Using Money As Leverage.

Here’s a lesson on using your money as leverage.  What could be better than paying only $1100 total for vacationing?  How about never using your own money to do so.  For my 26th birthday, I booked a trip to Los Angeles, CA for 4 days , 4 nights, hotel and rental car included.  The total came to about $1100 which I charged to a credit card for the cashback feature.  The problem with credit cards is that  you run the risk of interest compounding on a monthly basis which could one day grow past your initial balance charged ($1100).  So what should you do?  This is why I advocate building a healthy savings account because saving gives you power and options.  Even if you have it, no one is eager to kick out $1100 cash for a leisure expense.  If possible, why not divide that large lump-sum  payment over a period of  defined months so that a large sum of cash remains in your bank account  for a necessity expense i.e Rent, Car, Insurance etc . In other words create your own vacation repayment plan.  This is exactly what I did.  I took out a $1500 secured CD loan. This CD (Certificate of Deposit) loan  secures $1500 of your own money for an agreed upon term (24-36 months) to be held as collateral by the bank while giving you immediate access to the money the bank is loaning.  Many banks have them, I used Beneficial Bank, no credit pulls and you’ll leave out with what you went there for.  What’s the benefit? As opposed to the credit card, the interest accrued is fixed.  Meaning no surprises or compounding interest/ penalty fees as time goes on.   So How did I only pay $71?

Lets Peep the Resourceful moves.

1. I took advantage of the cashback feature of the credit card.

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2. I Capitalized on a fixed , low interest rate of a Personal CD Loan (Only 4.5%) .
3. With this loan, I was able to immediately pay off the trip from my cashback credit card, Distribute $1500 worth of debt over 24 months=  for a $67  monthly payment, and at the end of the loan, I’ll still have my $1500 CD. A CD that’s also earning interest as it’s held by the bank.
4. At the end of the entire story, I will have paid $71 in fixed interest over two years for my $1100 trip.  Total the trip will have cost me $1171. Keep in mind, I got a $1500 loan which instantly gave me an extra $400 to put toward whatever I wanted.
5. Couple the fact that I received an extra $400 with the fact that I will be getting back my $1500 CD in full… with interest at the loan’s maturity, and then ask yourself the question… Did I ever really pay for the trip at all?

On top of all of these these benefits, Good credit, Bad Credit, No Credit…the secured loan reports to the credit bureau monthly which is simultaneously building your credit.  By using this method, you are allowed to spend $1500 immediately with the assurance of seeing the savings again.. once the CD matures. Utilizing the financial tools right in front of you is vital to building your wealth. The only person that stands in the way of you using them is yourself. With moves like these, Where could you lose? For more free and valuable info Like The InvestorSmith on FB to follow posts!