Wednesday, February 22, 2017

Do you want a free $20? Featuring: Ultra High Interest Savings and Reverse Investing! Legitimately Free Money Part 2

My Brother recently text messaged me and asked “Do you know anything about penny stocks?”

I responded “Do you want a free $20?” I’ll get to that in a minute.

First I wanted to talk about reverse investing. Both my brother and I are in debt, his is credit card debt to the tune of $3500 and mine is student loan debt weighing in at $18,000. Hefty Hefty Hefty!

What is reverse investing? The same thing as investing, but you know EXACTLY the rate of return that you are getting. It’s pretty awesome and I am using it (along with my cash back credit cards) to pay off my student loans!

My credit card has a percentage rate of 17.99% APY (debt interest)
My Federal Student Loans have a percentage rates between 4-7% APY (debt interest)
My Western Union Net Spend card has an earnings rate of 4.9-5.0% APY (earnings!)

SO: If I have $1000 in each account. After 1 year I will have:

$1179.9 in credit card debt
$1070 in student loan debt
$1050 in investments + earnings

The interest from the earnings is much less than the interest on the debt, so you still end up losing money. If you were to reverse invest $1000 into your credit card debt (because it has the highest return right now at 17.99%) you would make $179.90.

With the $179.90 you saved paying off your credit card. You can invest THAT because you would have paid it to the cc company anyway and lost 100% of it had you not paid your debt down.

Penny stocks? Would you mind losing 100% of this money? You are playing roulette and betting on number 1: Every once in a while you will hit, but the rest of time will be misses.

Regular stocks? This carries the same risks as penny stocks, you can very easily still lose all of your money. However over the long run, established companies tend to net a profit. But you have to sell when the time is right, and there is no definite way to know without illegally insider trading.

Warren Buffet says that you can expect between 6-7% return from the stock market over the long run (as in 10+years)

I have a Western Union High yield savings/NetSpend card that earns me 4.9-5% APY on up to $1000. One of my student loans is 3.5% so if I can pay it down to under $1000 then I could use the interest from my netspend card to pay off the interest on my student loan, I still make money (although WAY not as much.) but the benefit is that I can keep that student loan account open potentially forever. This is great for my credit because the older your average account age, the better! My student loan account is almost 10 years old already, so it carries a lot of weight in my average. All of my other accounts are less than 2 years old!

However I am trying to order all of my “Work Pig cards” early on so I can have several accounts set up and getting older (like me) Once I have a pretty well established account age I can apply for a loan of some sorts. (car loan, house loan, land loan, etc..) If I need a loan I can absolutely apply for a loan earlier, but because I don’t right now, It would be better for my credit to keep one account open with a very low balance and use my earned Netspend interest to pay the loan interest and BAM! Credit maintained.

After I get approved for the loan I have the option to pay off and close out the student loan. It HELPS your credit to have diversified credit types like loans, credit cards, etc.  So if you pay it off you might see your credit score go down. Especially watch out for this if you are applying for a big loan sometime in the near future. Don’t pay off your old LOW BALANCE loan until AFTER you get the new loan.

 If you have a high balance loan, no matter what the percentage rate, more money means you owe more in interest every year. I’m paying ALMOST $1000 every year in student loan interest. I could think of much more fun things to do with that $1000, but it will cost me $18,000 before I can save it…BUT I’M WORKING ON IT.

Devote AS MUCH MONEY AS YOU CAN AFFORD TO towards paying high balances down/off. This DOES NOT include your 6 months of Emergency Savings everyone should have in the event you lose your job or go homeless (I’ve done both! Neither are fun, both are EXPENSIVE!)
Except actually, it could be! (This is one of those A-HA! Moments!)

With my Western Union Net Spend Card I earn 5% APY on the first $1000 in the account. I earn 0.49% on everything over $1000 which is not great, but my Bank of ANOTHERFEEFORYA savings account gets .01% or ONE ONE HUNDREDTH OF ONE PERCENT INTEREST PER YEAR.

