Your E-mail Segment

Here are a couple of e-mails from listeners. Chance are if one person e mails, there are lots of others who have the same questions:

Hi George: We are going on vacation to Mexico. The question is what do you suggest as far as taking money? I have asked lots of people and everyone has a different opinion. Some people say use your debit card (that sort of scares me aside from charges), some say Visa/MC, others say strictly US cash or take Canadian and exchange it down. I am confused…

This isn’t worth your brain power. I only answer questions as to what I would do, and in this case, you’re dealing with a pretty amount of money. You’re not buying a house down there, so we’re talking about the exchange on about $400 or $500. Whatever it is, it’s a $5 to $7 decision. I don’t pull out my debit card – that’s way too risky, unless it’s at a bank ATM. Not many places want our crappy Canadian dollar, and it’s a giant pain to find a bank to exchange it at. In the US, by the way, most banks now won’t even do an exchange unless you are a customer. They can’t recognize counterfeit foreign money and don’t give a hoot about non-bank clients anyway.

Take what you think in US cash. If you’ve got a credit union MasterCard, use it, because it has the least foreign exchange rip off, most others are 2.5% or more, there’s a chart in the back of the It’s Your Money book on everything credit card related, or you can call the 800 number on the back of your credit card and ask.

Hello George: In the It’s Your Money book, you talk about getting debt free by paying off the smallest debt to the largest debt. Wouldn’t it be more logical to pay the highest interest rates first?

Yes and no. You’re presuming that getting into debt and paying it off are logical decisions and three-quarters of it isn’t logical – it’s emotional. Is it logical to charge something on a 20% credit card? Is it logical to take a car loan over 7 years when you’ll always owe more than it’s worth? Is it logical to take a 6-months don’t pay that reverts to 29% right back to the get-go? No way.

Just like getting a car unstuck in the snow you need to get traction. Traction and extra cash comes from paying off the smallest bill. It’ll take a month or two, tops and frees up the payment that was going on that bill, as well as creating a huge self-confidence feeling that one is gone forever.

Rolling that money into the next smallest bill makes it go twice as fast, and so on. In the book is an example of $25,000 debt and how quickly it’ll get paid off with some huge interest savings. Remember that interest isn’t a rate thing – it’s interest dollars which we can control.

Besides, when it’s a single-minded focus to get rid of your debt it’ll happen really quickly. So the rate doesn’t matter that much when it’s only being paid for a year or so.

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