Financial freedom: Don’t let debt bring you down!

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Financial freedom: Don’t let debt bring you down!

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Freeze Your Credit 

Identity theft is rampant and you are at risk.  The most common form of identity theft is where someone applies for credit in your name (e.g. store credit, credit cards, etc.)  You can stop this from happening with 15 minutes of effort and between $0 and $30.  Just freeze your credit with each of the 3 credit bureaus.  Each credit bureau will give you a PIN number that you can use to temporarily unfreeze your credit when you wish to apply for a loan or need a credit score pulled.  Works much like an ATM pin.  Do it now! 

Read more: How to freeze your credit

Credit Cards as First Payment Option  

Credit cards offer the best consumer protections of any payment type including a maximum liability of $50 for consumer cards (business cards are different).  If you can’t get a credit card use a check card if necessary (but only if you get to swipe it and it never leaves your site because if someone steals from your check card the money is already gone from your account).  Avoid using cash so that Mint.com can automatically categorize your spending for you.  Also, get a credit card that gives you the best rewards by checking out Credit Card TuneUp.  Obviously, ONLY use this advice if you have the self-discipline to pay off your credit cards EVERY month (no exceptions).  My old primary credit card was Delta Skymiles Amex (when I was a frequent flier), but I now use a 2% unlimited cash-back credit card to get the most out of my purchasing.

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REFINANCE YOUR MORTGAGE!  

You will likely never see rates this low again in your lifetime.  And try to get a 15 or 10 year mortgage because the rates will be lower and you will pay less interest on your house over time.  If you can’t afford the house on a 15 year mortgage at 3-4% then you cannot afford that house anyway.  AVOID PMI (private mortgage insurance) by paying 20% down or doing an 80-10-10.

Disposable Credit Card Numbers

Get a credit card that offers disposable temporary credit card numbers that can be authorized for a single purchase.  Great for paying a merchant you do not trust or a merchant that might try to continue billing you monthly for something you wanted one time.  Amex used to offer this called Private Payments.  Call your credit card companies to see if any offer it.  If not, get one that does.

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Avoid Debt (some debt is worse than others)

  • Exceptions for mortgages, education, and possibly your very first car (future cars should be purchased pre-owned with cash whenever possible)
  • Especially avoid revolving debt like credit cards
  • Worst possible debt is payday loans and title loans (ridiculous interest rates!)
  • AVOID taking out private student loans.  Their lobbyists have written laws that are truly outrageous that make them incredibly toxic.  Stafford loans and PLUS loans are the way to go.

AVOID Credit Monitoring 

Complete waste of money (e.g. LifeLock).  Use credit freeze instead (see above). 

Read more: Credit freeze is the real answer to the LifeLock question

More advice from Matt Quinlan:

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