To put it into perspective, if I had $1,000 in the stickandbrick savings account for the last 10 years, I would have earned $1 in interest. That same $1000 in a Netspend account for the last 10 years, I would have earned over $500 in interest! Did I mention you can do this with at least FOUR other cards PER PERSON? So say you and your partner each have four cards with $1000 in each of their ultra high interest savings accounts, you would be earning $400 in interest PER YEAR.

So this account gets almost 500 times the amount of interest as my savings on the first $1000 and 50 times the interest as my savings on everything over $1000 in the account.

Here’s where that free $20 comes in.
If you sign up for the same Western Union NetSpend card I use and you use my referral code then you put at least $40 on the card (you can e-deposit checks or just ACH transfer cash from your bank account) Western Union will give you a free $20 (That’s a solid 150% return on investment by the way.)

Or enter referral code5551387262 
If the link doesn't work you can copy and paste this number into the referral box, but YOU CAN'T GET THE FREE $20 WITHOUT THE CODE. It's a mutual relationship, you get $20 when you put $40 or more in, I get $20 when I put $40 or more in, and Western Union gets two new happy customers! 

Sign Up for this Second Card in the series using my referral code HERE.
or enter referral code: 5853038054

Apparently there is a 3 account per bank, 5 account limit for these netspend cards. BRINKS, and HEB Are backed by one bank, and Western Union and NetSpend are backed by another.
Click here to Sign Up for the BRINKS NETSPEND card.
or enter referral code: 2542190163

You CAN use my referral for the HEB Netspend, but you only get HALF ($10) if all conditions are met, so get this one after you get your free $20.
and enter Referral code: 6425732894 AFTER YOU already got your $20 cards

PROTIP: You can only get ONE $20 bonus per 180 DAYS. If you HAVE $1000 cash to load into each account, you would make $25 in interest in that same 180 days. So if you have the money, it makes sense to order each card 24 hours apart. (for everything to go smoothly) and load each of them with $1000. If you DON'T have $1000 in savings you could make more money by signing up for one, then waiting the 180 days and signing up for another card through a referral link.

Note: You have to sign up through an active referral link to get the Free $20. As of April 2017 These links are active. 

Want to turn this free $20 into a free $50? It's actually so easy there isn't a reason not to do it if you have the money available and it isn't earning 5% cash back. 
All you have to do is add $940 more to the Netspend card and move the now $1000 you have on the NetSpend card into the SAVINGS ACCOUNT that you also get with the card.
You need to make at least one transaction at least every 90 days to avoid the inactivity fee on the account. I usually accomplish this with an ACH transfer of $10 into the account every month, and from the account every time interest posts. I pull anything over the $1000 into my free discover bank account where they earn almost double the interest as they do on the card at almost 1%.  It's no 5%, but its ALMOST TWICE 0.5% and that adds up over the long run.

If you want to take it one step further and turn that free $50 into a free $200? 

Check out my post on building an income ladder with these cards to have interest coming in every month, or all at once. FREE $200! (or more if you time it right!)

BUT WAIT! You can't just sign up for the card and leave it alone. There is a maintenance fee that applies if you don't make a deposit or withdrawal, or use your card at least once every 90 days. I choose to deposit $25 every month from my Discover Savings Account. I have the option of just making the deposit once per quarter, but this way I have a safeguard against any computer error that may happen. If something goes wrong and a transfer doesn't go through at least once every three months, I get charged a fee. If I make 3 deposits and only 1 goes through, I get no fee and I collect the interest on my savings.


PROTIP: If your bank charges you to do an ACH transfer to the account DON'T DO IT. There are many banks out there offering free ACH services. My Discover Savings Account will allow 6 transfers per month for free (it's a federal law/limit for savings accounts) AND it pays 0.95% interest on your balance (which is FDIC INSURED) meaning if the company loses all it's money, you don't lose all your money. That's something you can't get from the stock market.

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