O% Credit Cards and Signature Loans

A few days ago, a friend came to me and explained a financial scenario that he was considering. He wanted to know if I thought the scenario was a good idea. Now, I'm no expert in all things financial, but I do have opinions and some knowledge in this area.

(I'm also known as a person who can squeeze a penny till Lincoln squeals, but that's another story.)

Anyway, this person, we'll call him Ron, said that he needed money to move, but didn't have any saved. He said that he had a plan to get the money and wanted my opinion of his plan.

Ron had been mailed one of those "0% APR for 6 months" credit card offers and thought that he would take out a signature (or personal) loan from a local finance company to pay for his move, then use the "0% APR for 6 months" credit card to pay off the signature loan.

The local finance company was charging 28% APR for a signature loan, but Ron figured he could pay it off as soon as he got the "0% APR for 6 months" credit card in the mail. His thinking was that he would end up paying no or very little interest on the whole deal.

He wanted to know if this would hurt his credit and if I thought it was a good idea. I didn't think it was a good idea.

Here's why:

1. My first thought was, "I don't think your credit card application will be approved once they run your credit history and find a new signature loan in your credit report." Signature loans are often considered "high risk loans" because of their high interest rates and high frequency of default (Top 7 Ways to Improve Your Credit Score-Play by the Rules).
2. Hard credit inquiries hurt (lower) your overall credit score and he was going to add two hard inquiries in less than a month (How Credit Scores are Calculated-Interest in obtaining new credit).
3. The Credit Card company may not offer a way to pay off the signature loan other than a Cash Advance, which may not be included in the 0% introductory offer. And, a cash advance may incur interest as high as 30% APR.
   
4. If Ron makes just one payment late, that 0% APR skyrockets to the Default interest rate, which can be much higher than the normal (non-default) APR.
   
5. Using a Credit Card to pay off a Signature Loan is a dangerous juggling act that will fall apart with one mis-step. If Ron takes out a Signature Loan first, then finds that he can't get the"0% APR for 6 months" credit card, he will be paying 28% in interest throughout the life of the loan.
   

I'm assuming that Ron needs a loan because either his take-home pay is not sufficient to enable him to save money, or he is managing his money very poorly (or both). In either case, I don't think that adding new debt to an already precarious financial situation will improve his money management skills.

So, lowering his credit score by adding two hard inquiries, taking a chance that one of the credit applications may be turned down, risking the possiblity of having to pay a cash advance rate on the credit card, and the risk of making a mistake or making one late payment, means that if one thing goes wrong, Ron will go from struggling to save money to drowning in debt.

In my opinion, the risks in this plan are just too high.

Make Your Own Gift Bag from recycled clothing

I am a big fan of recycling, re-using, and re-purposing clothes. It bugs me to throw out a shirt that has a small damaged or stained area, while it still contains good material. So, one of the ways I re-use shirts is to cut them up and make Gift Bags. Depending on how much "good" material you get from the shirt, you can make small, medium, or large Gift Bags.

Making a Gift Bag can be as simple as sewing three sides of a square (or rectangle), hemming the top, and using a ribbon to tie the bag closed.




Or, as elaborate as making mitered corners, a casing to hold the ribbon that will tie the bag, and a buttonhole opening for the ribbon.

You can even line the bags if you want to be fancy.



If you have a large flat-bottomed gift to wrap, you can add a bottom to the bag. If you want to add a bottom you will need four sides for the gift bag, rather than two.

• Measure the bottom of the gift
• Add 1/2" all around for the seams, and cut out your fabric bottom
• Cut and sew together the four sides of the bag, leaving 1/2" unsewn (seam allowance)
• Sew bottom piece to the (sewn) sides, using the 1/2" seam allowance
  

Make Your Own Cream of whatever Soup

This recipe makes the equivalent of 9 cans of soup, at a cost of pennies per recipe.

• 2 Cups powdered mild
• 3/4 Cup cornstarch
• 1/4 Cup instant Chicken bullion
• 2 TBS dried onion flakes, or minced onion
• 1 tsp basil
  
• 1/2 tsp pepper

Combine ingredients, stirring until distributed.

To substitute for 1 can of cream of whatever soup, combine 1/3 Cup dry mix with 1 + 1/4 Cups cold water. Heat and stir until it thickens. Then use as you would the canned soup.

When a recipe I'm making calls for a can of Cream of "Whatever" soup, I don't bother with the Whatever part. I just make the soup (above) and add it to my recipe. But , if you'd like to add the "Whatever" to your creamed soup, here are some suggestions:

Mushroom: add ½ cup finely chopped mushrooms.
Celery: add ½ cup minced celery.
Potato: add 1 cup cooked diced potatoes.
Chicken: add ½ cup cooked chicken.
Vegetable: add 3/4 cup cooked vegetables.
Broccoli: add 1 cup cooked chopped broccoli.

