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Poll: Insolvent banks and credit card rates

tomhudson (43916) writes | more than 6 years ago

The Almighty Buck 53

When you or I don't have money, we say we're broke.

When banks don't have money, they say they're "facing a liquidity crisis".

So what are they doing? Well, one quick fix is to raise credit card interest rates.

When you or I don't have money, we say we're broke.

When banks don't have money, they say they're "facing a liquidity crisis".

So what are they doing? Well, one quick fix is to raise credit card interest rates.

A lot of people who were paying 8.5% are, as of this month, paying 19%. Someone with a $20,000 balance is going to be paying what - an extra $220 a month in interest? The banks (at least CitiBank) are giving their customers who complain 2 choices - either accept the reaming, or cut up the card, and pay off the balance at the old interest rate ... but people are so dependent on their credit cards that the banks know they'll "B.O.G.U.S." - "Bend Over, Grease Up, Sucker!"

Why? Because most people can't afford to cut up their credit cards.

I can understand going into debt to pay medical bills, because your health comes first. I can also understand going into debt for business reasons, because it makes sense if it will generate more income than it costs. Going into debt to buy consumer goods? Stupid. Makes about as much sense as charging groceries and gas, and taking 3 years to pay them off ... (which is what the consumer has been doing a lot of this past decade, spending 103% of their income every year, year after year ...)

Poll Question: Can you afford to cut up your credit cards?

[_] Already did - cash is king!
[_] I kept one ... "just in case" ...
[_] I pay them off in full each month
[_] I "usually" pay them off each month.
[_] As long as I can make the minimum payment, who cares?
[_] I'm charging like crazy - chapter 13 here I come!
[_] I'm doing a SCO - chapter 11 and 7 are my friends.
[_] Someone stole my credit cards, but I didn't report them because they charge less than I do.

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I could get rid of it but i wont. (1)

Blackneto (516458) | more than 6 years ago | (#22459460)

[_] Already did - cash is king!
[X] I kept one ... "just in case" ...
[_] I pay them off in full each month
[X] I "usually" pay them off each month.
[_] As long as I can make the minimum payment, who cares?
[_] I'm charging like crazy - chapter 13 here I come!
[_] I'm doing a SCO - chapter 11 and 7 are my friends.
[_] Someone stole my credit cards, but I didn't report them because they charge less than I do.

I'm a firm believer in having an emergency fund and savings in the bank.
We've only had one CC from our bank that we got 5 years after our bankruptcy originally for funds when on a trip.
but the last 2 years we've faced a buttload of car and house repairs.
currently we have a $2500 balance but it should be paid of in a few months.

After the bankruptcy i swore i'd never have another one. but a few issues came up when trying to pay with debit card that i didn't like.

All that being said I still will avoid Store charge cards and the like. And i'm not going to try to play the balance transfer game again. I'll just pay it off and build up the savings to the point it should be.

Re:I could get rid of it but i wont. (1)

tomhudson (43916) | more than 6 years ago | (#22459576)

I dumped all mine years ago. I generally paid them off each month as the bill came in, but my ex wasn't as restrained in spending as I was, so one day I just took them all, cut them up, and flushed them down the toilet. When the renewals came in hte mail, I did the same thing, and that ended that!

I know 2 people who have determined to do basically the same thing - pay them off, then shelve them - and they're making great progress. One has reduced her debt load by half, the other should have it down to zero this month. Unfortunately, I also know some people who have instead gone the "conslidation" route - 3 times so far, and it just gets bigger each time, since "now the payments aren't so big. Stupid!

I can't count how much I've saved because of reduced "impulse shopping", as well as not paying any finance or interest charges, but in the case of someone who maintains a $20k balance, at the new rate of 19% they'll be paying about $40,000 over the next 10 years to "float" that debt. That's insane! I don't know what they;re going to do when it goes back up to 24% sometime in the next year or two (and it will - we're only at the beginning of the current financial crisis).

Good luck on paying that one off!

Re:I could get rid of it but i wont. (1)

Blackneto (516458) | more than 6 years ago | (#22459850)

now the payments aren't so big

thats the biggest problem.

we've managed to do fairly well since the bankruptcy. mostly thanks to the advice of Dave Ramsey's book Financial Peace (now Total Money Makeover)
both of us grew up in households were finances weren't talked about and we picked up bad habits from our parents.
It really kills me to be carrying a balance right now since what I really want to be doing is paying down my HEL with my extra income.
But i'll have half of the balance paid off when i get my tax refund and the rest of it beginning of march.
4 months of socking away savings in the ING account and back to paying off the HEL.

Re:I could get rid of it but i wont. (1)

SQLGuru (980662) | more than 6 years ago | (#22591450)

There is a benefit to using a card, even if you don't carry a balance month to month: insurance.

Credit cards usually include additional insurance on big ticket items (electronics in particular) that go beyond what a store offers. I haven't taken advantage of it, but it is there. Also with renting a car, the credit car usually covers the insurance so you don't have to pay the rental agency for their overpriced insurance.

