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Hey credit Warriors welcome to the show And in this video I want to talk about The elephant in the room why I am no Longer using credit now there are a Variety of factors that have contributed To this and in this video I am going to Break down the reasons behind this and Show you what I'm doing instead and this Video is brought to you by Kudos but More on that later alright so I go by The name the credit Shuffle credit is Kind of my thing I use credit cards to Accumulate points and miles for luxury Travel I use loans and credit lines to Create cash flowing businesses and I've Leveraged my almost 800 credit score to Get the best interest rates on the Mortgage on my primary residence Construction loans and car loans for any Car I buy but times have changed and now In 2023 I'm no longer taking out any new Debt in fact I am doing the exact Opposite I am looking to pay down debt And maximize cash flow so I can build up A war chest of funds ready for the next Recession the next crash in property Prices or the next period of low Interest rates or all three so why do I Need to take this course of action well Let's give you the background so in Response to the Sky High inflation that We've seen over the past two years which Peaked at nine percent in 2022 Jerome Powell and the Federal Reserve have

Raised interest rates Actually that clip was wrong the money Printing is what they did back in 2020 And 2021 now they're trying to contract The money supply we should really play That clip in reverse So the FED funds rate now sits at 5.12 After Powell started regular rate hikes Back in 2022 raising interest rates Encourages people to invest their money In government bonds and Bank savings Accounts since they can now get a kind Of decent cash flow from those products Bank savings accounts are paying about Five percent or just under and the Six-month treasury which is a short-term Government Bond is yielding about five And a half percent this means they pump Less money into stocks and also spend Less money consuming products in Addition the average mortgage rate now For a 30-year fixed mortgage is around Seven percent average car loan rates are Above seven percent too an increase of An average of around four percent just Two years ago so basically now people Are buying less cars because interest Rates on car loans are too high and this Has caused chaos because we now have Oversupply with all the vehicles they Produced over the past couple of years When demand was high because interest Rates were low and the economy was Flooded with covered stimulus money I

Mean people were even buying Lamborghinis with that money that guy Was a Florida man but now times have Changed and Florida man can go back to Dealing with his alligators Because interest rates are too high to Buy a new car with a loan or a new house With a mortgage in my opinion a seven Percent mortgage on a home loan amount Of three hundred thousand dollars will Cost you five hundred dollars more per Month than a four percent rate would Have so this is the reason that I am out Of the credit game too the cost of Borrowing is just too damn high it's too Damn high so the old thing of borrowing Money to buy a car even if you have the Funds because you could use that money To get seven or eight or nine percent in The stock market and the car loan only Costs you four percent that doesn't work Anymore however I am still using credit Cards and paying them off every month in Order to collect the points and miles to Book luxury travel vacations I actually Just booked a trip to the big island of Hawaii staying at the Fairmont Orchid And then on to the Hilton Waikoloa Village Resort both of which look Awesome and just for clarity the recent Tragic fires in Hawaii are on Maui not On the big island but apart from credit Cards in other areas I'm going full on Dave Ramsey on you guys it's a trillion

Dollars of you buying crap you can't Afford to impress people you don't even Really like maybe you should stop that Yeah well it's not exactly like that but I am completely stopping borrowing money And in this video I'm going to take you Through the loans I have I'm going to Show you the interest rates I'm going to Tell you whether I'm going to pay them Off early and I'm also going to show you What I'm doing with my money going Forward but first of all since I am Still using credit cards and you should Too to get the benefits as long as you Can control your spending I want to talk To you about the sponsor of today's Video Kudos Kudos is a free browser Extension that helps you earn more Rewards by recommending the best card From your wallet for every purchase like When I recently booked a flight on JetBlue Kudos suggested the AmEx Platinum for five points per dollar on Flights but directly with Airlines and Showed me other hidden benefits like Travel insurance but that's not all Kudos also doubles your credit card Rewards on over fifteen thousand sites Yes you heard that right with Kudos you Can potentially double your rewards Whenever you shop online like here on Booking.com without Kudos I would have Earned three points per dollar on travel With my Chase Ink preferred but now I'll

Receive six points per dollar with Kudos And did I mention that Kudos is Completely free all you have to do is Just add Kudos in two clicks and Shop Like normal then sit back and relax Because the average Kudos user saves Over 750 dollars per year so stop Leaving money on the table use code Shifu to double your rewards when you Sign up for Kudos with my link below or Go to join kudos.com Alright so I'm pretty lucky that all the Installment loans I currently have open On my credit report are at rates Considerably lower than the current Average rates now I may still want to Pay off some of these early to increase Cash flow and paying off debt is a form Of investing that you might not have Thought of let's say you have a 500 a Month payment on a loan for something Say a car or a personal loan and you Have 10 months worth of payments left Well if you had the money to do it Instead of investing that money in the Stock market it would actually make more Sense to use five thousand dollars to Pay off that loan early and free up five Hundred dollars per month in extra cash Flow by contrast if you wanted to create Five hundred dollars per month in extra Cash flow with a fixed income investment You'd have to invest 120 000 in something like treasury bills or

A CD with a five percent interest rate But we've just created five hundred Dollars per month extra cash flow with Just five thousand dollars in spending So I'm going to be looking for debts That I have that I could potentially pay Off early to increase cash flow so that I can then use that cash flow and store It and create that war chest so I have Money to invest in the future and Typically I'll be looking for debts with Interest rates over five percent because The ones under five percent I think it's Not really worth it to pay them off the Interest is so low we probably won't see Those rates again for a while so first Up we have a mortgage on this primary Residence and the interest rate on that Is 4.5 percent I took the mortgage out In 2019. I should have refinanced it at Three percent in 2021 I'm kind of an Idiot for not doing that I will admit it Will I pay this one off early no way I Will most likely hold this one for the Full 30-year term if I was to take out This mortgage today it would cost me Seven percent in fact some guy phoned me Up a real estate agent and he said do You want to sell your house and I was Like no way man if I was to sell this And buy somewhere else I'd be paying Seven percent or more so yeah I'm gonna Probably hold this for the full 30-year Term inflation has devalued the amount

