Dafuq Is Interest? And How Does It Work For the Forces of Darkness?

Dafuq Is Interest? And How Does It Work for the Forces of Darkness?

Here at Bitches Get Riches, we’re constantly extolling the virtues of compounding interest, which Albert Einstein, Mother Theresa, and Nelson Mandela all deemed the Eighth Wonder of the World.* This might lead personal finance novices to believe that interest is universally a great and wealth-building thing. Not so, dear readers. Not so.

Just as interest can work for you, contributing mightily to your financial goals over a long period of time, so it can spell your very doom. DOOM.

Like a monetary Dr. Jekyll and Mr. Hyde, interest has both your best interests (see what I did there?) and your utter financial destruction at its heart. Let’s explore its dual nature with a healthy dose of hyperbole, shall we?

*Not intended to be a factual statement

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Case Study: Held Back by Past Financial Mistakes, Fighting Bad Credit and $90K in Debt

Case Study: Held Back by Past Financial Mistakes, Fighting Bad Credit and $90K in Debt

Hi, it’s me again—your Good With Money Friend! It’s time for another case study. This time we’re talking about how to recover from past financial mistakes.

You guys really enjoyed our first case study. It tackled problems related to student loan debt, employment instability, and paying through the nose for rent in a high cost of living area. I’ve been hoping to do another one, but all of my friends’ most recent money issues have been too specific to their situations to be helpful to a broader audience.

Until now!

A friend reached out, asking for help repairing her damaged credit score. So she scheduled a 30 minute call with me to discuss her options, because I’m literally that bitch.

Obviously it turned into a ninety-minute call, mostly because I love the sound of my own voice. (Vocal fry ’til I die!) But really because the more we talked, the clearer it became that her credit score wasn’t her main enemy on the battlefield for financial stability. It was like a machine gun a mile away: an easy threat to identify, making a huge racket and scaring the shit out of everyone, but not actually that threatening in her present circumstances.

If you’ve struggled with debt, or you want to hone your Good With Money Friend skills, read on. Hopefully hearing about her situation will help some other folks!

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When (And How) To Try Refinancing or Consolidating Student Loans

Friends, does this sound familiar?: You’re describing the crushing emotional and financial burden of student loan debt, and the grown-up you’re speaking to says something like, “Wow, that sounds really rough, have you thought about *refinancing* and also ma’am this is a Wendy’s??”

And having no idea what the fuck that actually meant, you drove forward to the next window, dabbing at your eyes with the crumpled receipt for your vanilla Frosty, weeping in confusion and sadness and brain freeze?

I knew it. I knew it wasn’t just me!

Yes that’s right, my lambs: we’re talking about student loans again. This time we’re discussing your options for refinancing or consolidating student loans.

What the fuck do these mysterious terms even mean? What’s the difference between the two? How do you know if one is right for you—and if it is, how do you actually do it? Be amazed as we reveal the secrets!

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Season 2 Episode 10: "Which is Smarter: Getting a Loan? or Saving up to Pay Cash?"

Season 2, Episode 10: “Which Is Smarter: Getting a Loan? or Saving up to Pay Cash?”

The financial lessons we received from our parents are problematic for many reasons.

For one thing, they’re often out of date, as the economic atmosphere of the 1970s and 1980s is a far cry from what we’ve experienced in a post-2008 world. We’re long past the quaint advice to pay for college by “getting a summer job” and to start a career by “walking into a business and asking for a job in the mailroom.” Heckin precious.

But there’s also the way an assumption of background knowledge can lead to further confusion. For if you don’t understand basic financial principles, the sweet knowledge nuggets your beloved Boomer dad drops on you might go down like lead balloons. Just as you can’t understand where Beyoncé came from without Destiny’s Child, you can’t talk about getting loans until you understand how interest works!

This week we’re dealing with just this issue. Petey is one of my oldest and strangest friends. I made him walk down the aisle with Kitty at my wedding in the hopes that those two weirdos would have a vulgar joke-off (alas, they conducted themselves with the decorum expected of a bridesmaid and a groomsman and saved the nasty shit for the dance floor).

Petey has his head all in a tizzy over his dad’s vague and incomplete financial advice. So we decided to set the poor boy straight!

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How To Pay for College Without Selling Your Soul to the Devil

Listen you lazy, entitled whiners: it’s easy to pay for college. Just get a summer job! Why, in my day I worked weekends as a fry cook down at the diner on Main, graduated without debt, and now I’m sixty-five years old and completely delusional about the inflated costs of higher education! Ask me more about the house I bought for $60,000 and how much I resent the respectful empathy of the children I raised!

Sorry, y’all. Probably should’ve started that with a trigger warning.

Whenever we write about student loans, we get at least one comment like this. Except with more caps lock. We delete them. For while we never silence interesting criticism, come on. This ain’t a public square for every old man who wants to yell at a cloud! We pay good money for this web hosting!

At least where the cost of college is concerned, things aren’t what they used to be. Thirty years ago, it cost the modern equivalent of $8K per year to attend a public college and $18K per year to attend a private college.

Today, the same year of school would cost $21K and $48K. And you’re supposed to buy FOUR of them!

