JP, what do you consider a "low" interest rate on credit cards?

 

I know 18% is not LOW! I wish it was like -10%. Then they would pay me for having a high balance!

-Matt

 

3.9%....some have 0% for 6 months or longer.

 

Another recipe for disaster would be use credit cards to free up money to invest in equities with the expectation of a 25% return.

 

Well, if you have a credit card with "0%" interest on your outstanding balance, by all means carry a balance and make minimum payments. If the interest rate is 3.9% and you're holding enough cash to pay off the cards, that means you have cash earning very low interest (probably not even 3.9%) laying around while you're paying the higher rate on your cards. Why not take the liquid cash and pay the cards off?? Is credit card interest even tax deductible??? The last several years have taught all of us how volatile the stock market can be.

 

I don't keep much cash around. That doesn't make any sense to for the reason that you mentioned.
And no, CC interest isn't deductable. It was back in the early 80's but they phased it out.

 

You know- when it comes down to it...

You get one chance to live.

If you want to suffer for 5-10 years to get your debts paid off then go for it and pat yourself on the back.

I don't have much sympathy for credit card companies that start tacking on almost an extra $100/month just cause you missed a payment when you are down on you luck. Multiply by multiple credit cards- and you got almost guarenteed bankruptcy.

And this is the problem- the debt the companies heap on when they smell trouble is not what you signed up for when you had good credit and 0% interest rates.

Never did bankruptcy myself- but came close 6 years ago and am still just staying above water.

I wouldn't blame anyone who was in a similar position and went for the bankruptcy.

jpsartre12

Your thoughts are contrary to the mindset of the people I know that actually are rich. The tend to carry 0 balances on credit and would never expect 25% ROI in stocks. You might be living in a bubble that may burst someday. Please tell me your investing strategy so I can get 25% consistantly and I'll give you back a 5% kickback.

 

[QUOTE]Originally posted by jeffthompson
You know- when it comes down to it...

You get one chance to live.

If you want to suffer for 5-10 years to get your debts paid off then go for it and pat yourself on the back.

I don't have much sympathy for credit card companies that start tacking on almost an extra $100/month just cause you missed a payment when you are down on you luck. Multiply by multiple credit cards- and you got almost guarenteed bankruptcy.

I have less sympathy for someone living way beyond their means then dumping their debt on someone else. How fair is that?

And this is the problem- the debt the companies heap on when they smell trouble is not what you signed up for when you had good credit and 0% interest rates.

They raise your interest rate when the loan made is riskier. If they had little risk making a loan, they charge low rates because their chance of default is less. It always pays to have good credit. Thanks to 25 years of my wife's diligence, we have perfect credit (according to TRW), anyway).

Never did bankruptcy myself- but came close 6 years ago and am still just staying above water.

I wouldn't blame anyone who was in a similar position and went for the bankruptcy.

To me, it depends on how they got there. If illness caused them to go into debt, I have a lot of sympathy for them. If they simply lived beyond their means, I'd be in favor of taking every possession that they owned.


jpsartre12

Your thoughts are contrary to the mindset of the people I know that actually are rich. The tend to carry 0 balances on credit and would never expect 25% ROI in stocks. You might be living in a bubble that may burst someday. Please tell me your investing strategy so I can get 25% consistantly and I'll give you back a 5% kickback.

I never claimed that I was rich, but I am comfortable enough that I'm not living paycheck to paycheck and will be able to retire without eating dog food when the time comes.
As for my investment strategy, don't get greedy. Make some money then convert part to less risky assets. Then start over.

 

I've got a younger brother who filed chapter 13 not so long ago-my youngest brother actually, and he's only 19 years old.