I'm spending each month on this mortgage Anyway which is another plus the only Thing I might do is refinance it in the Future if we're are able to get down to Below a 3.5 percent interest rate it Normally makes sense to refinance if the Interest rate you're offered is a full Percentage Point lower than your current Rate then we have a 25 000 personal loan from American Express At a 5.5 interest rate this is a loan I Took out last year just because I knew That rates were going up and it would be Probably my last chance to get any kind Of large loan at a low interest rate and I needed some cash because I was putting Basically all the cash I had seventy Thousand dollars into my Airbnb build And I actually needed some additional Cash to do some Home Improvements on my Own house for example I had a load of Trees that needed to be cut down in the Backyard this ash tree was killed by Emerald Ash Borah it is a beetle that is Sadly killing millions of ash trees in The eastern United States I had another One where the trunk was split like that And both trees were posing a danger to The surrounding houses and had to be cut Down I also had a few thousand dollars Worth of repairs to do on my Jeep Grand Cherokee anyway I took that loan and I Spent it all and it proved to be a smart Move because if I wanted to get the same

Loan today it would cost me almost nine Percent I've been paying the monthly Payments of 760 with no problem and my Balance is down to sixteen thousand Dollars Now with an interest rate of 5.5 Percent and the way it's structured the Short term of this loan is just three Years which means the monthly payment is 760 dollars per month you think of a car Loan for twenty five thousand dollars it Would be over five six seven years no Way you'd be paying that much per month So anyway that means that this loan is a Prime candidate to pay off early and Free up that 760 dollars per month in Cash flow and I'm gonna do just that Foreign [Music] Building the cabin I should have a Surplus of cash because I pay to build a Seventy thousand dollars to start the Build on a three hundred and forty Thousand dollar house but I'm getting a Construction loan of 297 000 however I have overspent by about Ten thousand dollars most of that was Bringing soil here from another site to Create this massive platform so that you Can't see the road down there but that Still leaves me seventeen thousand Dollars that I will get back and that is Enough to pay off the loan and free up 760 dollars per month in extra cash flow Oh and since we're here we might as well

Talk about this thing I have a Construction loan on this property for Two hundred ninety seven thousand Dollars at a four point six percent Interest rate it's interest only for the First year and the amount Rises as you Draw more funds from the loan right now I have drawn 168 000 funds from the loan To get to the stage in construction that We are at now and it's costing me about 700 per month in interest payments this One I will never pay off early four Point six percent is a great interest Rate and since it's for a business Venture anyway the mortgage will Eventually be paid each month by the Revenue from the business once I start Renting it out the only thing I might do In the future would be to refinance at a Lower interest rate and cash out perhaps Twenty thousand dollars to use in the Next deal then I have a car loan with Sixteen thousand seven hundred and Twenty three dollars balance on this car At a five percent interest rate and a Four hundred and sixty dollar monthly Payment with three years left on the Loan now this one is a little borderline I could pay it down early and free up 460 dollars per month but the interest Rate is a little lower at five percent So taking into account the opportunity Cost I could probably make more money Investing that lump sum elsewhere and

Because the loan origin only had a Longer time it was like six years I Think so I've already paid off half of It and that's why the monthly payment is Lower than the personal loan I just Showed you so I think it makes more Sense just to leave this one but oh What's that what about this brand new Jeep Wrangler Sahara well this car is Actually the first car I have ever Leased instead of bought you know like Tai Lopez does because Elise that means It's a lease there you go this car sets Me back just under a thousand dollars Per month in a lease payment but if I Had bought it the payment would be Higher because of the roughly seven Percent interest rates or more that we Currently have on car lots but the cool Thing is the money I'm paying in the Lease is actually paying down the price Of the car so at the end of the term I Will have the option to buy this 63 000 Car for just under forty thousand Dollars and I'll probably have to buy it In the end anyway because I'm going to Do so many mods to it so I'll either buy It in a lump sum or take out a loan on It as long as there's a lower interest Rate by then so that's what I'm gonna do With the debts that I have but what About moves with actual money because You know I do earn money it's not just Debt well I'm taking advantage of the

Great rates and close to zero risk that We get with six month treasury bills Right now I only keep about ten thousand Dollars in a savings account for Emergencies and then any surplus funds I'm putting into six months month Treasuries in addition to that I'm also Using a smaller portion of money to Cautiously buy back into some stocks I Was largely out of the stock market over The past year but recently I have been Buying back into Tesla stock I bought in At about 180 and we're already up to the Sort of 250 range but time in the market Beats timing the market so in addition To buying dips on just a small number of Stocks I'm actually going to be using a Larger portion of money just to buy into Index funds in general but I'm keeping Stock market investing on the small Scale since I want to build that stash Of cash with really low risk by using Products such as six month treasuries so That I'm a hundred percent ready to Pounce when the real estate market Crashes which many people think is going To be in 2024 allegedly but maybe not Who knows alright guys that is the video I hope you like that explanation of why I am no longer using credit to buy Things things in 2023 I'm still using Credit cards to buy things and pay them Off every month but I'm not taking on Any new interest bearing debt a big

Thank you to Kudos for sponsoring this Video use my code shufu to double your Credit card rewards when you sign up With the link below please subscribe if You're new hit that like button and We'll see you next time bye