Layne

I pay them off in full each month (1)

plover (150551) | more than 6 years ago | (#22459494)

I have a friend who also pays them off in full each month, but his trick is that he seeks out cards with exorbitant interest rates (28%) that offer a 3% or 5% discount on just about everything he purchases, including his rent. Ultimately, he saves over a thousand dollars a year, and has never paid a penny in interest.

As for me, I do the same thing but accept frequent flyer miles instead of a discount. My wife is flying to San Francisco in March for $5.00. It's not all bad.

Re:I pay them off in full each month (1)

tomhudson (43916) | more than 6 years ago | (#22459648)

I have a friend who also pays them off in full each month, but his trick is that he seeks out cards with exorbitant interest rates (28%) that offer a 3% or 5% discount on just about everything he purchases, including his rent. Ultimately, he saves over a thousand dollars a year, and has never paid a penny in interest.

That's brilliant! However, I've heard rumblings that banks are now dropping customers who don't generate enough revenue by paying their bills in full. The banks get a "rake-off" of between 2% and 4%, but its not worth it if you're only charging a hundred or so a month per card, and paying it off in full every month.

Re:I pay them off in full each month (1)

Tet (2721) | more than 6 years ago | (#22461700)

I've heard rumblings that banks are now dropping customers who don't generate enough revenue by paying their bills in full.

Unlikely. I speak from some experience here, having launched a credit card company some years ago, which was later bought out by a major bank. It's true that banks don't particularly like customers that pay off their balance every month. But ultimately, so long as the customer generates enough revenue to pay back the CPA (Cost Per Acquisition -- the average amount spent on marketing etc per customer you sign up), then they're happy to keep you as a customer. There is still a small profit to be had on customers that pay off the full balance each month, and it's enough to cover the CPA in an acceptable timeframe. But even were that not the case, the banks are generally happy to accept a small loss in order to retain you as a customer. The sign up rate for cross selling other services to existing customers is significantly higher than for trying to get new customers from cold, and for that reason alone, it's generally worthwhile keeping a loss-making customer, provided the losses aren't too large.

As for me, I never had a credit card for the first 30+ years of my life. When we launched the company, we needed test accounts, and so I got a couple of cards. Each time, I went for the maximum interest rate possible, which allowed me to get a higher cashback bonus, and I pay the full amount off each month. I simply can't understand why anyone would want credit for anything other than specific purchases (house, car[1], and so on). I can't understand the mentality of paying for general things with credit.

[1] Although even then, I've never bought a car on credit, and don't ever intend to do so. The only credit I'm currently paying off is my mortgage.

Re:I pay them off in full each month (1)

plover (150551) | more than 6 years ago | (#22468332)

I simply can't understand why anyone would want credit for anything other than specific purchases (house, car[1], and so on). I can't understand the mentality of paying for general things with credit.

And thus you are receiving failing grades in "Believing in Marketing 101", "Keeping up with the Joneses 203", and of course "Advanced Impulse Purchasing 324".

The average American is marketed to at unimaginable levels, by psychologists who have a deep understanding of group zeitgeist and herd mentality, paid for by businesses run by statisticians, all pounding advertisements at capacity levels through every media channel in existence; with new channels being invented almost daily purely to carry more advertisements. Considering that 50% of Americans are below average :-), having professional geniuses selling worthless crap and valueless services to them is like shooting fish in a barrel. And the credit companies are all too happy to have the marketers offer their products over those same channels, as are the retailers.

It's no longer a question of "why would anybody buy on credit" anymore, it's more of a case of "how smart do you have to be to avoid the marketing," or "how long can you withstand the marketing pressures?" I don't consider myself stupid by any measure, I'm an "insider" in the business, and even I find certain ads extremely compelling.

Most ads don't work any more ... (2, Insightful)

tomhudson (43916) | more than 6 years ago | (#22470048)

"and even I find certain ads extremely compelling."

What are these compelling ads you speak of?

Seriously, I'm at the point where every time I see or hear a commercial, I automatically notice the weasel words, the lies, the misinformation ... for example -

  • every time I hear "Swiffer", I think "really bad for the environment because it promotes disposable single use mop-heads".
  • "Zoom-zoom cars." Gas-hogs for people who will rice them up with coffee-can mufflers.
  • "Breakfast cereals." You must think I'm too lazy or stupid to make a hot meal that's 10x better for the same price or less.
  • "Kelloggs corn flakes and 8 oz of milk is a good dietary source of protein". So is just the 8 oz of milk, buddy ...
  • "Laser-vision." Hey, you forgot to mention that as you get older, you'll need glasses again ...
  • "No-risk offer." In other words, you want my money up front, and if it doesn't work and I actually follow through with the refund process, you'll give me a partial refund, but I eat that over-inflated shipping and handling charge ..."
  • "New and improved!" Well, which is it? Is it new, or is it improved?
  • "At this price they won't last!" Gee, do you REALLy want to tell everyone they're made that crappily???
  • "Limited quantity" Its so crappy the manufacturer went broke.
  • "90% of our students get jobs." Since you don't specify that they get jobs related to the classes they paid for, I assume they got McJobs after finding out your "job training courses" were worthless ... and the other 10% are probably on welfare ...
  • "The fastest-growing" - easy to double your numbers when you're the smallest, newest, greenest one. 1 customer, 2 customers, 4, 8, 16, 32 - look, we double in size every month!!!
  • "No money down. 36 months interest-free!" How much if I pay cash? I know that the interest is rolled into the deal ...
  • "Best fuel economy in its class" Hey, nice way to avoid giving me the rated mpg. Caught ya!