Everything in life is not nearly so cut and dry as those who are well off are making them out to be. Some have had the good fortune of making some very good decisions early on and reaping the benefits of those decisions later. For some it's been a hard road with a hard learning curve. Even the most thought out plans can sometimes go bad, whereas some people don't even spend that much time planning anything but end up well off- theyre the lucky ones.
For being 19 years old my little brother had it going on, a decent job in management at a Wendy's restaurant, putting himself through college to get a business management degree, bought his first car(a used 99' Ford Taurus) in his own name, opened himself a checking account, and also got his first credit card- he was working on all these things from when he turned 18 years old. He's lived at home his whole life paying rent to my mother for his bedroom- this is as much for her benefit as it is for his own, she lives on a very limited income, and my father passed away 5 years ago - the rest of us siblings have moved out and 2 of us have families of our own. He helped one of my other less responsible brothers to get a cell phone (actually he was guilt tripped into it) but it had to be in his own name as my other brother's credit was not up to par. He helped my sister to get her first credit card as well. Good kid, with good intentions, who made some regrettably naive decisions.

Things went downhill QUICKLY. My other brother ended up "falling in love" with some internet junkie in Oregon, and went out there to see her. He came back a week later and put his notice in at work, collected his "oh so secret"savings together,packed his car, and moved out there-with the phone.
It lasted about a month. After he was done spending a small fortune on this chick and her family, she moved back in with her old boyfriend and sent my bro packing. He came home wiped out,
broken hearted, and jobless.

We all felt for him-and I was watching him closely to make sure he wasint going to do something to himself. The little guy (my favorite,who I still kiss, right on his cheek, everytime I see him-regardless of who's there)
found out a month later that my brother, who had been in Oregon, had racked up some serious roaming charges while he was out there - 3300.00 worth! My jaw dropped when I heard this. But HOW?????? Turns out, when he was out there she would'int let him spend the night at her house, and instead he was on the cell phone talking to her for hours on end from either his car, or a motel! True love for sure........

AT&T would not make any concessions, nor would they work out any form of payment arrangements PERIOD. The cocky supervisor told my brother - it's due NOW- not later. When the little guy just asked to have his cell phone services suspended until it was paid off at 200.00 a month, he was told "Don't you believe you should pay your bills?" "You recieved a service, and now you don't want to pay us for it?" "I don't know what to tell you kid- go file bankruptcy I guess, but we better get paid or this is going on your credit." What a scumbag. We all know it dosent cost AT&T anymore money for that extra time thats used - they buy their air time bulk at the same rate, and sell it off at different rates according to their various plans -but they would rather push someone into bankruptcy, than make payment arrangements on an already inflated bill, full of rip off charges.

To make matters worse AT&T was adding various surcharges and interest fees to this unpaid bill over the next 3 months until my little brother's bankruptcy went through - even though the service had since been cut off! By the time of his bankruptcy it had inflated to a little under 5000.00.

This was not the only reason he ended up in bankruptcy court - shortly after this, my Mother had to go to the hospital one night for pulminary edema. she was comatose, and on breathing apparatus for a week. Then she had to have surgery for it. We all went to be with her, and I myself spent many hours on end by her bed side-especially just before the surgery. The little guy lived there though - this was taking a harder toll on him - he's younger, with no family of his own - my Mother is everything to him. He tried juggling work with the hospital, but this only lasted a few days- he was way too irritated at the thought of being away from my Mother to serve hamburgers, and in fact got into a huge spat with a visiting district manager after recieving some criticism for how the store was running. He asked for leave and when the vindictive DM kept putting him off on the issue for a few days, he just stopped showing up for work(after telling the DM that this was gonna happen) and it was the excuse needed to fire him.
He changed, he started living off his credit card for everything. Even when my Mother was home from the hospital and doing reasonably well - he did not want to leave her alone. His car payments were not being made, but my Mother did not want for anything. He'd water her garden, pick her weeds, rub her feet, cook her meals, clean house,etc - in short he was doing everything he could to make himself feel like he was a good son.
He even broke up with his girlfriend over this. More than once my Mom even reminded him of his own life to take care of- but he'd make her feel like things were ok.

I really think he was seriously depressed, but would never let on.
His college course was screwed, his time invested on the job was gone, credit card maxed out, car payments behind, cell phone gone, girlfriend gone, he was always thinking my Mom would die at any minute, his credit took a major hit- and AT&T was still not done putting the screws to him. I helped out with cash here and there to keep things afloat in my Mothers home- but I didint have the resources at the time to help him out of his debts. A wife and kids can do that to you.

