Credit Where Credit is Due, Update

Hello! David J here again bringing you more of the steps on my journey toward financial independence.

Quick update to the last post...

The LLC's credit card arrived today!

It only has a $3,000 limit, but that's $3,000 the LLC has access to that it didn't have before.

SO... NOW the question is, what can the LLC do to make the most of that? I have a feeling the answer is coming, but it's not here yet.

There's opportunities coming with my investment group that I don't quite have all the details on just yet.

That said, I can turn you on to this:

Have you ever heard of "Self-Directed Retirement Plans"?

That can be confusing. Some outfits may tell you that sure, you can self-direct your employee retirement plan! (401(k), IRA, whatever...) Just choose from any investment they offer.

That's NOT self-direction! Thus, when I talk about this I take an example from the folks who taught me about them... I call what I'm talking about "true" self-directed , or "genuine" self-directed. That means you've rolled your retirement funds into a plan where YOU select the investments from a list of anything in which your retirement plan can LEGALLY invest.

Now, again, I'm neither an accountant nor an attorney - please refer to your financial professionals for advice.

You'll also need to find a custodian for your SDRP(s). This might be an outfit such as American Pension Services, Equity Trust Corporation or the like. (Disclaimer: I am in no way connected with either American Pension Services or Equity Trust Corporation.)

Whether you have regular savings, retirement funds or a line of credit, you always have the option to invest in something which produces returns above and beyond the "cost" of your money. Heck, that's how the banks work! They borrow money from the Fed or each other - some even get it from depositors! What a concept! - and lend it out at higher interest rates than they pay to get the money to start with.

So, "be the bank". If you can acquire money at, say, an introductory 0% rate for a few months or you are set up to self-direct your retirement plan, and can lend money out at any positive rate of return, then you're making "free" money off of cheap or "free" money!

Where do you get high returns?

Here's a couple examples to get you started. Disclaimer: I am in no way connected with any of these other than as an "investor" or potential borrower:

o Prosper.com

o Lending Club

Read up on their terms and conditions, their introductory pages, etc. and find out what they're all about. Be advised that last time I looked at Lending Club there was no way to "join" without taking out a loan and, once you begin that process, there's no way to cancel it without contacting their customer service department.

There's also borrowers such as real estate investors who are very willing to pay above-market rates for short term funding, 3 to 6 months or more, secured by real property. Since banks aren't lending in that space right now - at least not at the volume the industry demands - it repesents YOUR chance to "be the bank"!

When you lend money out of your retirement plan, the returns have to go back into your retirement plan, of course, but hey - any positive rate of return is better than losing double-digit percentages every time something newsworthy happens in the Wall Street Casino!

Now, again, let me reiterate: I'm neither an accountant nor an attorney - I am NOT quailfied to give either legal or financial advice! Please refer questions to your qualified professionals.

Watch this space for an update. Stuff is happening here!

We'll talk again soon!

Take care - be well!

Much Success!

Credit Where Credit Is Due

Hello! David J here again bringing you more of the steps on my journey toward financial independence.

We haven't talked about corporate credit for a while. I've been still working on that and now my LLC has been approved for its first credit card!

I did what we talked about earlier, including getting some Net-30 lines and getting a DUNS number. That's right - you can find the LLC on Dun & Bradstreet.

Now, marketing remains a major source of new revenue for the credit card companies, even in THIS economy, and even in the commercial market - corporate credit.

So, lo and behold, the LLC gets a solicitation for a cash-back credit card! I went to the URL listed in the mailing piece (yes, it came snail-mail!), filled out the application on-line, and - long story short - I got the reply that the application was approved!

This is so new that I don't even have the card in my hands yet. So, I can't even tell you what the credit limit is or any other details.

Obviously, I read and agreed to the Terms and Conditions on-line. So, I know about interest rates, billing practices and such.

...and yes, it is personally guaranteed by me. Now, my credit score remains good thru all my tribulations, but my credit utilization is VERY high. Remember from earlier posts I mentioned that when the credit card servicers started cutting credit lines back in early 2009, I lost some $50,000 in open credit including losing one $14,000 line entirely when the servicer lost their funding.

So, I can't get new credit lines in my own name, but my LLC just did!

Even if you can't complete the whole credit building program for your business entity as we discussed back in December of 2010 - I didn't, you can still build corporate credit for your entity. The key is going to be to build some kind of a good credit reputation for your entity, and ensure that D&B makes that information available to the world.

We'll talk again soon!

Take care - be well!

Much Success!