Make Your Own Taco Seasoning Mix

Taco Seasoning Mix
Two TBS (tablespoons) of this mix is equal to one envelope of store-bought Taco Seasoning.

• 1 tsp constarch
• 1 TBS minced onion
• 1 tsp onion powder
• 1 tsp garlic powder
• 2 tsp chili powder
• 1/4 tsp red pepper flakes (optional, only if you like it hot)
  
• 1/8 tsp cayenne pepper (optional, only if you like it hot)
  
• 1 TBS cumin
• 1 TBS paprika
• 1/2 tsp oregano
• 1 tsp salt

*Hint: I buy most of my spices at Big Lots, where I can get the Encore brand of spices for 50 cents (3.17 oz bottle).

Taco Meat
Use this recipe for Nachos, soft Tacos, etc. Cooked chicken slices/pieces can be substituted for ground beef.

• Brown or boil (boiling creates softer texture and is easier to drain off grease) 1 lb ground beef, drain
• Add 1/2 Cup water
• Add 2 TBS Taco Seasoning Mix, stir
• Simmer 5-10 mins
  

Cheap Side Dishes

Make your own Fried Rice
Stir and turn this recipe frequently while cooking

• Heat 2 TBS oil in a frying pan.
  
• Add tiny bits of leftover meat and vegetables.
  
• Add one raw egg, mixed for scrambling.
  
• Turn and stir frequently till egg pieces cook (approx 5 mins).
  
• Add soy sauce and heat through (approx 10 mins).

Pickled Veggies
These are a great snack or side dish, and kids love them. If your pickles are whole, slice them and add them back to the jar.

• When pickles are almost gone, save remaining pickles and juice for this recipe.
• Add to pickle jar: thinly sliced carrots, celery, onions, cabbage, etc.
• Allow to "soak" overnight.
  
• The longer it soaks, the stronger the flavor.

Microwaved Carrots and Onions
These vegetables come out sweet, tender, and moist. Not what you would expect from the microwave.

• Slice carrots and onions (the thinner they are, the quicker they cook)
• Add veggies to a glass baking pan (make sure it fits in your microwave)
• Add pats of margerine on top or in layers with veggies
• Cover and Microwave on High approx 6 minutes
• Stir, cover and cook 6 minutes longer

Tangy Green Beans
Italian dressing makes canned Green Beans flavorful and interesting. This recipe is good hot or cold.

• Drain 1 can Green Beans
• Add 1/2 Cup Italian Dressing (any brand)
• Heat (approx 10 mins on stove, or 3 minutes on Med. in Microwave)
  

Make Your Own Onion Soup Mix

Lipton Onion Soup Mix is a great seasoning to have in the pantry. But it can get expensive buying those little envelopes. Try this copycat recipe instead.

I use this recipe on roasts, baked chicken, crock pot stews, and soups. This stuff improves the flavor of just about anything you cook.

Onion Soup Mix

• 1/4 Cup dried minced onion
• 2 TBS instant beef bullion (or chicken bullion)
• 1/2 tsp opnion powder

Combine all ingredients. This makes the equivalent of 1 package soup mix. Just sprinkle on meat or add to soups or stews and cook as usual

*Hint: I buy most of my spices at Big Lots, where a 3.17 oz bottle of the Encore brand of spices is only 50 cents.

Make Your Own Ear Drops

I use these ear drops after a shower or taking a swim. Anytime I get water in my ears they seem to get infected or just ache. I've not had any ear infections or ear aches since I began using these drops about 2 years ago.

Swimmer's Ear Drops

• 1/3 rubbing ALCOHOL
• 1/3 white VINEGAR
• 1/3 WATER (boiled for 10 minutes, then cooled)

You can make any volume of these ear drops as long as you keep the ratio of 1/3 each (actually you can use full strength vinegar in your ears, but more alcohol may burn, so I use thirds).

I didn't list amounts of each ingredient to add, because it depends on the container you are using. I use an empty ear drop container, which holds about 1 teaspoon of each ingredient. You can use any container that has a lid, but you might want to buy a rubber-tipped eyedropper to dispense the drops.

Alcohol kills bacteria and drys the inside of the ear.
Vinegar kills bacteria and fungus.

Just use 1-3 drops in each ear after swimming or showering. Let it stay in each ear for at least one minute before letting it drain out. You can use these ear drops on your pets, too.

Make Your Own Egg McMuffin

This makes a great breakfast or lunch. Hey, you could have it for dinner too, if you like. A side dish of Applesauce goes well with the McMuffins.

Stock up on english muffins, eggs, breakfast sausage, and American cheese when it's on sale.

