amount of money out of your bank account, and increasing your debt will make things much harder on yourself.
Just keep chipping away at the current debt and get something newer when you can afford it.
I had fleeting thoughts of negotiating for the laptop if I get the new job.. but if I get the job at the pay level I'm hoping for, my paychecks should almost double and it would make paying off my debt really, REALLY easy.
Thanks, guys. I wish I was better at budgeting, but every now and then I need sense smacked into me. I just get lustful for certain toys.. like the new mustang that was announced.. *wistful sigh*
You talk about wanting a Mustang now, but if you made twice as much money, you'd just upgrade that Mustang to a BMW or (my personal preference) a Cadillac. If you made ten times as much money as that, you'd just get a Lambo or a Veyron or something else. It's never enough. There's no such thing as too much. It will never stop.
Some people take a defeatist attitude about this reality, but the truth is it can actually be a quite liberating epiphany. It makes you realize that rather than running on an endless treadmill, you can work towards other goals that will actually have a lasting impression on your well-being and the lives of those around you. Managing your own expectations about what you want vs. what you need and re-prioritizing what is important to you (experiences/people vs. stuff, actually being healthy vs. buying new fitness gadgets every month, etc. etc. etc.) go a long way towards that.
I know tons of people my age who have gotten completely sucked into the consumerist, keeping-up-with-the-Jonses lifestyle, and I know for a fact that all of them are miserable. Their day-to-day living consists of being constantly bombarded with the stress of knowing that they are barely able to get by, having the Sword of Damocles hanging over their every purchase (i.e., their numerous creditors), and yet still trying to feed the inner beast of more. Being worried if you have a major health bill coming up, or if you might possibly get fired due to the recession, or any one of a million things that just constantly builds on that roiling ball of stress and guilt and defeatism. It's almost surreal how much misery they inflict on themselves just because they want more "stuff".
Reward yourself for each goal. Don't make it too extravagant, but allow it to be sort of proportional to the achievement. If we're using food as the reward system it'd work like this: Pay off your debt; then treat yourself to your favorite home-cooked meal. Put a couple hundred bucks into a permanent savings account, go out to eat at a decent restaurant. Pass three months worth of expenses for a financial emergency, go to a nice restaurant.
Also, as I believe someone noted, balance transfers tend to have higher interest rates...even the exception of special introductory offers probably aren't for you as they are more geared towards people with high credit scores. A note on balance transfers that you may not expect - there tends to be a fee, sometimes around 5-10% of the total balance. This makes juggling debt a trap that ends up being far worse than you would originally expect.
According to the numbers you gave, if all three of your current cards are maxed out you can still have them paid off in a year to a year and a half. Pay off the balance on the higher interest cards first while making minimum payments on the others. I'd recommend being a bit more conservative and putting something like $100 / month into savings while putting the rest into your debt. Once your debt is paid down, you should be used to living without that $200-300 / month, so start socking that away in savings. Once you've built up a couple grand, take some of it - maybe half - and go buy yourself something nice.
Maybe even set shorter milestones - $50 here, $200 there, and a budget where you can see the amount you owe going down and the amount you save going up. Being able to see those numbers every month, and look ahead in your calendar to when that debt is gone is a huge motivator.
Using the 0% cards isn't always a bad idea, provided you are certain you can make the payments and meet the terms of the 0%. My wife and I frequently use those offers as interest free loans when making big ticket purchases, or use our Lowes card for the 5% discount, but we are careful, organized, and capable of doing it. If you aren't sure, don't take the chance.
My advice to anybody is never to carry debt you don't need to(mortgage, etc.) especially not credit cards. USE credit cards, but use them to your advantage. Use a credit card that gives you cash back and only spend as much on it as you can pay off monthly so you don't pay interest on the purchases.
Figuring out where you can trim the budget and get the current debt paid off is a good start. Then make sure you have necessary expenses covered and put the rest into your emergency/fun pool (or bust those into two savings piles). Then if a purchase comes up and you can afford it from your saved frivolity pool it won't be nearly as risky as the debt pit.
The best retail credit deals are ones that are 6-months same as cash. If you can't get one of those, then everything else is pretty much all the same.
we also talk about other random shit and clown upon each other
In personal finances, never buy luxury items you can't pay cash for, basically.
The only people I’ve known to possibly successfully juggle credit cards are people with really good credit. Over time they sign up for multiples of the exact same card to either receive introductory cash rewards or to get a 0% interest rate where they use the money to invest in GICs, cash them out before the time expires and pocket the interest. I say possibly because they only make a few hundred dollars a year doing this but are potentially making their credit worse for loans they actually need. Note they don't do this for making purchases they don't have the money for as eventually that house of cards comes crashing down.
Purchasing things on credit usually just leads to purchasing more things on credit and having to pay huge amounts of interest. It’s really a spiral that leads you ever deeper into debt as if you think things will make you happy (which they rarely do) and debt makes you unhappy its really easy to just keep on buying more things. Credit should only be used to help you. I use it because my card extends the warranty on my purchases, gives me cash back, provides me some protections and because of ease of use (Its easier than going to the bank for cash and allows me to have less bank transactions so I can keep a lower limit and invest the difference). Debt should only be used to provide you with an affordable place to live or as an investment that will make you more money (school, potentially a car if required for work, starting a business, etc.).
