In summary, please beware of the smooth talking advertisements for credit cards that you receive in the mail. There's a lot more to them than meets the eye. Remember, there's no free lunch from the banks. They're out to make money, and they have some very smart lawyers that know how to help the banks "earn" their profits. Always handle any credit cards and credit card applications with great care. Someone may be waiting for you to slip up and give them the chance they're looking for.
- Have you ever given any thought about how much money you can earn with a savings account? "What are you talking about", you say. "In today's market you can barely get 1 percent on your savings, most banks offer less than that." Would you be surprised if I were to tell you that the interest you can earn at your bank can be as high as 20 percent per year? Oh yes, and the best part of it is, it's tax free. Now that I have your attention, I'm going to tell you how that's done. it's very simple, and after you've read it, you'll say "I never thought of that!" OK, the way you do it is you save your money in the bank where you'll receive a pittance of interest. But the best part of it is this, when you go out to by that furniture, those clothes, that car, go out to dinner, etc. you'll save up to 20 percent on interest charges on your credit card. If you're patient and save for a car, you'll save thousands of dollars on interest charges. At today's prices for automobiles you'll easily save as much as 5 or 6 thousand dollars on interest charges. And...the amount of money you're now ahead is tax free!! You now have $6,000 more to your name than you would have had if you had not saved your money. Yes, the banks don't pay much, but who cares when you can actually earn $6,000 when you buy a new car? That's 'money in the bank' so to speak. Happy saving!!
- When you have decided to own your own home, built to your specifications, remember this true story. An acquaintance decided to have a house built according to the specifications agreed upon between himself, the architect, and the builder. He was advised to go to a contract attorney and have the attorney draw up a contract containing special penalty clauses in case the builder failed to ensure strict adherence to the agreed upon blueprints. He did not see an attorney, but entered into a contract drawn up by the builder. As a result, my acquaintance has suffered much stress and anxiety because the builder made dozens of errors in constructing the house, for months refused to correct the errors, and has overrun the promised delivery date by nearly a year at this time. Additionally, my acquaintance has spent many thousands of dollars for lawyer services attempting to force the builder to adhere to the original contract.
Therefore, before you go to see an architect and builder to build that dream house you've always wanted, find a knowledgeable contract attorney to draw up a contract for you with the appropriate penalty clauses included. Include a penalty clause for anything that can go wrong, late delivery date, sloppy carpentry, electrical, plumbing, carpeting, or tiling work. Obtain a guaranty that the lot where the house will be built on is free of environmental discrepancies, is not a filled in swamp or garbage disposal area that will settle after a few years and crack the masonry, walls and ceilings of your house. Consult with your attorney as to the amount to be re-imbursed for sloppy work or a requirement for making all necessary repairs by the builder or subcontractor to bring the work up to the standards agreed upon in the contract.
Doing this work up front may cost you a few dollars more but it will save you many dollars and many headaches and sleepless nights. The point is: keep the architect, builder, and subcontractor's honest and force them to accept responsibility for their actions.
- This is for those of you with single dependents for whom you have bought stock held in a custodian account with a corporation, specifically a corporation that has a stock program that allows you to buy stock directly from the corporation without going through a broker. If your minor or dependent child is one of the lucky ones whose stock has appreciated considerably you may want to consider selling some of the stock each year. The reason for this is that, as long as your child or dependent is a single dependent, he/she can receive TAX-Free unearned income up to $750 per year and receive earned income up to $4,550 without having to report it to the IRS. Unearned income includes taxable interest, ordinary dividends, and capital gain distributions. Earned income includes wages, tips, and taxable scholarship and fellowship grants. Gross income is the total of unearned and earned income.
So, say you receive about $400 a year on stock related dividends. The dependent still has $350 that has not been used. If you sell enough stock for the minor to realize the $350 in capital gains you'll have a non-taxable gain. Then, take your receipts and re-purchase the stock before the next dividend is declared to get that dividend. You'll have locked in the tax free capital gain and can continue to receive the dividends. The only drawback with doing this is that your dividend amount will be less since your stock base is now higher and you'll be able to buy fewer shares. You'll need to do an analysis to determine the difference between the amount of the capital gain and the dividend amount you'll lose. If the capital gain is higher than the amount of dividends lost, then you always want to sell the stock to capture the gain. Howver, also consider that when you are finally ready to sell the stock, your stock base will be a lot higher and there'll be less capital gain to report. Besides, who cares if the stock base is higher? You've already cashed in on it. Remember, the rich get richer only because either they know what they're doing, or because they have someone who knows what to do and tells them what they need to do.
- Most people have credit cards, and it's hard not to have any with all the cards being "pushed" on us on an almost daily basis. As you probably noticed, each bank tries to outdo the other with their promises of a low or even no introductory interest rates for the first six months, no annual fee, etc. It all sounds great, until you read the fine print, and let me advise you read the fine print.
- You'll find some amazing revelations, such as, the interest charged is based upon 2 billing cycles, not a 30 day but a 60 day average daily balance (First USA, I found, does that). That has the same effect as being charged 7.8% APR instead of the 3.9% APR they promised in their advertisement.
- Other credit cards may have a little clause in the agreement which provides that, although you now pay an interest rate of 7.9%, if you close the account before you have paid all the charges, guess what, the interest rate jumps to 24% for the unpaid balances (Fleet Bank).
- Something I learned in an FBI presentation--don't just throw those unsolicited credit card applications in the trash. Tear them up in small pieces. People specializing in fraudulent behavior pick those applications up out of the trash, change the address and send them in to the banks, they receive the cards and go on a spending spree. A word to the wise....