Posted by Adam Grossmann, January 2017
Spend on your credit card, while having your money reducing daily home loan interest? Sound about right? As with most finance sales pitches, you may hear a technical truth, but not the fundamental flaw.
Think about your lives outgoings. Various bills, cost cycles, investments, food, fun, transport, education, maintenance, medical, family, unplanned expenses and after all of this, the need for a holiday. From a single account with a single balance, how well do you keep all spending within budget?
Now consider a $450,000 loan @ 4% IR over 30 years. In the first year you pay $3.25 to reduce every $1 principal debt. Even after 10 years, you are still paying $2.27 for every $1. With sweeping credit cards, every dollar miss spent adds to principal debt, costing several times more future income to recover ground. It's a penalty you don't see, but can weigh you down heavily.
Financiers make money not only through direct interest, but by creating future liability through liquid structures. Without changing your accounts or the way you use them; Cashflow.coach manages money, avoids pitfalls, strips your cost of finance and tracks progress.
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