If the cost of regular goods and services grows at a steady walking pace, the cost of higher education is galloping away like a Triple Crown winner whose ass just met a hornet. I didn’t even mention the cost of textbooks, room and board, and other academic fees, which are all even worse. Can’t be giving you nightmares!

Meanwhile, average hourly wages have barely increased 11% (adjusted for inflation), making the wage-to-college-cost-ratio just fucking laughable. Yet college is still a barrier to entry into not only white collar jobs, but an ever-increasing number of blue collar jobs.

My purpose here is not to unpack the absurd inflation of higher education costs in recent years (I’d need another 2,500 words, and I can only hold your attention through so many gifs). Nor is it to debate the relative value of a college degree (another 3,000 words).

Instead, I want to focus on practical solutions for people who’ve already weighed their options and decided that college is right for them. Yes, a traditional four-year undergraduate degree is heckin’ expensive as fuck. Short of The Deep Magic, how do we mere mortals even attempt to pay for it?

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The Real Story of How I Paid Off My Mortgage Early in 4 Years

The Real Story of How I Paid off My Mortgage Early in 4 Years

As of fifteen minutes (and one very cold beer) ago, I officially own the beautiful house I’m sitting in right now.

That’s right: I paid off my mortgage early.

My partner and I have been refreshing our mortgage account every few hours today, waiting for the final payment to process. (Weirdly, you have to WIRE the final payment. Seriously? After this years-long relationship of sending personal check after personal check, our mortgage lender refuses to trust us at the finish line? Fine, whatever…) Just before the close of the day, it happened.

Look! I paid off my mortgage early!

Current principal balance: $0.00.

$0.00.

My mortgage is gone. I am done paying rent. I paid off my mortgage early. If all things go according to plan, I will never ever pay rent again for as long as I live. Let’s talk about it!

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Ask the Bitches: “The Government Put Student Loans in Forbearance. Can I Stop Paying—or Is It a Trap?”

Ask the Bitches: “The Government Put Student Loans in Forbearance. Can I Stop Paying—or Is It a Trap?”

So… I made a mistake.

Our Patreon donors have been so wise with choosing quality topics in the past. So this month, I invited our supporters to pitch article topics directly to us.

Sounds great, right? WRONG. This was a huge mistake because all of our supporters’ ideas are fucking great! Now I have no choice: I simply must write them all. When am I supposed to do my life’s most important work: incorrectly cutting the wood for my woodworking project, then driving to Lowe’s to buy more wood???

This is technically incorrect. Piggy is the Chip.

One question stood out as being particularly time-sensitive, so today I’m answering this question from our patron Rachel, who we all know to be so glitteringly beautiful that she’s regularly mistaken for an ice sculpture of herself:

I’d love to know your thoughts on U.S. federal student loans currently being deferred with no interest. Is it smart to continue to make my regular loan repayment? Or should I stop making student loan payments and use that money to invest in other things?

– Patreon Donor Rachel

An excellent question! Today we’ll address the basics of student loan forbearance, including how it pertains to the CARES Act. (That’s the $2 trillion stimulus package we explained here.)

Luckily there’s a fairly definitive answer, which I am just barely capable of explaining in human speech. Let’s get into it!

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Kill Your Debt Faster With the Death by a Thousand Cuts Technique

Kill Your Debt Faster With the Death by a Thousand Cuts Technique

Sometimes I take for granted that everyone knows basic tenets of finance. Like how the IRS will never ever call you, or how money depreciates due to inflation. Or even how Harriet Tubman should absolutely replace Andrew Jackson on the twenty dollar bill.

But every once in a while one of our darling readers (who are the salt of the Earth, but like, fancy Himalayan pink sea salt with grains of dried truffles mixed in) will remind me why we need to focus on basic financial literacy. It is, after all, our sacred mission, bestowed upon us by the goddess of internet memes!

Thanks to a conversation I recently had with some of our Gen Z readers on the sosh’ meeds’, today I’m going to focus on a frighteningly simple tactic for paying off debt. For once it’s understood, it could save you metric buttloads of money on interest, help you pay off your debt faster, and bring about world peace.

You’re heckin’ welcome, world.

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Ask the Bitches: I Want to Move Out, but I Can't Afford It. How Bad Would It Be to Take Out Student Loans to Cover It?

Ask the Bitches: I Want To Move Out, but I Can’t Afford It. How Bad Would It Be To Take Out Student Loans To Cover It?

We have a question today from a Tumblr follower. If you don’t follow us on Tumblr, you should! Piggy is one of the Tumblr Deep Ones. She’s been on the platform since its infancy, and she answers tons of reader questions.

Like this one!

I need to move out, but I don’t have any money actually saved up. I do have a job that can cover my monthly costs and still have some left over. So I was wondering just how bad of an idea it is to take out a student loan to get me out of my situation and then immediately work on paying it off.

Ah. A very relatable dilemma.

For most people (and families), housing is the largest item in their budget. Young people spend, on average, a quarter of their income on housing—more than any other age group. Which means that saving money on housing can have an enormous positive impact on your finances. Especially when you’re young.

But is it ever a good idea to strategically spend a lot more than you have to on housing? Spoiler alert: yes, it absolutely can be.

Let’s get into it!

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