Art Of Money

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Here’s a slice of the letter that I received from my credit card company the other day. Have a glance and then I’m going to ask you to answer a simple financial question.

“Dear Jon,

Spring is here, Summer is around the corner. Make the most of you MNBA MasterCard credit card account.
If you had the chance to enjoy new experiences, make improvements around your home, or strengthen your financial picture, you’d do it right?
No transaction fee - on these cheques [ed: that's personal checks for you yanks] only!
You’ve got a $10,000 credit line. You’ve got a low promotional 2.99% Annual Percentage Rate (APR).
You’ve got enclosed access cheques. Put them together and what do you get?

• A big-screen TV (and surround sound)
• Professional landscaping (for once!)
• A new deck or patio (with furniture to boot)
• A much-needed getaway
• Whatever you like!

Your MBNA MasterCard credit card account has promotional 2.99% APR on Access Cheques and Balance Transfers, valid until your statement date in December 2006…”

Here’s my quiz…one question…Do you take the money?

I like how in the pre-blurb it says “…strengthen your financial picture” as one of the options but in the list of what you can get, it has all doodads.

When I first read the letter I was mildly outraged. It is obvious [I hope!] what their game is. Stimulate your associations between the improving weather and the urge to spend money so you can enjoy the summer season. So they make it so easy for you to increase your debt, but why not, the money is cheap right? In the long term, it definitely will not be cheap.

Anyways, it is this marketing pitch that has seduced the average North American to spend 1.07 for every 1.00 that they make. Ouch!
So do you take the money?…of course the answer is no, right?

Well that was my first answer…and if you are the average North American, and content to stay that way, then that is definitely the correct answer. But then I remembered that my goal was to become rich and that I’ve spent a lot of time and effort adjusting trying to adjust my thinking patterns; which I believe is essential to becoming rich.

Let’s take a look at the question again, this time pretending we have the mind of a rich person…let’s be Donald Trump’s mind for a moment. First off, forget the enticements of doodads, of course we aren’t going to waste money we don’t have chasing feel-goods.

But $10k for 7 months at 2.9% interest? Could I put that money to work in a way that makes more than 2.9% [make sure you read the fine print!]?

Hell Yes!

Even a conservative dividend paying stock or corporate bond should get you 6%. In six months you have made 150 dollars just for having a bit of financial moxy. Of course if you have educated yourself and you are sitting on a dozen deals that are just begging for a couple thousand dollars to get them rolling and profitable then much greater returns are possible.

To summarize, it is really our financial intelligence that determines our wealth. I get these kind of credit card offers constantly. It really only takes a slight shift in your thought patterns around money to see the difference between being rich and middle class. In most cases the rich know how to use other people’s money and other people’s time to make money for them.

Am I recommending that you grab every offer of “free” and “low cost” money that every greedy bank throws at you and dump it into the stock market?

Hell NO!

But I am suggesting that it only takes a slight opening and some financial education to start on the road to moving beyond the limitations of the middle class mind.