You have to be really careful with credit as you can screw yourself over for years pretty easily. I moved cities about two years ago to start a new job. It was expensive, stressful, very busy and exhausting. I paid for everything on credit because it was easier but due to my not paying enough attention to my limit versus expenditure with all the stuff going on I went slightly over my limit. My preauthorized payment for my new cell phone contract also didn’t work for some reason which I wasn’t aware of. I had the money to pay all this off right away but my lack of attention lead to my variable card interest rate going from the lowest available to the highest (8% higher I think) and it’s still like that 2 years later even though I now pay my card off in full every week and check my monthly activity to ensure that all my payments are going through. I thankfully can pay all my debts off every month but if I were to purchase a home this short lack in awareness may end up costing me tens of thousands of dollars.
You need to create a budget then. I have a note paid app in my phone where I record every purchase I make and then once a week put it all into a spreadsheet I have on my laptop at home and do a monthly networth and cashflow analysis of my cash, investments, pension and student loans so I can figure out my financial plan for the next few months. Even though with my current job I went from working poor to making a decent living and am a trained accountant before I started doing this I was spending all my money and had no idea where it was all going. I actually make more money now then when I started but spend way less, eat healthier and am way happier because I don't piss my money all away on frivolous purchases.
I've found two things help with large purchases. First, don't purchase anything over $100 dollars immediately, wait at least a few days. For purchases over $500 I personally try to wait at least a year which is probably why I haven't bought a new computer even though I've wanted one for 5 years, an iphone or an ipad (getting one soon). The second is to make any large purchase part of your saving plan, you shouldn't be going into commercial debt and if you can't save the money up for it you either don't need it or can't afford it.
My credit score is 670 last time I checked. The CCs I have are from when I was 22 and unemployed. They won't raise them because I've mostly been floating with them near maxed out, which I admit is a problem, but I've only been late 3 times in my nearly 10 years of having them. I am carrying a lot of financial loan debt, however.
The budgeting part usually hits me in the ass because I suck at budgeting for food and things like that.
Save up 75% and put the last 25% + tax on the card if you REALLY want it.
I'm not saying all this to be a dick, personal finance is one of the most important things in your life so I tend to be blunt when I post about it. I've made enough of my own mistakes to just sit around and not say anything when others are making them too.
I suck at budgeting for food too. It's the largest part of my budget that I have difficulty controlling but it would be worse if I didn't at least track it. Sucking at budgeting for food doesn't mean that you shouldn't budget, it's actually a pretty clear sign that you should.
I'm looking for this particular class of laptop because I perform wireless surveys and work in a lot of cramped conditions like server rooms and closets, and need something portable. I could get something passable for about half the price, but I am trying to future proof and develop an environment to allow me to create virtual labs.
I didn't outright say I wasn't getting it, only that I was going to be more responsible and wait.
My current debt:
$300/500 on a target card
$900/1000 on a BoA Visa
$500/3000 on a Best Buy CC (which will be paid off first because damnit Christmas)
$2000 on a personal loan for a car (fixed $80/mo payment, I can pay more at any time)
$30-40k in financial aid loans, paid off at a rate of $200/mo and based on my income of $31k
$70 in car/renter's insurance
$150 in payments to the people I'm living with/phone payments.
medical bills are creeping up, currently spending about $200-300/mo on them.. stupid insurance.
When I was renting an apartment it added $800/mo to my bills in various forms.
Then at the end of the month, plug everything you bought into excel. Categorize your purchases, and graph it out so you can better see where you're spending your money. Use this information to make any spending cuts and formulate a budget. Give yourself some set numbers you absolutely can't go over, and plan out rewards for yourself if you keep under your budget for the month. (Again, proportional to the amount saved.)
I know. My moment of weakness algae passed, but I figured it wouldn't hurt to refine the discussion.
The writing it down and paying in cash thing is basically the Dave Ramsey method. Now that I can get to ATMs again, I should give that a shot. I am trying to use Mint more, as well.
I hate to be that guy, but..
1. No you really don't.
2. Ultrabooks are a luxury.
3. Any computer costing anywhere near that much money is a luxury
4. When you are in your financial situation, any computer more than the bare minimum required to keep your paychecks rolling in is a luxury you shouldn't be concerned with. (And be honest here. You know as well as everyone in this thread that you don't NEED that computer for your work. Don't get into the habit of lying to yourself. It's a hard to turn around once you go down that road. )
Let's do some quick math. Suppose you and your more financially aware clone each walk down the street one day and find 2000 dollars lying on the ground. You go rush to the store and buy your new laptop. You now have a new computer, which does the same thing that your current computer does, but is a bit lighter, maybe a bit faster, and... that's about it. Your clone takes the money, immediately pays off the $1700 dollars in credit card debt.
Fast forward 6 months. You still have your laptop, and over the past 6 months have paid (assuming roughly 20% interest) over $1800 dollars in interest on the debt you chose not to pay off. Meanwhile, your clone has been pocketing that money and has just about paid off the car with it.
Fast forward to the 1 year mark. Your have your nice laptop, but the next years line is out and you are already out of date, and you still are plunking down 380 a month on that debt. Meanwhile, your clone now has no credit card debt, has their car completely paid off, and is sitting on somewhere in the neighborhood of $2000 in the event of a rainy day. Now your clone could go buy next years model of that laptop, and not only have a better laptop than you, but have no credit card debt and have the car paid off to boot. But your clone doesn't do that. He dumps the money in the bank and starts eyeing those student loans... because he's done the math we're] doing right here.
Seriously? Can we cut the crap here? I don't care where you work in "cramped conditions". I work in server rooms all the time for my job. There is no place you can work that will physically fit your body that will not fit any laptop on the market today. You even admit you could make do with one that costs half the price but you're too busy lusting after a more expensive one. Even worse, you clearly are doing your job just fine with the one you have now, so none of this should even enter your mind.
Sorry if I sound like an ass, but you need to hear it.