• Either fry 8 eggs (this works better if you cook them individually, or in a large frying pan to keep them from all running together) ...
  
• Or cook eggs like an omelette [crack 3 at a time and mix like you are going to scramble them; add them to a frying pan and allow it to fill the bottom of the pan; once the eggs are firm (don't stir them) use a spatula to cut into four pieces; turn them over for a few seconds to finish cooking]
  
• Slice the sausage while it is still frozen (it's easier to cut if frozen) and fry
  
• Split and Toast the muffins
  

Add an egg or omelette piece, slice of sausage, and slice of American cheese to a toasted muffin. Microwave for a second to melt the cheese, and serve.

You can make a batch of these, put them in freezer bags, and freeze them for individual breakfast sandwiches.

Microwave or bake at 350 for 15 min. to reheat.

Make Your Own Fabric Softener or Air Freshener

This is a cheap way to make fabric softener stretch. It's all I use anymore. An additional bonus is that you don't have to remember to catch the rinse cycle.
It can also be used as an Air or Fabric Freshener, like Fabreeze.

Fabric Softener Spray or Air Freshener

• 1 capful of fabric softener (any brand)
• Fill the rest of a 32 or 36 oz spray bottle with (boiled, then cooled) water.
  

Use 8-10 Sprays per load, or just spray the clothes that you know will wrinkle before putting them in the dryer.

This Spray can also be used as an air freshener or fabric freshener, like Fabreeze. Just spray into the air or directly on curtains or fabric covered furniture.

For a stronger scented Air Freshener, you can use 2 capful of softener (it doesn't work any better as a fabric softener with 2 capfuls).

Keeping up with the Jonses

Yesterday, I wrote How Big does your House need to be. There is another issue in that story that I didn't mention. That issue is Showing Off; more commonly known as Keeping up with the Joneses.

As I watched that episode of House Hunters, it dawned on me that the reason this couple wanted to move was not just because they had alot of "stuff," but also because they felt compelled to Show Off. This came clear to me as I answered the questions that kept running through my head.

What conclusions do you come to when you ask yourself these questions:

• Why would someone need a house with a formal dining room when they had an eat-in kitchen?
  
  
• Why would you need a formal living room when you have a family room or den?
  
  
• Why aren't members of a family "allowed" to use certain rooms in their houses?
  
  
• Why is it "bad" to have the TV as a focal point in a room?
  
  
• Why must we pay to heat and cool rooms that we aren't allowed to use unless company is in the house?
  
  
• Why do we spend the most money to furnish and decorate rooms that aren't meant for the people we love the most?
  
  
• Why do we feel that making an impression on a friend, co-worker, or relative is more important than our own immediate family?
  
  
• Have we bought so far into advertiser's propaganda that we now believe that our image truly is an indicator of our value?
  
  
• Have we really assimilated that message into our belief systems, and now accept that spending money to impress others is a quest that is worthy of our time, money, and limited energies?
  

The answer, for me, is easy.

I will not use any of my limited resources in an effort to impress anyone. My value lies, simply and automatically, in being alive.

How Big does your House need to be?

I was watching an episode of House Hunters on HGTV the other day. In that show, HGTV featured a couple who had 3700 square feet of space and were looking for another house because they needed more room.

"More room," I thought? "How can they need more than 3700 square feet of space?"

They had two small children, so they were a family of four. That means they need 3 bedrooms, right? Well, they needed four bedrooms. They wanted a guest room. No, maybe it was five. I think they wanted a separate home office, too.

Where does it end?

Obviously not there. They also wanted a "formal" dining room and living room. That means they need a separate "informal" eating space, and a den or family room so that they can actually sit somewhere and watch TV. God forbid they watch TV in the formal living room!

Oh, and I forgot to mention that one of the criteria for their new house was that it have a 4 car garage. They had a boat, a jet ski, and two cars.

OK, it was becoming clear to me. They needed more room because they had alot of stuff.

Now, obviously, it's not up to me to tell people how many "things" they should buy. If they have the money to buy and maintain boats and jet skis and cars, that's their choice.

But, when you think about it, you begin to see just how expensive these things become. Think about it - These people had to buy a bigger house because of their things. I would say that significantly increases the cost of these things.

How much are you willing to pay for a boat, and a jet ski, and two cars? Is an additional $50,000 for a bigger house with a 4-car garage too much? If we divide $50,000 by 4 we get $12,500 added to the cost and maintenance of each item.

I don't know how much this couple paid for their boat, jet ski, and two cars, but that extra $12,500 puts them in the way-too-high category, in my opinion.

This show illustrates a question that I think we all have to ask ourselves. How many "things" do we really need to buy?

When do we finally have enough?