He eventually got himself together and found another job washing dishes, but by this time the repo man was looking for his car, and his credit union would not take anymore payments on the defaulted loan which was in the process of collections.
Refinancing the car, and debt consolidation were out of the question as well- thanks to AT&T's diligent efforts. In the end he got an attorney who put a petition in for chapter 13 bankruptcy, which was approved by the judge. He now pays a monthly sum to the court clerk to be dispersed among his various debtors - including AT&T - until they are all paid off. His only consolation is that AT&T has been halted from adding any more bogus charges to that inflated bill, and he gets to keep his car so he can hold down a job. He's started college again, and has a prepaid cell phone through Liberty wireless. He knows his actions will haunt him for the next 7 years on his credit, but all he plans to do is save money, pay his debts, finish school,and get a job he likes with good benefits.

I have no doubts that this kid will succeed. I love my little brother, and if I end up in a position (hopefully soon)where my money eventually starts working for me - you better believe I'll be bringing him to the top with me. Either way I know he will make it, and when he does- he won't be the type to pick someone apart for filing bankruptcy to get through tough times...he's already living through that experience now at a very young age.

There are no givens in life- no guarantees, all we can do is try our best to be smart, and plan things properly, and do our best to follow them through - this is easier for some than for others.

We do not all have the same educational opportunities, or job opportunities - not when one kid is just born a millionaire and goes home with Mommy and Daddy to Camelot, while another born in the same hospital, on the very same night, goes back to a broken home, already statistically in debt to the government for 1500.00, and has to sleep in a dresser drawer.

Theres my bit.

 

In late 90's, I was working in the IT industry, making big $. High hourly rates. In 2000, I decided to take a break and came back to the east coast. For a few months. When I wanted to work again, I found out the market has crashed. Very badly . I spent most of 2000 and all of 2001 sending resumes, had to send thousands and got just several phone interviews which lead nowhere.

In 2002, I said, this is just beating a dead horse and I stopped looking completely.

In 2003, things got tougher financially. I had no debt, no loans, no CC or anything like that so I was okay (And that's the only thing which kept me away from Bankruptcy) but I cut down my expenses to the very essentials. Like food and electric. No gas because I didn't really need to go anywhere.

Got to the point where I was a hitting a new low in my life. Endless unemployment. Finally came to realize that this was over for good, and not coming back. The companies I had worked for outsourced their projects, just one of the reasons. Yet I was not qualified for anything else, and I did not want to sweep the floor at McDonalds after making $80,000 as a senior network administrator so recently. That would be a pretty big blow to one's ego, wouldn't it?

But I looked and looked, trying to figure out something least unpalatable. Small town, no work in rural America.

Eventually in late '03 got something above the min-wage, but not much. Then a second job. *sigh* Still not making any money, but at least paying for my expenses, which is big progress. Still, the downward spiral, as with many others, is there. If I wrecked my truck, or the car wears out, I just don't have the funds to replace it.

These developments have been good for, in retrospect. I evaluated my "friendships" and kicked out the worthless ones from my life, which turned out to be all of them. My values changed. My religious convictions had totally changed. I spent a lot of time doing things I always wanted to do but never had the time: Reading, gardening, animals (chickens). Even though I fell into terrible poverty, ultimately I realized I had to pick new directions in life and that's what the problem was: I wanted to maintain personal status quo but it became impossible, sometimes life forces you to change, to become a different person.
All in all, looking back, I don't think I would even want to go back to my past life, dealing with all the stuff, and office politics -- for me, it is a dead-end. I moved on. I asked myself, what if, (hypothetically) this is the last year of my life? I shall live every year as such.

All in all, yes, I am happier than ever. Problems occur, solutions are worked out.

Read this book called "Who moved my cheese", it is apropos.

My advice is, abandon what doesn't work and do what does work. Pragmatism supercedes idealism.

But, borrowing "money" in any way is a step towards the abyss.

