The more you know, the better off you are. If you are going to have a tool box, you don’t want to put just one tool in it. The more tools in your toolbox, the better off you are going into pretty much any situation. Know what each tool does and what it’s good for.
I recently saved myself around $1,500 dollars on interest by using the tools in my tool box better. I found a way to avoid paying a lot of interest and I took it. It’s like gaining that much money for free. It’s even more than that because to pay that interest I would have to also pay taxes on the money I paid it with, which I don’t have to do now, so it’s actually more like getting $2,000 for free.
If you hear the word refinance, generally this is what they mean. Trading a higher interest debt for a lower interest one. What I did was a form of refinancing.
Be careful, though, because refinancing can mean other things too like getting a lower monthly payment. A lower monthly payment doesn’t necessarily help you. It often hurts you. You may pay fees to refinance and you may end up paying a lot more money over time by taking lower monthly payments.
Lower payments are good, but you need to most closely evaluate the total cost of the loan before and after when refinancing. The refinancing I mentioned above resulted both in lower payments and lower total amounts owed over the life of the loan.
Below is a list of a few powerful financial tools, you should strongly consider using all of these:
- Rewards Credit Cards and Balance Transfer Credit Cards
- Matched retirement contributions invested in index funds
- A Tool that lets you periodically evaluate your overall financial position
- High quality education that is free or low cost