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Why Debt Balance Transfers Don’t Work

[Music] foreign brought to you by the every dollar app start budgeting for free today today's question comes from Andrew in Minnesota what are your thoughts on balance transfer credit cards I have three credit card debts I'm paying off in baby step two and the interest rates are really high would it be wise to transfer it to a zero percent interest rate card while I am paying them off the life hack of the balance transfer to the zero percent card how many have built their wealth Dave no I'm not a fan of these balance transfer cards and one of many reasons is that it doesn't solve the root problem you going into debt another reason is the three to five percent they charge you just to do this which means if you transfer 10 grand you're paying an extra 500 bucks for the pleasure of continuing to be in debt with the zero percent offer that will soon run out while you're still in debt and then we're back to square one so while I'm paying off debt can mean a lot of things while I'm paying off debt over 10 or 15 years which means you're not really paying off debt or while I'm paying off debt for one year because I'm gazelle intense and sold everything but the kids and they're worried you know I mean that's that's two different things of while I'm paying off debt so um while I'm paying off debt over 10 years which means I'm not really doing it then I'm moving with George don't bother because you're just kidding yourself that you actually did something interest rates aren't your problem the guy in your mirror is your problem you need to quit spending like you're freaking in Congress if you're instead doing the other way and you're like gazelle intense you're paying it off in one year then what you're saving is 18 of your balance or 26 percent of your balance minus whatever transfer fees there are and so you would save some money but let's just kind of talk this through for a second let's say let's say net of fees transfer that you saved I'll make up a number let's say it was a 20 and a five percent fee so net of 15.

You save 15 okay if you save 15 off for one year on twenty thousand dollars while you're paying it off well you're not really saving it on twenty thousand because during that year you will have reduced it within six months down to ten thousand so your average is not twenty thousand your average is about ten thousand that you're saving the interest on does that make sense okay this done math nerd here okay so 15 of ten thousand dollar savings is fifteen hundred dollars on a twenty thousand dollar balance so is it worth it to save fifteen hundred dollars on a twenty thousand dollar balance in one year yes but to George's Point does it solve your problem no you have a twenty thousand dollar problem you don't hit it with a fifteen hundred dollar tool you hit it with a twenty thousand dollar tool which is you you be working you butt off that's the tool yeah okay and you be living on beans and rice rice and beans and don't talk to me about you deserve to go out to eat you'll be a broke person in credit card debt you don't get to go out to eat broke people don't do that crap that's the other piece is you have to actually change your habits you can't just go up I switched to the zero percent we're good now I can keep living my life how I was living and the problem is what I'm trying to point out is the problem is when you make this massive intellectual calorie burning move right to make this transfer and I'm beating the muscle genius ah I've got the billion dollar credit card industry on its back punching it in the nose no you don't okay they are punching you in the nose this is why we're having this discussion so you're not gonna whip their butt you they're the 800 pound gorilla you might take a little chunk out a 1500 chunk out but don't think that that solves the problem it's okay to do it as long as you know that 95 of the problem still stands there and 95 of the solution still stands there and that be you to your point yeah so do the transfer if you want but don't act like don't strut around act like you did something and don't get comfortable because now with zero percent you're going well it's fine it's not gonna don't act and don't act like you can do this odd infinitum because that's what they're praying for that they can keep haggling you hassling you and punching you in the face and it's time for you to uh just say you know what I don't like the rules of this game I refuse to play anymore I'm taking my toys and going home you know I'm going I'm getting away from you people you I'm gonna put up a boundary you're talking this is a toxic relationship absolutely so what reminds me Dave I just uh we uploaded this YouTube video on my channel and reacting to this woman who said hey velocity banking hack I paid off my mortgage years early by maxing out my credit cards and writing a check to myself and then switching to the zero percent cards one after another and all of you should do this hack to pay off your mortgage early it's genius and so I broke it down on why velocity banking is a scam but it reminded me of this conversation about these balance transfers so they renamed stupidity velocity you have to give it a cool name to keep it hip because then you know infinite banking you've talked about that I thought velocity means statement speed that's the anointment stupidity yes but stupidity banking No One's Gonna no they wouldn't sign up for that no oh so we had to give it a different name infinite banking Velocity Bank oh it's it's stupid fast do stupid fast quickly fast do do stupid quickly uh you know how to sell things Dave you know how that works it's just exhausting so here's what they'll jump through interest rates in almost a thing to remember the reason debt consolidation doesn't work in general is that 88 of the people that take out a debt consolidation loan end up going deeper in debt because they don't change the person in their mirror the problem with this whole thing is it's a pain in the butt because changing you changing me me changing me is a pain in the butt I don't like changing me I like the old me I don't I don't want to have to go through the pain of growth I don't like it I don't like the discomfort of transformation and yet that's what makes a better version of me and so changing me is the hook not changing the um technique or the hack so change the you know if you want to shift your balances that's fine but you still have 95 percent of the problem you've only addressed five percent of the problem so don't strut around the yard throwing your shoulders back acting like you be bad because you're not you haven't done anything yet you just moved it around the shell still has a p under it it's just a matter of which one the con game on the street and you're just playing the game you got you're getting suckered again so it's there somewhere you can count on it until you get rid of the toxic relationship completely by paying the stinking thing completely off it's a big deal it's a big deal so that's the difference in see I grew up in the financial world as a as a in the academic side of things getting all the licenses and selling all this crap and we are always taught that the problem is a math problem and it's just not when it comes to your personal finance it's 80 Behavior twenty percent had knowledge it's in the psych Department yeah wrong Department it's not a math issue it's a behavior if it's a behavior problem then the solution is a behavior modification solution yeah people think well the problem Dave is the 24 interest if I could solve that no the problem is the guy who got your who got themselves into 24 interest debt and if we can solve for that we've solved for a whole lot more than just this one little dinky debt oh and let me tell you when you fall for stuff like velocity stupidity banking um when you're desperate or when you're greedy if you want to con someone you need to find people if you read I read a great book by a con man one time he said if you want to con someone find people that are afraid or that are greedy and if you so if you think that you're the exception to the rule and you've got the hack and you no one knows about it but you after all this time God selected you to give him this what you've got to be kidding me that's so greedy and stupid and nice prod comes right before the fall you just describe most of the cryptocurrency community and now the nft community they're really quiet now yeah not making much noise pipe down where are all you people that said George and I were frauds well they made their Millions now they're on the beaches Dave they're not tweeting anymore that sounds like velocity banking to me now they're probably back at work working their normal job that's a velocity uh Philosoraptor banking oh there you go that's a whole new banking I'm signing up for that one Chomp Chomp I know what happened to the dinosaurs I'm not I'm not touching that one with a 10 football

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