2.5 years ago i went to a friend's (steve) house for thanksgiving. after the meal we went out to his back yard to make a fire in a rusted out 55-gallon drum they use as a firebarrel.
we didn't have any wood so steve brought out 3 bags of kitchen garbage (kleenex, food garbage, half empty aerosol cans, etc.). i volunteered to light the fire and _with no hesitation whatsoever_ i dumped about a gallon of gasoline into the barrel all over the trash bags. steve then goes to get matches out of the house. he asks how we're going to light it and i grab the matches and proceed to stand right next to the barrel and light a match. steve is smart enough to back away...
flick.. flick.. fliFWOOOOSSHHHH!!!! everything is instantly orange and
hot and i see kleenex and paper plates and various crap explode up in
the fireball that engulfs me and the drum. i am blown back a little
and stumble away. i notice my coat is on fire and pat out the flames
on my right sleeve.
steve: "HOLY SHIT!!!"
my face feels hot and i smell burning hair. i pat out my burning hair.
steve: "HOLY SHIT!!! look at your hair!"
i step back farther as the 55-gallon drum and all the grass in a 5-foot radius is still flaming.
me: "that was pretty dumb..."
steve: "i couldn't even see your SHOES!"
my glasses saved my eyebrows and eyelashes (and eyes) but i burned all the hair off my hands and front/top of my head. my coat and jeans protected me ok. i had a bad sunburn on my face and hands for a week.
i discovered last night that my one card that cuts 2% off any transfer will allow me to continue transfering $ to the account (like, it's not a one-time deal).
in this lesson we will cover maximizing the return from this 2% cut situation:
the main problem/annoyance with balance transfers is that the account being transfered to (account A) will put the balance you request into the account _immediately_ but the the account being transfered from (account B) won't receive a check from account/bank A for 4-8 weeks. so up til now we've only been about to revolve money through the 2% cut account once a month or so.
here's how to improve the situation. assume an account that cuts off a percentage of all transfers (say 2%) and a number of other accounts that have balances, and a number of accounts that give you VISA checks with no fees for using the checks (or, at least, small fees).
account A - cuts 2% off all balance transfers, account limit $3K.
account B,C,D,E,F... - various balances at 6%, most have VISA checks with no fees.
now, send balance transfer request for $3K from account B to account A. 2 days later, deposit $2940 into checking account from account C with VISA check. this check is approved and cleared immediately and the $2940 appears in checking. the next day, send a real check from checking account to account A for $2940.
account A will receive the transfer request and immediately charge you with $3K x .98 = $2940. they will queue up a check to account B for $3K but processing and sending this check will take a month. your real check will show up and clear the $2940 a few days later. account C now has a $2940 balance and account B will be receiving a check for $3000.
in about one week you have cut $60 from your debt at the cost of 2 stamps. AND account A is now empty and ready for another transfer.
do another transfer: send balance transfer request for $3K from account C to account A. 2 days later, deposit $2940 into checking account from account D with VISA check. this check is approved and cleared immediately and the $2940 appears in checking. the next day, send a real check from checking account to account A for $2940.
by the time account B actually receives the $3K check from account A, you've gone through ~3 transfers and can use B again as an account to transfer from (if there's still a balance after the $3K deposit) or as an account to write VISA checks against.
summary: with 1 account that cuts a percentage of transfers and at least 3 accounts with balances and VISA checks you can remove maxLimitAccountA * percentageCutRate every week to 10 days from your debt. for my experiment this works out to $60 per transfer or ~$200/month. wow!
possible problems: if account A realizes you have 3 checks to various accounts queued up while you repeatedly transfer and pay off account A, they may get pissed. i don't think this is illegal in any way but the multiple outbound checks may raise some flag in the computer. but it's likely there are two different departments in the bank handling account A. by funneling the payments to A through your real checking account you look a little better - you could just send the VISA checks directly to account A but that looks bad...
warning: keep track of all transfers! all this money will be in motion at all times. with $10,000+ floating in the ether of electronic transfers and US mail you need to know who has what money and where all the money is headed.
in our next lesson we will explore another aspect of debt management that i'm looking into. the premise is that you can significantly reduce debt by taking money from your paycheck/normal income and send it directly to the accounts with balances. i haven't fully researched this yet but i plan to soon.
PS. who needed the guns?