Credit Card Debt
If you’ve recently starting reading, you may have some concerns about my high levels of credit card debt. I’m actually taking money from 0% APR balance transfer offers and instead of spending it, I am placing it in high yield savings accounts that actually earn me 5% interest or more, and keeping the difference as profit! 
Along with other deals that I write about, this helps me earn extra side income of thousands of dollars a year. Recently I put together a series of step-by-step posts on how I do this. Please check it out first if you have any questions. This is why, although I have the ability to pay the balances off, I choose not to.
Cash Savings, Home Purchase
We’re still in the process of buying a home. There will be big drops on the cash column soon as we finally spend our down payment funds as well as pay for things like closing costs and home improvements for our home.
$5,000 was put towards the earnest deposit, and I just marked it as spent. But I will have to decide on how to account for my home value in my net worth. I’m leaning towards just keeping it simple and taking option #2, but that may be considered a cop-out if my home value drops.
Retirement and Brokerage accounts
For the third month in a row, our investments overall have dropped in value by 2-3%. Good thing I only check in once a month. I gloomily predict that things will get significantly worse before they get better… but I don’t actually risk my money on guesses. I continue to “stay the course” and keep making regular investments into my asset allocation.
New Midterm Goals?
Although I still want to visit Brazil, Australia, and Southeast Asia, it looks like we’ll probably be spending the next 6 months instead installing hardwood floors, remodeling bathrooms, and jackhammering some concrete. I don’t know if we’ll have the time or money to visit any other place besides the wonderful world of Home Depot. We’ll have to see.
You can see our previous net worth updates here.
The Best Credit Card Bonus Offers – October 2024
Big List of Free Stocks from Brokerage Apps
Best Interest Rates on Cash - October 2024
Free Credit Scores x 3 + Free Credit Monitoring
Best No Fee 0% APR Balance Transfer Offers
Little-Known Cellular Data Plans That Can Save Big Money
How To Haggle Your Cable or Direct TV Bill
Big List of Free Consumer Data Reports (Credit, Rent, Work)
For tracking home value I’ve started just doing this:
Least Amount I’d Sell At – Mortgage Loan = Home Equity
It’s not as accurate as Option #1 but it’s less of a “cop out” than Option #2 and in the end a house is only worth what someone is willing to pay for it so why not take the reverse of that and say it’s worth what you’d let it go for.
With interest rates in free fall, it seems to me that the credit card arbitrage deal is losing its appeal. Nobody is offering 5% yileds any more..
Take pictures of your remodel? I want to see what you do! 🙂
Just what Divideandgrowth said – you might want to update your AOR pitch – the days of five percent are gone 🙁
Divideandgrowth/ Dima, I believe the 5% will be coming back soon, as soon as this summer.
Dividendgrowth and Dima – You’re right, it is getting more difficult, but the deals are still out there. Countrywide’s offering 4.9% on six month CD’s…not quite 5, but darn close.
I just did a rehab last year. My figures so $58,000 in improvements
and $20000 for “soft” costs (cc, landscaping, utilities, interest, taxes, etc.). $40/sq. ft. spent on just the improvements since I coordinated subs myself.
Upgrade to 200 AMP service; new upscale kitchen,with SS appliances/granite, built new master bathroom (cut from lv), new roof, new windows, new water heater, crown molding added throughout.
We spent 7 months working on these improvements. Yard work/ag meter expensive due to .6 acre lot an sprinkler system but fun project overall. 1031 exchange so had to rent it. Great fun. Good luck with your remodeling. Let us know the progress.
Good thing you didn’t invest in stocks……. I’ve lost more than $10,000 in the past month. SOUR Apple kills!
I would be hesitant in chasing a high-yield at countrywide. Even though BOA agreed to buy them, they can always revoke their offer for pennies on the dollar if they smell more trouble ahead or if BOA is in trouble itself.
As far as accounting for your net worth I’d be as conservative as possible on your valuation (After all I’m an accountant). So I’d go with the lowest valuation possible that you get from option #1 or #2.
After reading this blog for about a month, I went for the Citi Rebate card with 0% interest for 12 months and no transfer fee. They sent me a check and I paid off my house, which was at 8%, financed in ’95. I was already putting every extra penny I had in to paying it off early, and would have done it by the end of this year. Now I can just sit back and make my 0% interest payments and stick the rest in savings until the balance is due. Although I couldn’t put the check in savings this time, I feel like I came out smelling like a rose! Thanks to all for the great comments!
Great way to track your finances.
A question:
How does it affect your credit (not just the main credit score, but other ratings/evaluations) if you have several accounts open/close every 12 months versus one (or more) credit cards open for a long time?
Just found your blog!
I like your conservative approach. That’s the way it should be!
Anyway, ChowMunga for now.
With interest rates in free fall AND THE COMMONPLACE 3% FEE, arbitrage has lost much of its shine. I’m surprised you’re at $23k. I’m moving to the next step: fishing for the best offers on lines I already have. I’ve already noticed CapOne is experimenting with terms. (2% fee for 12 mo, 3% fee for 18mo, never capped). Regrettably, all these terms suck. Give me a “capped fee” on my $30k line and we’ll talk.
How about 30k with no transfer fee at all :), that’s what i got, can’t beat that
I just took a 30k 0% from Citi last week. There was a 3% service fee, but it was capped at a$75 maximum, so I ended up getting $29,925. Not a bad deal when you put it in a 4.9 % CD.
Jonathan, for tracking your home in your net worth, I have tried Option #1, and the problem is, it’s too tedious to check Zillow every month. If you only check your portfolios once a month, I would update your home value/equity only once a quarter…the dial doesn’t change that much, especially when you never know how much you could really sell it for.
Don’t worry about getting the remodeling done too quickly. As long as it’s livable, the house isn’t going to fall apart because you don’t do it and you’ve got years to get it done. Have some fun instead, really.
Oh, and I hope you’re just kidding about Home Depot, since their prices are usually FAR from the best!
I like your new midterm goal. I hadn’t visited in a while, so I am just now noticing it. Also, given your increases every month it looks like you should probably adjust your long-term goal to an age much earlier than 45.