Alexis Martin-Neely posted a radical article about debt management, and some drastic shifts in financial planning (see my post here).
Recently, she’s getting attacked because of this risky move. By her own admission, it’s risky and not for everyone. The reason why it’s such a bold concept is that you’re getting access to some cash, which, if you’re in desperate need of financial assistance, could spark a rebirth.
Again, re-read her concepts. If you’re already having a difficult time making payments, then it’s not a great option for you. The drawback to the plan, is that you’re still going to have to make at least your minimum monthly payments. However, the bonus is that you don’t run the risk of not getting approved for a bank loan, if you need some extra money.
I think there’s three key concepts to help this idea float:
- You must make your payments on-time each month, or you risk increased interest rates, late payments, etc. This requirement also implies you have a stable income, or you can create a stable income by your investment;
- You must have credit cards with a low-interest rate, or you’ll end up being behind on your "investment"; and finally,
- You must invest in something besides consumer goods (a business, your education, etc.), and the investment must be "tangible" in that it’s value will increase and it’s payoff will be measurable.
I don’t know why this is so novel or radical an idea. There’s a multitude of people who follow this type of plan in utilizing airline and other rewards programs. A large number of the people I know, and have consulted with, have followed similar methods to increase their personal wealth, and maximize their value. It’s not stupid or radical if you’re being money smart and making the credit work for you.
