Fri 29 Sep 2006
Cheap money is a Goldmine
Posted by RichSlick under Easy money
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I periodically read various blogs out there to see what’s on people’s minds. I like reading comments and questions people post on a blog. Lately, I’ve been reading a great deal of how debt (all kinds) is bad.
I’ve read articles on how credit card debt is bad….
I’ve read articles on how student loan debt is bad…..
I’ve read articles on how mortgage loan debt is bad….
I’ve read articles on how debt is a bad…bad…thing…
I generally refrain from advising people with “xyz solution” because there are simply too many variables to consider (age, marital status, health, financial goals & objectives, children, housing preferences, educational skills/level, etc) to offer any kind of specific advice but I will offer this piece of advice to everyone:
CHEAP MONEY IS A GOLDMINE OPPORTUNITY!
I wont’ give you specific advice and I’m not telling you to go get a mortgage, student loan and credit cards but I will tell you how I’ve taken advantage of cheap money.
I’ve written about credit card arbitrage earning me $1200 over an 8 month period.
I’ve written about using a 3.25% Interest Only ARM to pocket $14k over a 3 year period.
I’ve advised my wife to borrow as much student loans as possible her last year of school because the rates were so low (3%) and the interest can be written off on fed taxes!!
In all instances above, debt was never a “bad” thing. I could even argue that all this “bad debt” helped improve my FICO score because it showed responsible repayment of all borrowed money. Higher FICO score mean lower rates (see 3.25% loan rate above).
In my opinion, one of the key ingredients to building a wealthy portfolio is obtaining, using and leveraging (preferably someone else’s) cheap money.











September 29th, 2006 at 8:22 am
I completely agree with your statement.I borrowed cheap money from my HELOC to start swingtrading stocks.I earned over 30% on my efforts in one year.The experience I gained by attempting this,”priceless”.
February 25th, 2007 at 6:31 pm
I agree. When I started college the school I went to gave me a lot of free money that I didnt have to pay back along with option for loans. Of course logical to me loans were bad so I was about to say no.
My cousin who was overheard me discuss this quickly told me how stupid I would be if I rejected those loans.
I took out the maximum I could with loans. I am graduating this June and can pay all the loans back in one check, but I chose to use it to buy a car
3% interest, and i get to deduct the interest come tax time, can it get any better.
February 27th, 2007 at 6:23 pm
Nice, Jake…..very nice.