Break Rules

I used to watch Suzie Orman religiously.She is probably a disciple of Dave Ramsey.They both espouse the philosophy of the debt snowball.

That philosophy is simple enough to understand.

All debts are bad.Pay off your debts before even thinking about investing.They do have fine disagreements over whether to pay off smaller balances first or higher interest rate debts first,but the ideas are similar.

And when you do invest,put most of your money in mutual funds.

Or something along that line.

Ok,so don't quote me or send lawyers after me for libel.Yet.

That's my understanding after reading Ramsey and watching Orman.

Well,after reading Robert Kiyosaki and joining biggerpockets,I've had to make informed choices.

To be sure,not all the parts of the Ramsey/Orman philosophy is bad.

A particular teaching of that school of thought that I've tried to hold on to is to run as far away from credit cards as possible.

I have seen the damage ginormous credit card debt can do to a person's finances.Up close.It is no laughing matter.

However,after using my high limit visa card strictly for gas and groceries only for the past 4 years and clocking the juicy rewards while paying the balance off every month,I have now decided to break the golden rule.

I closed on a duplex this past week mostly using the visa balance transfer option.

Here are the details:

REO duplex in Murray hill,an up-and-coming neighborhood in Jacksonville.

Listed as "pre-foreclosure" at $111,000,I offered full price.The next week,my agent received an email from the selling bank requesting "highest and bests" as multiple offers were on the table.

Having lost out on a cute SFH with a garage apartment and sinful ROI just few weeks before,I asked my agent to up the offer to $126,000.

It was accepted.

This duplex will rent for $900/unit with monthly gross of $1800.

Taxes $2000/year

Insurance $1240/year

Tenants pay all utilities.

Yard maintenance $600

By my bad math,that's roughly a 14% return.

My visa card charged a one time 4% fee on the advance with no further interest due for 12 months.So the cost of credit is $3000.

This duplex will be refinanced in 12 months to pay off this balance before interest is due.

Until then,I'll focus on how to reinvest the $18000 rental income in that time.

Break some rules.

Just be sure to understand the risks and consequences.

So,investors:what cardinal personal or general financial rules have you broken to get a deal done?