Want to sell to me? Be honest. Tell me why you think your product or service is a good product or service. Tell me how it will save me money or time. Give me the &)(*(^^%%$# PRICE!!! Do NOT engage in negative advertising (this applies especially to politicians). Do not engage in market speak. Do not shout! Do not try to create a sense of urgency - first, I won't be rushed, and second, if you're in such a hurry, I'm going to treat you with extra distrust - if its a good deal today, it will still be a good deal tomorrow.

Re:Most ads don't work any more ... (2, Insightful)

plover (150551) | more than 6 years ago | (#22470914)

What are these compelling ads you speak of?

Micro Center ads for Quad Core chips, for example. Even though I'm typing on a perfectly serviceable Athlon 4000+ that is generally sitting around idle, I *want* a faster computer. Even though the computer I'm typing on probably has more CPU cycles per second than the sum total of all CPU cycle seconds on all computers manufactured prior to 1970, *I want more*. It's not that there's one particular shiny Intel ad that's compelling, it's a constant flood of new product announcements, reviews, and machine displays. That's what marketing does. It makes you want things which you do not need.

Marketing is not some asshole repeatedly shouting "BUY THIS MOP, IT REALLY WORKS!" That's like calling someone who wrote a Visual Basic macro for Office a "software engineer".

Did you ever buy that 71" Samsung you were looking at a year ago? Your exact quote was "I'm thinking of spoiling myself", and you even repeated the phrase "spoiling yourself". The fact that you even wrote a journal article about it said a tremendous amount about your internal "desire" level. Now, dig deep to the root cause of "why" your brain desired a big screen TV, when your existing TV probably still displayed your favorite shows just fine. Something made you *want* that TV set, and the chances are that a large part of that desire was manufactured by a constant barrage of marketing.

Modern marketers aren't just showing you a commercial and checking "Tom Hudson" off the list of commercial viewers. It's now an orchestrated, synchronized, chain-fed shotgun of everything from billboards to newspaper advertisements to in-store displays to product-placements-in-movies to on-line reviews to donating-plasma-displays-to-charities to LCD-displays-above-the-pissers to paying-cute-girls-to-chat-up-the-benefits-of-Sony-big-screen-TVs-in-sports-bars.

You wanted that TV because Samsung, Sony, Toshiba, LG, and Panasonic wanted you to want it. That's professional marketing, and it's damn hard to resist.

Re:Most ads don't work any more ... (1)

tomhudson (43916) | more than 6 years ago | (#22471248)

That's just it - I wanted to spoil myself ... but when I actually looked at the big-screen TVs, the reality was disappointing. And that's when I realized that I just am not all that interested in it, despite all the hype, despite my daughter having a 60" TV, despite my brother-in-law and one of my friends having 42" TVs ... so I decided to continue "spoiling myself" by NOT buying one. This way, I don't feel guilty about not watching it, and reading a book instead :-)

I'd rather go visit friends, etc.

Which reminds me - I was thinking that, for the next poll, I would ask people what board games they have in their "game closet". Those old cardboard, paper, and plastic games are still fun (Risk or Pictionary for example).

I *did* buy a dvd-recorder for the TV this christmas (they were on sale for $99, so I bought 3 - 2 as gifts). I even used it to record a grand total of 1 movie ... It'll be more useful to transfer video from my camcorder to disk than for actually recording TV shows.

Ultimately, if the $$$ stayed in my pocket, the advertising was ineffective.

I spend all day working with computers, but as long as I have 2 monitors, lots of disk space, and a decent amount of ram, I'm a happy camper. The office box is an Amd64 3800. Oddly enough, I don't find it much different from my home box - an Athlon / Sempron / WhateverTheyRenamedIt 2600. Its fine for writing code, compiling, and posting on slashdot ;-0

Of course, if I were running Windows, I'd probably feel the "need for (more) speed" ...

Re:Most ads don't work any more ... (1)

plover (150551) | more than 6 years ago | (#22471700)

We just got together with my wife's side a couple weekends ago for a "board game Sunday." We played a couple hands of "Pit" (mostly because my mother-in-law doesn't like all the shouting! :-) A couple nephews played chess, others played some dice games, some euchre and cribbage, some tried to set up Mousetrap but lost patience when it didn't work right, and basically it was just a really fun afternoon spent with each other.

And to stray completely off topic now, I bought my wife a new copy of Pit for Christmas (the deluxe edition to get the little bell to further annoy the mother-in-law, of course!) And we noticed that Pit has changed since her aunt purchased their deck in 1973. It used to feature what were once common farm products: hay, flax, rye, and oats. But they've replaced them with more modern crops like oranges and soybeans. Didn't change the game play, especially since I couldn't identify a field of flax unless there was a sign posted saying "This is a field of FLAX, like in that game."