 

My wife (a CPA) was "downsized" last July and drew unemployment for nearly 6 months before finally landing a job just after Christmas - all she wanted for Christmas was a job - she was blessed with one, albeit making $10/hr less than before.

Before being downsized, she was the controller for a local Redi-Mix concrete company - making $25/hr. Her unemployment (the max she could draw) was about $10/hr. and the state hardly took taxes out on that. Her employer (like most) paid for her unemployment benefits and yes...probably passed it onto consumers, as with any overhead cost.

My wife wasn't "laughing" about her unemployment - while it helped make ends meet, it sure didn't put us on "easy street", and we're having to pay the taxes on it now...so it isn't always something to be thrilled about.

Regards,
Scott

 

Medical bills and and high debt are no reason for bankruptcy. Credit card companies charge 23% interest to those who pay because they are trying to recoop from those who left them holding the bag due to bankruptcy.

The problem with our credit system is everyone takes advantage of it . Nothing down, low monthly payments, financed for the rest of your life.

Instead of driving a $30000 car, buy a used car or truck for $10000 and pay it off! Then if you get laid off you have no payment to meet. Same with a house. Buy things with cash when you can afford them and then when the unexpected happens you don't have to worry about affording it.

My father was hit with two kidney transplants five years apart while I was a kid. He payed a combined total of $100K for them out of his pocket. He did not make a lot of money. It was tough. We got through it.

What ever happened to saving money? What ever happened to paying your own way? What ever happened to pride and dignity? I'll tell you what happened to it. The Government gave you away to cop out! If you rack up bills, no matter what they are, you are still responsible for paying them!

MEDICAL BILLS. They provided the care to fix you didn't they? Then they deserve to get payed! The government should not have to pay for it. If you need medical care it is going to cost you money. Sometimes it takes alot of money. If you rack up a large bill and then leave the hospital and doctors holding the bag they have no choice but to pass the cost of your unpayed bill to the next guy walking thru the door.

Take some responsibility for the bills you generate. Just because you can afford the payments does not mean you should purchase the item. Consider the layoffs. Consider the medical bills that you will generate when you get older. Save and be prepared for the situation when it arises.

There is no justifiable reason for making someone else pay for the bills you aquire. That is exactly what you are doing when you file bankruptcy.

 

A lot of people don't understand. I filed for chapter 7, 5 years ago and my boss gave me a really hard time about it. But I had no choice I had to and it was probably the best thing I ever did. the relief of not worrying about the bills anymore was worth it.

 

1. You pay 23% interest because YOUR credit is not good. Why is it that I, along with just about everyone I know have cards in the 6%-7% area? And Most Companies will Drop if you call and get them batteling against another card. I've done it plenty.

2. There is No Justifiable reason?
Let me throw one at you mister?
how about you have a couple of Kids who become Ill.. You Lost your Job, and because of that you have no Insurance. you find out Your Childrens Illness is related to Organ failure. Said Operation and transplant will be in the neighborhood of $250,000
With Follow up treatements, IF its successful.
So you just lost your 30,000 dollar a year job, your on unemployement. Your Spouse is working at the stop and go making 10,000 a year. Your Mortgage is behind because your TRYING to help your child survive.. It does no good to sell the house because your upside down because of the economy, and rent would be just as much. You have No parents nearby and the Hospital wants a Huge downpayemnt ino rder to save your childs life because you have no insurance..So you take your Lifes savings to do that.. your left with nothing, Cant make your bills.
What else are you going to do. Believe me, Scenarios happen like this all the time...

I agree alot of people just dont pay attention to their spending, but because THEY file, is not going to raise YOUR interest to 23%, YOU are in charge of that.
If someone has the usual 6 months supply of salary saved up in the savings account, which is the neceesity these days in case of Job loss.. What do you do if you havent found a Job after 6 months?

Theres too many Iffs to even THINK that there should never be a scenario where you file.

Ron

00 Excursion Limited 4x4 limited V-10

 

Ron,

VERY well said...

Regards,
Scott