Seven out of Ten? Really?? [Archive]

Oneslowz28

08-30-2009, 11:59 PM

I owe about 8k on credit cards. I got my first one the week I turned 18 and have one from almost every major credit card company including 3 banks.

The 7 out of every 10 figure is probably right. When you are in college you are constantly bombarded with credit card offers from both the mail and booths set up around campus. When you buy a motorcycle from kawasaki, suzuki, or yamaha and finance through one of them they basically issue you a credit card that is maxed out from the beginning.

Every one I know owns a credit card even my 87 year old great grandmother. All of my friends have a few and I still get 6 or 7 offers for more in the mail every month. Having a credit card is a must in American society. Its the foundation that almost every one builds their credit history off of. When I got the loan on my home I was asked about what credit cards I had. Because I had 6 at the time they gave me the loan. The loan officer said that if I had just had 1 or 2 that he probably would not have approved me because I was so young. By having 6 that were all in good standing it showed that I was financially responsible.

Spawn-Inc

08-31-2009, 12:45 AM

well i don't know about the numbers, but i have had one for a little under a year now and haven't paid a cent in interest or fee's. it's a visa 1% cash back card and so far it's been at there loss. i was just on the phone getting the card replaced, seems i use it to much, and the lady said i was in great standing with them and got my limit bumped from $1000 to $5000. i also have a $8000 line of credit for emergences. i'm 22 and have NO debt what so ever, though i still live at home so thats the main reason why. but i do have a car fully paid for and $6000 pc setup with tv, etc.

i'm not at all good with money in that when i get it, its spent. but i have managed to stay out of debt thus far. i let the CC go up to about $300 then pay them $300 and keep doing that.

simon275

08-31-2009, 12:58 AM

I hate credit cards I almost most never ever use my one only if a I have to. Also keeps the government from tracking me. /tin foil hat

d_stilgar

08-31-2009, 01:53 AM

My wife and I have student loans. She has graduated and only has $7000 after four years. I am pretty much just starting, and just took out $2800. Hopefully she will get a good job soon and can pay off the debt quickly. Other than that debt we have none, and never plan on having any. We have $1500 in the bank that we never spend, and I mean never. It is there for the never-to-be-foreseen-how-the-heck-man-I-am-screwed emergency. We will never spend it on anything else.

We are pretty wise spenders and savers. We budget well. When either of us have good jobs, we just save the money and chip away at the loans, then when times get tough, we then spend the money we've been saving.

I believe that 7/10 have some sort of balance (a tank of gas, a book) that they pay off every month. I think it's a minority that has massive debt. That minority can feed the system and never get out. I don't know how you ever could.

A lot of people just like have it now and pay later. It's an awful system for any economy. If people are going to get smart and stay debt free, which I think more and more and more individuals are doing, then obviously our consumer driven economy is going to suffer until people turn it around for themselves. Then, when they can afford things with cash again (like our great grandparents did), they will begin to spend again and the economy will turn around, with much less personal debt.

. . . *government/political commentary begins here, but I'm leaving it out and so should you* . . .

ownaginatious

08-31-2009, 04:31 AM

I find it very odd how so many people have no understanding of "If you don't have the money now, why would you have it later?". I have no sympathy for people severely in debt from buying superfluous things without monitoring how much they're spending.

I understand some people ending up in debt just for pure survival (i.e. raising kids, need to feed them, no job... debt is the only option), but students who fall for the credit card booths at their schools or whatever and end up in debt buying the "newest, coolest and trendiest things" are just morons.

This is why I prefer a debit card. If I don't have the money now, well, too bad for me :p... I'm just going to have to wait.

Zephik

08-31-2009, 04:49 AM

This is what I plan on doing once I actually get a credit card. If I want something then I'll save up my money for it. Once I have enough saved up for the item that I want, then I'll buy it with the credit card and use the money I saved up to make payments and thus giving me good credit. Otherwise, only in absolute emergencies.

Oneslowz28

08-31-2009, 05:57 AM

I would not go as far as saying someone with a good bit of debt is a moron. I have about 220k total in debt. If you include my mortgage, truck loan, credit cards, student loans, and a business loan.

I mean unless you win the lottery, have money from the get go, or save every penny you make for several years, there is no way you will be able to buy a home with out going in debt. An economy the size of ours can not survive with out a credit system. Credit is how banks make their money and small business all the way to huge corporations pay their bills. Its not a bad system if people fully understand it. This is why I think 2 years worth of finance classes should me required in high schools. They touched briefly on interest rates and finance for about a week in my pre calculus class in high school. It was not until personal finance in college that I fully understood what everything meant.