Re:Most ads don't work any more ... (1)

kurokaze (221063) | more than 6 years ago | (#22563828)

Oranges and soybeans? This must be the deluxe version for sure.. coz the version I play has rice, cocoa, oil, gas, etc.

But... damn fun game pit is...

Now if only I can get as many people interested in Catan!!

Re:Most ads don't work any more ... (1)

plover (150551) | more than 6 years ago | (#22568132)

I like Settlers but next to Pit it takes a comparatively long time to learn, and definitely a longer time to play.

Pit is something a bunch of drunken people at a party can just pick up a handful of cards and start out yelling at each other. And if they're doing it wrong, it's all the funnier! "Corn! Corn! I mean I need two barleys -- oh, shit, did I just say that out loud? Four! Four!"

But my kid and his friends spend hours every week playing Catan at school, with all the add-on packs and stuff.

Re:Most ads don't work any more ... (1)

rthille (8526) | more than 6 years ago | (#22477918)


We've got a 32" or 36" flat-front (tube) tv that's probably about 8 years old now. My wife is pushing for a new 52" LCD/Plasma. I'd rather go back to before when we had an old apple //e color monitor hooked up to a vcr that I dug out of a dumpster for the tuner. Actually, I wouldn't mind the 52" display, I'd just use it to display our photos which we hardly look at now, and fore-go the TV & movies.

Re:Most ads don't work any more ... (1)

tomhudson (43916) | more than 6 years ago | (#22483986)

Wait another year - they'll be half the price or less next year because of the reduced demand:

  1. Everyone who wanted to buy one and did a refi or HELOC already did;
  2. Recessions always reduce demand - and we're already 6 to 12 months into one as far as the average worker is concerned (and when you consider that, after real inflation, incomes haven't grown since 2000 ...);
  3. Over-capacity as the adoption of hi-def players doesn't ramp up as fast as hoped;
  4. Many consumer's redit cards maxed out - those who aren't, aren't in a rush to load up on debt;
  5. Credit / liquidity crises gets worse, so fewer "no money down, 36 easy payments" plans to get people to "take the plunge";
  6. Lots of competition from used units coming onto the market at desperation prices, as 3 million more homes go into foreclosure over the next 2 years
Heck, the way things are looking, you'll be able to pick up a used 60" for $500 or so by Christmas ... you can already get a 50" used for $800 on craigslist [craigslist.org] , or a 61" for a grand [craigslist.org] - oh, wait = 60" for $500 [craigslist.org] . If you look around, you'll be able to find similar deals - people who are walking away from their mortgages are "motivated sellers".

Re:Most ads don't work any more ... (1)

Miguelito (13307) | more than 6 years ago | (#22553738)

Yeah, I've been looking at the same 71" Samsung that you likely were.. and have been doing so for over a year now. I'll probably be buying soon (after I zero out my HELOC.. which was for bathroom/kitchen repair/rennovations) when the next models come out and the current ones drop to clearance prices. To answer the original question that brought that up.. no one made me want to get a big TV but myself. I currently have a 8 year old 65" mitsu.. that still works ok.. but has a lack of hdmi inputs which I really want to change too.. purely for the more simple hookups with added support for 1080p (and 720p really.. current set can do 1080i but not 720p). I run my TV a LOT (rarely am I actually putting full attention into it though.. I'm usually online with my laptop and use it for background noise, but do watch things occasionally) and since I can easily afford it, I want to spoil myself too. I play a lot of console games too and the added quality would be nice. :)

As for the board games... Risk is still a classic, if you can find some people that are willing to put in the time. Of course you mentioned that, and the classic Monopoly. I personally like to play trivia games, but find a hard time getting friends and family to play because I usually kick their butts every time. A couple trivia games that went over pretty well with family were the 80's and 90's games.. trivia limited to the decade in question on each game. More focused on the time frames suggested rather then all over the map the way the old stand buy, Trivial Pursuit can be.

Re:Most ads don't work any more ... (1)

tomhudson (43916) | more than 6 years ago | (#22554218)

One solution for trivial pursuit is handicaps - you have to answer questions from 2 or more editions to advance your token. Its a LOT harder.

Re:I pay them off in full each month (1)

nacturation (646836) | more than 6 years ago | (#22577396)

Unlikely. I speak from some experience here, having launched a credit card company some years ago...
Interesting... I'm curious to know, how does one go about doing something like that? Does it take a ton of start-up capital to get going?
 

I've kept one (1)

RM6f9 (825298) | more than 6 years ago | (#22459878)

and glad I did - medical bills, even with decent insurance, the "patient's responsibility portion", is a back-breaker - The race between my building a third income and our losing our second (and her, and more than likely the house) is already uncomfortably close - hence the sig.

Re:I've kept one (1)

OS24Ever (245667) | more than 6 years ago | (#22601942)

have you had the stuff tested for lead and dead people? Seriously.

Looks interesting. How much money did they want from you up front?

They won't go broke. (1)

turg (19864) | more than 6 years ago | (#22460110)

Citibank won't go broke because they can make money appear out of thin air. Well, technically it's a country's central bank that does this when they lend money to the banks, but it's the bank receiving this money that's making the decision that results in the creation of money.

