One of our Cari$ Rules for Financial Freedom is to “Be debt free” because we believe real Financial Freedom is only achieved when you are debt free. Put another way, we recommend individuals treat debt with a healthy amount of respect (if not fear), eliminating it quickly, or avoiding it whenever possible. But if we look around, many people use debt freely, almost as if there were no consequences. In this, and a few related posts, we
The Rule of 78 is likely to appear in a couple of our posts, so we decided to do a separate post to explain it. There is a little math involved, but it’s very straightforward. The Rule of 78 (also known as the “sum of the digits”) is often used as the the basis for companies to earn interest on loans, calculate interest rebates, or even calculate car insurance refunds. Understanding how it works and
Hire Purchase (HP) is likely the most common way household items are purchased and financed and is sometimes regarded as an easy way for persons of lesser means to afford certain necessities (or luxuries). But HP transactions are not straightforward. For clarity, we are not suggesting this is a reason to avoid them. On the contrary, our objective is to identify the points you should be aware of, so you have no cause for later
A financial lifestyle choice that CariDollarsAndSense recommends is for everyone to always Be Uncomfortable With Debt. We also believe that true Financial Freedom is only achieved when we are debt free, which is one of our Cari$ Rules for Financial Freedom. Being in debt impacts our lives in so many important ways that we have dedicated several articles to the topic covering: Affordability: How Much is Enough Debt Part 1 and Part 2 Understanding interest rates: APR
This is a continuation of the posts Be Uncomfortable With Debt and Good Debt and Wealth Creation. In Be Uncomfortable With Debt we recommended that you should approach borrowing carefully and make an informed decision if new debt is right for you. A major factor in this decision would be the impact of new debt on your net worth: does it add or erode? In Good Debt and Wealth Creation we examined borrowing purposes that would
In the related post Be Uncomfortable With Debt, we promoted the idea that you should approach borrowing carefully, not casually. Treat debt with respect and agonize over having to borrow. When making an informed decision if new debt is right for you, a major consideration would be the impact of new debt on your net worth: does it add or erode? Generally, all debt erodes your net worth because of the associated interest cost. Interest is an
Hire Purchase (HP) transactions take place everyday for various consumer goods such as furniture, appliances, televisions, and even cars. Several retailers offer these items for sale and tempt you by offering you to “buy on terms”, or put another way, pay for the item with instalments over an agreed period of time (usually up to three years). It sounds pretty straightforward: bring a job letter, payslip, utility bill (or some variation of these requirements); sign
We all know the interest rate on a loan is the cost to borrow money. Although at CariDollarsAndSense we believe Financial Freedom is achieved more rapidly if you avoid most debt, if you must borrow, then try to get the lowest interest rate possible. Unfortunately, determining the lowest rate is often not straightforward. The purpose of this post is to help you understand the problems involved, so you can keep more of your money (pay less interest).