It is also necessary for our economy that people be massively in debut. If those people were not in the system banks and credit institutions would have very small accounts payable books and their stocks would tank. Look at it this way. The more people that owe you money over the long term, the more security you have that you will stay in business for the next 30 years. Its the same business model that makes buy here pay here used car lots so successful. If they were to just sell 8-10 cars a month @ 3k a piece they would only be making $30k a month with some months only selling 1 or 2 cars. But if they sell 20 cars a month and finance those cars @ $250-$300 a month then they have the security of 6k a month and that number keeps on growing by $250-$300 every month with every car they sell.

XcOM

08-31-2009, 06:21 AM

well i know im in the uk, but i don't really have a credit card,

But i do have a Pay As You Go Credit card, its from mastercard, you go into any post office or paypoint and put money on the card, then you use it just like a normal credit card, only you don't have any credit.

But they do offer payment protection still for free.

Also they offer a credit building facility, where by they impose a monthly fee for the card, they then loan you about $100 (+~-) for 12 months worth of fee's, you never actually get the money, they keep it in a holding account, you then play the cards fee for the 12 months, once you have done this your debit to them is paid off, and it shows on your credit file you have kept regular payments. But strangely it still works out cheaper than using a credit card, if you are the sort of person than pays your credit card bill in fill regularly then this would be a good idea.

TheGreatSatan

08-31-2009, 08:10 AM

My mother had been in debt for years. When my dad died back in the late 80's she had over 20K in medical bills and funeral expenses. Over the course of my life she's filed bankrupcy twice and just recently received part of her mothers estate. Finally after 25 years of debt she owes nothing. No credit cards, no house payment, no car to pay for.

Eclecticos

08-31-2009, 09:34 AM

Thats good, I just one the Capital One sweepstakes.
Good for a donation to a non-profit organization. Woot! :)

Oneslowz28

08-31-2009, 09:39 AM

My wallet is a non profit organization. :p

Airbozo

08-31-2009, 10:29 AM

The SO and I cut up our credit cards aver 12 years ago and have never needed them. If we don't have the money in the bank, we don't buy the item. We have never had an issue renting cars or hotels. Every place will take our Visa check card no questions asked.

IMHO, Credit card companies are evil and the product they pimp is designed to keep the average person in debt over their lifetime. I believe they also prey on college students, hooking them into the credit morass as early as possible. Hell when I was growing up no credit card company would even consider giving a college student any sort of line of credit.

Mortgages are a different beast and I have no issue with them since they are a loan on a physical item that increases in value over the life of the loan. (in most cases)

Car loans are middle of the road to me. Most people can not drop $30k on a car without the help of some credit. I just hate that I pay higher rates to offset someone else's inability to manage their own finances. (unless you get a promotional deal)

Bottom line: Credit cards are EVIL!

d_stilgar

08-31-2009, 02:24 PM

It is also necessary for our economy that people be massively in debut. If those people were not in the system banks and credit institutions would have very small accounts payable books and their stocks would tank. Look at it this way. The more people that owe you money over the long term, the more security you have that you will stay in business for the next 30 years.

I disagree. I think there is a big shift in the economy happening now where people are getting out of debt. Yeah, this is bad for banks, but way better for the country as a whole. Instead of having the entire GDP run through banks, and pay some interest and fees to them, we can cut out the middle man and keep that money in our own pockets. There was a time when most people were debt free and there were still banks. If the banks can't change their business model back to one they had before massive debt, then they deserve to go out of business. If banks give out loans that they know people can't pay off and it backfires, those banks need to eat their mistake or go out of business as well.

I think banks are a good service for saving. I think credit cards are evil. You have no need for a credit card (or even a credit score for that matter) if you pay for things with cash. A good mortgage can be had for those with no previous credit if you have a steady job, you can prove your income, and you have never been late on your utilities or rent.

Airbozo

08-31-2009, 03:03 PM

...Deleting what I agree with...

I think banks are a good service for saving. I think credit cards are evil. You have no need for a credit card (or even a credit score for that matter) if you pay for things with cash. A good mortgage can be had for those with no previous credit if you have a steady job, you can prove your income, and you have never been late on your utilities or rent.

I disagree with the credit score comment.

The difference between a bad (or no) credit score can end up costing you ten's of thousands of dollars in interest on a mortgage. Is it right? No. But I do understand why it is in place. I just don't agree with how they determine the score.