Re:They won't go broke. (1)

tomhudson (43916) | more than 6 years ago | (#22462714)

CitiBank is the one most likely to go broke. #2 on the list is Bank of America. The problem with the banks is that they need to have a certain amount of capital - money in reserve - or they can't borrow, even from the Fed's "discount window." Currently, neither on is expected to survive the ongoing housing crash in their current form, which is only expected to reach bottom some time in 2010 - 2001. BoA's purchase of Countrywide is looking worse every day - talk about buying an asset that's in decline.

Expect to see something like this [bloomberg.com] - as the government nationalises both banks if foreign buyers either don't step in, or the government decides that majority foreign ownership is "undesireable".

[x] I'm charging like crazy (1)

themusicgod1 (241799) | more than 6 years ago | (#22461150)

This reply has been brewing for quite awhile, and is not *completely* a reply to this thread, but may as well post it here.

"Going into debt to buy consumer goods? Stupid."

Although I've never been that good with my money, since I've taken a few economics courses (and of course, CS courses), I've learnt a few things which has changed the way that I approach
my finances.

The first thing, is more or less exactly what money is. What is it? Most of the time, when we talk about money, we think about something metal or paper you can hold in your hand.
Of course, most money has very little to do with these relics; money these days is accounted for by computers. It isn't even "stored" in computers, it is tallied. You can create
a billion dollars not even by creating more bits, but by changing a single digit on a computer terminal/memory location. That is what money is. Sure, there are social institutions
to enforce the patterns of behaviour involved in using money, but money, is essentially nothing at all. The contents of the pointer set to NULL. So why do we care so much about it?
Historically, having money makes the difference between starving to death, and not starving to death; but if you take a step back, it isn't actually money that provides you with
food, or doesn't, but the social institutions surrounding money. They are either efficient or inefficient, fair or unfair, pleasant or unpleasant, usable or unusable by you, but
they are what provides you with food, not the money itself. It's our superstitions about money that lubricate social interaction, not the money itself. Money is, and does nothing.
And as such, I have long since stopped caring about whether or not I have a dollar, a thousand dollars, negative-thousand dollars, imaginary-thousand dollars or
";Y}iV5:hQ" dollars.

Second, I would argue it is not the fact that something was purchased on credit (and thus carries a higher cost, with a portion of that cost in going to the banks in the form of
interest) that would make 'buying consumer goods on debt' stupid, but only buying consumer goods at a cost that is higher than the actual value of those consumer goods to that person.
Some people probably do buy things using credit, that once the price of interest is taken into account would be a price higher than they would be willing to pay, and are thus swindled
by their own ignorance. But I don't think it's necessary to be ignorant of the costs involved at all; it may make perfect sense to buy using credit.

Take for example a plasma screen TV(probably the least necessary thing I can imagine). I know people who drool over those things. They would spend years of their lives sitting vegging
in front of it, or something, so would enjoy it quite a bit. They would be willing to pay, say, 5,000$ for one. But the price is only 2400$ for some certain model X. They would be
willing to pay 2800$(2400+400 interest in the long run), and they *should* be willing to pay that much, using credit, because it is rational for them to do so. Now whether or not they
should actually desire a TV so badly is another question entirely, but it's not relevant; there are some goods that are actually cheap when you think about it, and paying another
10%, 30% or even 300% for those goods makes perfect sense in the long run. Personally, I would probably pay 2$, 5$ or even 40$ for a litre of milk now and then, since I put a high priority
on the health, clear thinking and deliciousness that milk allows. And if the 'cost' of a litre of milk is 2$, with 3$ of interest fees in the long run, I'm still getting a good deal, and
I don't think at all that it's 'stupid' of me to buy milk at that price.

Thirdly, credit allows longer-term decisions to be made. Last year I "planned" my finances out successfully for more or less a year and a half in advance, and somehow by some random stroke
of luck followed through; I planned to be completely broke right about now, and sure enough, I'm completely broke. I survived the entire year of 2006 without working, and taking a full
courseload of university classes, all without much help from student loans; in general, and especially when you're broke, long term planning is easier when you allow yourself credit.
I make easily 10 times what I made before I started university, and it was a good deal pay a few hundred or thousand dollars to the banks so that I could get to this point. I would be
probably willing to pay five times what I have paid, easy. Being able to plan in the long term means better opportunities in the long-run, and that is certainly not "stupid".

Lastly, and especially considering my first point, some things are just more important than having favour of the banks. Survival is certainly one, but I would argue so is the survival
of others. If something is getting in the way of your helping someone else who needs your help, then you should disregard, or avoid it. There are plenty of women in the world who need
our help in getting education, and basic hygiene. There plenty of people who are in need of a clean, cheap source of water. For the cost of a few major desal plants, a lot of political
tension can be dispelled, and peace becomes more attainable. With peace, security, prosperity and happiness. You may think these are lofty things that are utterly unconnected to you
but we now have the technological tools to move people in such a way that given loans, and without the help of governments, people like you and me could pay for, and impliment these things,
coordinating ourselves online. If anything, in the long run, it may be stupid to *not* go into, and stay in, debt if we are actually capable of accomplishing this.

