Smart Money Blog

Many times I’ve mentioned the $40k milestone as being a goal for many of us using the balance transfer strategy. After quite a few questions on how you’d achieve that goal, I decided to dust off the math book and show some examples.

The common rule for figuring your allowed credit line, is taking your claimed household income (HHI) and multiplying that by 5. Your household income can include your spouse, children, roommates, or many times, simply an embellishment.

Let’s start by saying you claim a HHI of 170k.

$170,000 X 5 = $850,000 (Your available credit line)

850k x 89% = $756,500 (Cash available to transfer using an 89% utilization to keep your credit score safe)

756.5k x 5.4% = $40,851 (Interest after sticking it in a Countrwide account getting 5.4% interest)

That is a simple way to calculate how you can make $40,000 a year with balance transfers. There are obviously a lot of variables to consider, but I think that will give you a good idea on the steps to take.

Please share your experiences in the forum so we can all expand our BT knowledge!

Lately I’ve seen some posts popping up on the forum, and received many e-mails regarding the success of their own “App-O-Rama,” and I thought it was about time I shared some of the restults.

I’ve personally known people that have made $40,000 a year doing this, but let’s focus on what some of the first-timers are doing here at the site.

Most of the new users reporting, have raised their credit lines into the 300k-400k range, and plan to make $20,000 or a little more this year from interest, just after a week or two after originally signing up for the cards. Many plan to push it much further, but let’s take a look at what this means, when comparing it to an actual job.

An easy way to calculate a yearly salary, from an hourly wage, is to simply double it, and add a couple zero’s. So if you are making $10 an hour, your yearly salary would be $20,000. This equation assumes you’re working 40 hour weeks, and 50 weeks a year.

I thought that would be a fun demonstration to show how many users are now making more than a lot of day to day employees, simply by paying off their credit card balance each month. Keep up the good work guys!