I personally believe that my studious control of my spending and payment of my bills should get me a better interest rate than someone who pays late and/or defaults on a loan (no matter what the reason).

Kayin

08-31-2009, 07:18 PM

Wife and I have no credit cards, no interest in them, and a bit of debt, but it's getting paid off and we're working on saving where we can. We don't believe in credit cards or credit, and wherever possible we avoid them. We're paying payments on a van simply because I didn't have the time or tools any more to rebuild something for cash.

20 years ago, these interest rates were criminal-it was called usury. Look that one up, it's sickening.

We will be out of debt in a few years, and we pay cash for PCs, appliances, all that good stuff, and if they ask us if we wanna put it on their card, we walk out. **** the credit card companies.

Xpirate

08-31-2009, 09:39 PM

usury - The practice of lending money and charging the borrower interest, especially at an exorbitant or illegally high rate.

I use a single credit card as a convenience. I use it to buy junk on-line and to pay for gas at the pump. The balance gets paid in full at the end of the month.

I am paying interest on my house, but soon I am going to sell all of my personal mutual funds for a loss to pay it off completely. If I had used the investments to just pay cash for the house in 2007, I never would have lost any money on them. I will keep the IRA even if the market bubble might burst soon.

Don't ever let anyone tell you how stupid you are for paying your debt off early. I have already saved $30,000 in interest from making extra principal payments. I will save an additional $22,000 for paying it off the rest of the way.

Spawn-Inc

08-31-2009, 10:38 PM

see for all the people who hate the credit card companies, take advantage of them and look for free, high interest credit cards that offer rewards or points for other stuff. as long as you have the money and pay off the card all the time you never loose anything to them and only gain. so far i have received $50 cash back and am building it up again, at $38 after 4 or 5 months. sure it's not alot but it cost me nothing....

Omega

09-01-2009, 03:33 AM

seriously.

credit cards are easy;

treat them like you're spending cash. when you run out of money to pay it off, DON'T SPEND ANY MORE.

I have three credit cards with 0 debt across all of them, and I only use them when I have the money, accounted for and put aside so i don't accidentally spend it twice.

As tempting as it is sometimes to use it to buy gas or something (because when you're broke and need to get places, it's a lot easier to run it on your card than go make money), I don't, because i know it'll only bite me in the ass later.

Mark_Hardware

09-01-2009, 03:48 AM

Don't ever let anyone tell you how stupid you are for paying your debt off early. I have already saved $30,000 in interest from making extra principal payments. I will save an additional $22,000 for paying it off the rest of the way.

Just be careful with that, too. Especially mortgages. They will usually sneak in some early payment penalties. They can be kinda hefty too. You gotta think, the interest is the bank making money, so if you aren't paying it then they have to make their money another way.

x88x

09-01-2009, 12:22 PM

I would say 7 out of 10 is actually probably pretty accurate, especially considering how many people I know who used their credits cards to pay for college. Personally, there are two things I'll ever let myself be in debt for: a house and education. A house, you can't really get away from borrowing for, but even now, finishing off my degree, I'm trying to pay everything up-front in cash. I have my check card, and that works just fine for me; I just don't buy anything if I don't have the money to do so. I might get a credit card at some point, just for emergencies, but honestly I'd rather stay away from that entirely.

gramatton

09-01-2009, 12:39 PM

i have never owned a credit card, and I don't think I ever will. IMO its really just a way to trap people and make money off of idiots that can't control themselves. And seeing as how I ran into problems with a debit card, that I got rid of awhile ago, I want to keep myself from having problems with a credit card. I pay cash for everything, and if I just so happen to need a credit card to pay for something, ie online, I use my SO's debit card and just pay her for it.

I guess part of why I feel that way is that out of 5 of my ex-coworkers, 4 were pretty much screwed by their debt.

slaveofconvention

09-01-2009, 02:19 PM

I find it very odd how so many people have no understanding of "If you don't have the money now, why would you have it later?".