Re:[x] I'm charging like crazy (1)

tomhudson (43916) | more than 6 years ago | (#22462818)

"Investing in yourself" can take 2 different forms - buying goods and services that increase your productivity and marketability (better nutrition, education) and "fool's gold" - that big screen TV. I almost bought a big screen TV last year - then I realized 2 things - even the $6,000 model had a relatively lousy picture, and I don't watch TV. Most months, the TV isn't even turned on.

I'm making an exception for the Sarah Conner Chronicles - if I remember - but that's it. That will in effect more than double my TV watching for the year.

I like the concept of "lending circles" a lot better. This way, the money is focused on increasing long-term worth and value. In addition, people get feedback on their plans, and make connections. The payback rate of lending circles is 94%. This is because more than 19 out of 20 loans result in a long-term increase in income for the borrower.

Re:[x] I'm charging like crazy (1)

themusicgod1 (241799) | more than 6 years ago | (#22463120)

You must enjoy something. There is an unmentioned 3rd option; spending on making life liveable. Whatever the cost, it is certainly an alternative to investing in one's productivity. I used to think(and to a large extent still do) that life is fundamentally unliveable, and that suicide was really the only rational choice. Now I'm thinking it is possible to make life liveable, but it takes a lot of work, and even more smarts.

And I hope you're right about lending circles, that increases my hopes for the people I've gotten into ripple [ripplepay.com] actually treating it responsibly...

Re:[x] I'm charging like crazy (0)

Anonymous Coward | more than 6 years ago | (#22597704)

Very interesting and thought provoking response (at least for me).

The only thing i take issue with is the "printing money at will" part... While they can theoretically print money at any point, in reality, they're not creating money. Each dollar they print, is essentially taking 1/nth of the n dollars that are current economy. Essentially, by printing a dollar, they're taking a little bit of money from everyone who has some to get a dollar to spend.

None of the above (1)

smitty_one_each (243267) | more than 6 years ago | (#22462060)

Wife and I have a generally low-stress policy that's decreasing the annoying (but not disastrous) level of debt we'd accrued.
Use one card for all our transactions, and that card kicks back 1% to the mortgage. Keeping it paid off.
Using low-interest balance transfers to maneuver the rest of the load and continue to pay it down.
We're also making healthy amounts of long-term investment elsewhere.
Is it the most efficient approach? Unlikely.
The virtue is that we've been fairly consistent over the last 18 months or so.
The trick, learned a couple of years into the marriage, was to let it be _her_ idea.
My grandstanding alone was ineffective.
Women: can't live with them, can't live with'em. ;)

Re:None of the above (1)

tomhudson (43916) | more than 6 years ago | (#22462872)

"The trick, learned a couple of years into the marriage, was to let it be _her_ idea. Women: can't live with them, can't live with'em. ;)"

I hope your wife doesn't read slashdot. ;-0

"The virtue is that we've been fairly consistent over the last 18 months or so."

That's something people need to realize - like dieting, you can't do it in one week, or one month. It has to become a real habit, and only then is it easy.

Re:None of the above (1)

smitty_one_each (243267) | more than 6 years ago | (#22463560)

Nah, she don't /., though I do have her on the Google Reader.

re: sig (1)

slothman32 (629113) | more than 6 years ago | (#22528568)


Does it translate to "I am not a man, I am a curse"?

Credit card usage (1)

Zeriel (670422) | more than 6 years ago | (#22463260)

My wife and I have been keeping a steady balance of about $3000 on our credit card, mostly because my credit score seems to go up faster when I do that. Otherwise, we pay off what we purchase each month.

I can't even conceive of a $20k+ credit card debt. At this point I owe $3k on the credit card, $1.5k on some "no payments for a year" furniture (and that $1500 is in an interest-bearing account, and has been since the purchase *grins*), and around $7k of student loans of her that we're paying off at an accelerated rate. That list used to include a new car, but it's paid off as of yesterday, and we're renters due to the market for housing being continually insane in my area.

Re:Credit card usage (1)

tomhudson (43916) | more than 6 years ago | (#22469790)

"$1.5k on some "no payments for a year" furniture (and that $1500 is in an interest-bearing account, and has been since the purchase *grins*"

You've been paying at least 14% interest (and possibly more) on that "no payments for a year" deal. The vendor grosses up the sale amount to cover it, and pays the finance company that enables the contract. If you want to see the true rate, stop paying it ...

So unless that interest-bearing account earns you at least 14% after taxes, you're behind ...

Never mind that I've seen these deals from the merchants' point of view (you get to see a lot of "behind-the-scenes stuff in I.T.) - just walk into the same place with a wad of $100 bills and watch how fast the price comes down ...

Re:Credit card usage (1)

Zeriel (670422) | more than 6 years ago | (#22474914)

Oddly, the initial transaction was supposed to be cash, and it didn't change the price--your thoughts were the same ones I had.

I figured, if I wasn't gonna get a break for cash, I'd just take the deal and pay it off later and at least recoup some interest.

(That and it was $500-$750 cheaper at the place I got the furniture than the next cheapest place with equivalent stuff.)

Re:Credit card usage (1)

tomhudson (43916) | more than 6 years ago | (#22484042)

What you have to do is show that you're prepared to walk unless you either get a better deal, or they throw in a sh*tload of stuff. They'll do one or the other (usually the latter, since this way they can say they didn't lower the price of the tv ... hah!).

Make friends with one of the people working there, let them know you're serious, and you'll get a chance to see as they diddle with the amounts on-screen at the sales terminal to make the deal work (its how I got an additional 13% off my camcorder, over and above the 15% "open box" discount).

Re:Credit card usage (1)

Zeriel (670422) | more than 6 years ago | (#22488664)

I do that with electronics and appliances, but I shop for furniture infrequently enough that it's not really time-effective to do it there.

(when I got my washer and dryer, I think it was 15% "display item discount", 10% cash back, and 12% miscellaneous discount)

Re:Credit card usage (1)

afidel (530433) | more than 6 years ago | (#22563986)

It depends, I know some places the zero percent teaser rate resets to something like 19-25% at the end or if you miss a payment so the credit company doesn't charge the merchant anything. If you are disciplined and make the payment for the amount of (purchase price/months at 0%) then you can make out fine. I did this with a couch recently. We wanted a very nice couch and after shopping 4 places that carry this brand we finally found one willing to negotiate well, we saved about 20% off the highest price we were quoted and 10% off the average. We then used their zero percent financing option and saved another ~5% by keeping that money in savings. Of course missing even one payment would have wiped half the savings out, but that's why you need to be responsible with your money and always keep a large rainy day fund.

Paid In Full (Every Month) (1)

MonTemplar (174120) | more than 6 years ago | (#22468300)

I'm usually pretty good about not going crazy with the credit card. The Amazon Wishlist (and others) has saved me countless times. ^^;

I avoided them like the plague after my bankruptcy (1)

nizo (81281) | more than 6 years ago | (#22534050)

Though now I have two, which I got to help me pay for school (mostly software, and some hardware to run said software, and books/tuition). Though I ended up putting some expensive car repair work on one :-| But then again it is a used car that I am not making payments on, and is still reliable, so cheaper to keep at this point.

One is almost paid off, with the other one carrying about $2000 on it. I should have them both empty in the next six months or so. At that point, if I can I am hoping to travel (Siggraph would be freakin' awesome) since that is something I have been putting off my entire life. So assuming the stars align and the economy doesn't hit the crapper completely I may charge some plane tickets later.

I am hoping anyway.

Ever heard of "saving up" for things? (1)

p3d0 (42270) | more than 6 years ago | (#22587998)

Try this: continue making fake "credit card payments" into a separate bank account after you pay off your card. If your numbers are right, you'll have $2000 plus interest a year from now, and you can go to Siggraph without going into debt (and paying interest) for it.

Front Page Poll? (1)

Ruzty (46204) | more than 6 years ago | (#22550246)

Looks like your poll became the front page poll almost verbatim.
Grats Tom?!?!?!

Re:Front Page Poll? (1)

tomhudson (43916) | more than 6 years ago | (#22550422)

Yep - they even left the html tags in with their cut-n-paste.

Nice to know that they read my journal ;-0

well before my bankruptcy.. (1)

kesuki (321456) | more than 6 years ago | (#22583102)

i was one of those people living off their credit cards with only the 'hope of someday having a big salary' as the feasibility of me paying them off. I knew a lot about computers and kept thinking one day I'd land a job with an internet company, and of course anything i spent on computers was just part of my 'education' so i spent a lot... but that 'someday' never came, and long before it came there was my collapse into bankruptcy, because i simply couldn't handle the stress from my work (it was an entry level job, i could barely manage part time) and i didn't get enough 'extra income' doing pharmaceutical trials at a company called "Pracs" to keep me afloat...

then i moved back in with my parents, and they put up with me for quite a while without pressuring me too much, although i tried to find work, nothing i could handle would cover my costs... and then mental illness became a significant problem... i was blacking out, acting bizarrely, doing things IRL that i had done in the past, with no recollection of having done them, having problems with paranoia about hackers etc... eventually i was hospitalized, and diagnosed, and have done much better with medication.

with disability uncertain, i do have a credit card, but for obvious reasons my mother now has to approve any purchases i 'need' so i don't use it much, basically she allows me to subscribe to a movie rental place, and allows me to purchase blank dvds when i run out. I don't sell movies, but copying discs generally avoids 'errors' in replay that are annoying. if the software can't copy the disc, then it's too damaged for normal playback anyways. this also saves me from re-renting good series or movies, although it generally takes me several years before i re-watch stuff.

So now i have an apartment paid for by HUD, food stamps to cover my groceries, and a lady who cleans my place and takes me shopping once a week. The last item i could maybe live without, but since i lack transportation, the county simply authorized the funds to cover her, since there was no other way for them to pay for my transportation to buy groceries. It's kind of crazy, but it's a lot cheaper than paying to house me in a group home or time spent in the hospital, so the county pays the bill for the lady who cleans and takes me shopping. they for whatever reason have no way to fund giving me cash, or transit stubs for the city cab, so instead i have a lady who takes me shopping, because THAT they can get money earmarked for, because of my mental illness.