This is a bit black and white though... What about the person or people who don't have, for example, £1000 now but do have about £70 a month spare in their budget - if that person is willing to pay a little interest, they can get that £1000 item today, and pay it off with the £70 a month. It's all very well saying "they can just save up" but that would mean waiting 15 months for the item. Even with interest, you'd end up paying that item off in about 18-19 months so you could argue that they're paying the extra £200 so they don't have to wait that 15 months - and I pretty much guarantee you that you wouldnt be able to rent a £1000 item for 15 months for £200 - it does make sense in its own way, if you have an open mind to the possibilities....

slaveofconvention

09-01-2009, 02:23 PM

Airbozo

09-01-2009, 02:48 PM

Just be careful with that, too. Especially mortgages. They will usually sneak in some early payment penalties. They can be kinda hefty too. You gotta think, the interest is the bank making money, so if you aren't paying it then they have to make their money another way.

Banks are starting to get a little better with this though - still a long way from perfect but better. Even these massive businesses only have a finite amount of money they can loan out and if you repay early, it does free that money up to loan to someone else so arguably, they still make their cut if you pay it off early...

I have had about 5 different mortgages and none of them had an early payoff fee. There are loans out there that do charge an early payoff fee, but I would avoid them. If you are getting a mortgage and you see that it does have this fee, tell the mortgage broker to find another loan (if possible).

Spawn-Inc

09-01-2009, 03:47 PM

This is a bit black and white though... What about the person or people who don't have, for example, £1000 now but do have about £70 a month spare in their budget - if that person is willing to pay a little interest, they can get that £1000 item today, and pay it off with the £70 a month. It's all very well saying "they can just save up" but that would mean waiting 15 months for the item. Even with interest, you'd end up paying that item off in about 18-19 months so you could argue that they're paying the extra £200 so they don't have to wait that 15 months - and I pretty much guarantee you that you wouldnt be able to rent a £1000 item for 15 months for £200 - it does make sense in its own way, if you have an open mind to the possibilities....

but then thats how the whole debt thing starts, you say yes i make 70 extra a month. you go ahead buy what ever it may be, you figure it will take 12 months to pay it off. halfway through something happens and you don't have that extra 70 a month. then the debt piles up.

but then again you should have some rainy day money banked, but not everyone can afford to do that. it's all back and forth.

i would love to go buy a ps3 and not worry about the interest, but the idea of paying someone to loan money bugs the hell out of me.

Xpirate

09-01-2009, 07:06 PM

Just be careful with that, too. Especially mortgages. They will usually sneak in some early payment penalties. They can be kinda hefty too.

This is very true. I made certain that my loan did not have this kind of penalty. They sometimes get people to agree to something like that with a lower interest rate.

simon275

09-01-2009, 07:56 PM

Money is a real tough issue especially with the tight job market these days.

I have noticed that taking public transport more and not eating out. Save a lot of money. Also having pre drinks at home before going to a club is a good way to save money.

Mark_Hardware

09-02-2009, 04:46 AM

I have noticed that taking public transport more and not eating out. .

Idk man, I had to take a bus the other day cause my car died, (I was on my way to buy a new car, how ironic) and I was shocked at the fare price. I almost didn't have enough to pay for it! I used to take a bus to work everyday, but it would cost me so much more than driving. In fact, I couldn't afford to take the bus anymore!
But that's Phoenix. Our mass transportation is a joke, and we are about 15 years behind every other major city.

billygoat333

09-02-2009, 08:26 AM

but then thats how the whole debt thing starts, you say yes i make 70 extra a month. you go ahead buy what ever it may be, you figure it will take 12 months to pay it off. halfway through something happens and you don't have that extra 70 a month. then the debt piles up.

but then again you should have some rainy day money banked, but not everyone can afford to do that. it's all back and forth.

i would love to go buy a ps3 and not worry about the interest, but the idea of paying someone to loan money bugs the hell out of me.

thats what families are for! lol we actually went over that in my personal finance class. the best place to loan money from is your parents or siblings :P

Airbozo

09-02-2009, 10:51 AM

But that's Phoenix. Our mass transportation is a joke, and we are about 15 years behind every other major city.

Except any city in California...

simon275

09-02-2009, 08:07 PM

Idk man, I had to take a bus the other day cause my car died, (I was on my way to buy a new car, how ironic) and I was shocked at the fare price. I almost didn't have enough to pay for it! I used to take a bus to work everyday, but it would cost me so much more than driving. In fact, I couldn't afford to take the bus anymore!
But that's Phoenix. Our mass transportation is a joke, and we are about 15 years behind every other major city.

Far out how much is a bus ticket....

I could go to work on public transport by bus but it would be a roundabout route and take like 3 hours or I can drive and I takes 1 hour. So the choice is pretty obvious. As all the public transport in Sydney is designed to be radial with everything going to the city in the center. I live in the north and work out west so I just cut across in my car.