Not that I'm complaining, she's easy to get along with and saves me from doing housework that in the past I've had a very shaky record of completing.

[_] Already did - cash is king!
[X] I kept one ... "just in case" ...
[X] I pay them off in full each month
[_] I "usually" pay them off each month.
[_] As long as I can make the minimum payment, who cares?
[_] I'm charging like crazy - chapter 13 here I come!
[_] I'm doing a SCO - chapter 11 and 7 are my friends.
[_] Someone stole my credit cards, but I didn't report them because they charge less than I do.

Re:well before my bankruptcy.. (1)

tomhudson (43916) | more than 6 years ago | (#22584206)

That's an interesting story. I'm glad things are better for you now.

I pay them off every month (0)

Anonymous Coward | more than 6 years ago | (#22583564)

It's the only way to go: to pay them off every month. You get the free credit for 20 days and use of the product then as long as you didn't spend too much you just pay the bill at the end of the month.

Not wholly offtopic... (1)

jawtheshark (198669) | more than 6 years ago | (#22587284)

I pay them off each month, all three of them. I have one exclusively for online purchases, it's not a physical card: it's just a number and has extra safeguards. One is associated with my current account and the third is associated with the joint current account with my wife. Each one of them have a special purpose.

Why? Because I make a budget [slashdot.org] . A little planning, a little calculation and money problems are gone...

Re:Not wholly offtopic... (1)

tomhudson (43916) | more than 6 years ago | (#22588768)

Your budget idea is a good one, and so is the two accounts method.

It *is* possible to do it with only one account, but you have to be disciplined about it.

Re:Not wholly offtopic... (1)

jawtheshark (198669) | more than 6 years ago | (#22592696)

Well, I don't want to take credit: this is the system I learned from my dad and I just published it in a journal because it is infuriating that so many people cannot manage their money properly, even if they are on a site like slashdot where the more mathematically inclined hang around.

Yes, discipline is part of the equation. My wife has a feeble for expensive clothes and accessories, but I pretty much budgetted that in ;-)

Re:Not wholly offtopic... (1)

tomhudson (43916) | more than 6 years ago | (#22596276)

My wife has a feeble for expensive clothes and accessories, but I pretty much budgeted that in ;-)

Clothes, shoes, purses and coats come with the territory, you ignorant clod!

One thing I've noticed is that most single women are in better financial health than their boyfriends. Guys tend to want to "pimp their ricer", buy the latest toys, etc. A couple of grand on a new set of rims buys a LOT of clothes and accessories ...

Re:Not wholly offtopic... (1)

jawtheshark (198669) | more than 6 years ago | (#22597532)

Guys tend to want to "pimp their ricer", buy the latest toys, etc.

I'm not one of those. If anything my financial health was better than my wifes. However, regarding that quote: I never got that. Why do these dolts don't just buy a car that they like in the first place? I've got an unmodified 2000 Audi TT and I have never felt the need to change anything on it. It is perfect as is. Changing it would be the equivalent of punching the designers and engineers in the balls.

Oh, and I got that one on a partially tax-deductible loan ;-) Gotta love an accountant father ;-)

As for toys? Ha! I'm a dedicated dumpster diver. All of my computers are at least 3 years old, if not older. The lone exception is my laptop and I only bought it because my old laptop started to physically fall apart. Even then I bought the cheapest dual-core (AMD) laptop *on sale*. My cellphone is 3 years old and it cost 79€ back then, I have the second-cheapest Palm in existence (120€) and that was a waste of money because I frankly don't have that much meetings anymore. (Back when I bought it, I did though)

Financial responsibility is something one learns, and my parents did a damned good job at it!

For me ... (1)

ces (119879) | more than 6 years ago | (#22590266)

[_] Already did - cash is king!
[X] I kept one ... "just in case" ...
[_] I pay them off in full each month
[X] I "usually" pay them off each month.
[_] As long as I can make the minimum payment, who cares?
[_] I'm charging like crazy - chapter 13 here I come!
[_] I'm doing a SCO - chapter 11 and 7 are my friends.
[_] Someone stole my credit cards, but I didn't report them because they charge less than I do.

I tend to try to pay my credit cards down quickly. I must admit I've put a few toys on them that have taken more than a month or two to pay off. Unfortunately I've hit some financial difficulty that means I'll be making minimum payments for a while and dumping some expenses on the cards. This hit just after I put a major purchase on one card. OTOH I plan to pay the cards back down as soon as I am able.

Thankfully the rate on all of my cards is pretty decent. I called the bank issuing the card with the highest rate on it and managed to talk them into lowering my rate to the same as my lowest rate card.

Re:For me ... (1)

tomhudson (43916) | more than 6 years ago | (#22596226)

This hit just after I put a major purchase on one card

Isn't it always like that ... :-(

Hopefully, things will work out over the next little bit and you'll get them cleared again.

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