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Old 04-08-2009, 09:29 AM
 
13 posts, read 35,077 times
Reputation: 16

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This type of thing is written into your agreement you sign. I am a 21 year old college student and my rates have always been variable at 21%. With that said, I pay my bill off each month because it is ridiculous to pay an interest rate of 21% or even 10%, and they have raised my limit substantially well above $5,000. Credit cards should only be used in emergencies or to boost your credit report so you can attain a house loan or car loan in the future. Credit should only be used for assets and things that can build your net worth in the end.

Credit should not be used to supplement your everyday spending. If it is, you're living above your means. This is why the country is in the mess it is in. Not because the system is designed to kill us all or it is flawed. The banks have to make money somehow, otherwise what is the point in lending money. The problem is people have lived well beyond their means for years now. That problem ranges from any number of things, driving cars you cannot afford, buying houses you cannot afford, buying expensive groceries or clothes, buying every new thing ever, and having kids when you cannot support them.

At 21, I feel as though I have a better grasp of this than most adults in today's world. It's a shame that we the taxpayers are having to bail out banks and other corporations because of greed by everyone. At the same time, I do not necessarily feel sorry for everyone who is defaulting and going bankrupt. A lot of people were incredibly irresponsible, had no emergency fund saved, and were living well beyond their means. At the same time, I feel sorry for those who had well off jobs, and seemed fine that have lost them and are now in stress about their housing situations and future bills.

At the same time, this is why we all have to be more responsible with our money and save emergency funds. Economic downturns like this happen every so often. They usually are not this long lasting or this intense, but every twenty years we do typically see an economic downturn where people lose their jobs.

There is no shame on BoA. This is a bank with a pretty strong financial standing and if not for Obama, would never have taken the TARP funds. These funds were intended to help banks with lending and now that BoA wants to repay those loans, the Obama administration does not want to accept the repayment. This administration wants to to control our economy with micromanagement. A government that controls all of our assets is a bad government and ruins free market enterprise.

As a consumer, you have every right to shop your credit and make decisions best you can. The small print lines at BoA say they have a right to up your interest rate at any time. Perhaps, you should lock in at the 10.99% APR and pay off the debt and cut the credit card. Only then will this country start to get out of the problem it is in.

Until then, those people that continue to carry revolving credit balances that are well beyond anything they can ever pay, will continue to harm this economy as these crashes will happen time and time again.
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Old 04-08-2009, 09:31 AM
 
Location: Wouldn't you like to know?
9,038 posts, read 14,580,849 times
Reputation: 3631
Quote:
Originally Posted by anifani821 View Post
Jack - we are not struggling to pay bills. We would have to take it out of savings to pay these cards off and I don't want to do that. I prefer paying them off monthly and not touching my savings.

However, we would have much more $$$ if we had used the cash we spent on tuition and put it into CDs instead. I would suggest to others that they take out student loans - at least some student loans - instead of using cash to pay tuition. We look back and feel if we had taken out even 25% of the cost in student loans, it would have left us in a more realistic position for retirement.

It is true - you can't borrow money for retirement. That is why we have worked so hard to sock it away in 401Ks. But that turned out to be a disappointment. I should have put more in CDs, I think. So that would be what I recommend to others. Put some of that money into Roth accounts. I have one Roth and some $$ in bonds/T-bills. I just wish I had done more of that type of allocation for my savings.
I think we as a nation have been brainwashed on taking too much risk in our 401k's...it has burned people who are close to retirement.

If you look at Vanguard's 2015 retirement fund, they have/had I believe 65-70% in equities.....too risky for a severe bear market which we have gone through since 10/07.

I agree w/you on the Roth and more conservative allocations.......
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Old 04-08-2009, 09:31 AM
 
Location: NE Charlotte, NC (University City)
1,894 posts, read 5,358,747 times
Reputation: 1032
Yes Ani, back to the original topic, let the banks burn for all I care...at least the ones who walk on us like we're nothing. They need a stern lesson in customer service. I was lucky enough to have customer service ingrained in me way back when I first stepped out into the working world and I've seen how it can make or break you. All too often folks rely on the sheer mass of the customer base to make up for that 0.00001% loss in revenue they experience by you leaving. Wrong way to go if you ask me...REGARDLESS of small print. There is a right and a wrong...and what they're doing to you is wrong!
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Old 04-08-2009, 09:35 AM
 
Location: State of Being
35,886 posts, read 62,030,127 times
Reputation: 22153
Quote:
Originally Posted by Metallisteve View Post
Yes Ani, back to the original topic, let the banks burn for all I care...at least the ones who walk on us like we're nothing. They need a stern lesson in customer service. I was lucky enough to have customer service ingrained in me way back when I first stepped out into the working world and I've seen how it can make or break you. All too often folks rely on the sheer mass of the customer base to make up for that 0.00001% loss in revenue they experience by you leaving. Wrong way to go if you ask me...REGARDLESS of small print. There is a right and a wrong...and what they're doing to you is wrong!
What they are doing all over this country is wrong! CNN had discussions going on this whole credit card mess last evening. I was glad to catch it b/c there was a woman who was even more angry than I am, LOL.

As of this morning, I did pay that one off, simply b/c I don't want to do business w/ BofA on their terms.

The other one . . . I will just keep it open b/c it is not good on your credit report to close accounts.

I am furious w/ ALL these banks for gouging consumers.
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Old 04-08-2009, 09:42 AM
 
Location: State of Being
35,886 posts, read 62,030,127 times
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Quote:
Originally Posted by CouponJack View Post
I think we as a nation have been brainwashed on taking too much risk in our 401k's...it has burned people who are close to retirement.

If you look at Vanguard's 2015 retirement fund, they have/had I believe 65-70% in equities.....too risky for a severe bear market which we have gone through since 10/07.

I agree w/you on the Roth and more conservative allocations.......
Well the thing w/ 401Ks - those dollars are pre-tax dollars. So we did benefit from that even if the outcome this past year was we lost value in the funds themselves.

The rules I was taught back in my 20s changed. I was taught - put a chunk in T-bills and bonds. Well, I like being conservative. But financial managers said this was making very poor use of my savings dollars when the market was booming. So we reallocated. I insisted on leaving some in bonds. I would advise others that all this stuff about longterm gains . . . yeah. That is great - until something falls apart, LOL. I would have been better off if I had stuck to my conservative methods for the last 20 years, instead of allowing myself to go for higher risk investments. So word to the wise: I don't care who is giving you the advice: it is better to have at least half of your portfolio in very conservative investments.
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Old 04-08-2009, 10:07 AM
 
Location: Somewhere in America
10,932 posts, read 8,432,841 times
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Quote:
Originally Posted by Metallisteve View Post
And that's the basis for Dave Ramsey's slogan:

"Live like no one else so you can live like no one else!"

If "living like a Monk" means knowing where every dime of your money goes each month and it doesn't go unless you tell it to, then size me up for a robe.

All the debts you mention can be paid in cash, eventually. The core of the principles are that if you don't have the cash, you don't buy it right now...especially not just for the reason of you wanted it your whole life and you think you deserve it. You knock out debts to the point where you control every dollar that comes into your bank account...not some promise note. You take that money to live off of, invest, and give...and yes, eventually, you pay cash for everything...cars, houses, boats, whatever. THEN you've truly earned it, and dare I say, might even appreciate it a little more.
So how many years would you expect to save money to buy a house that today is worth $221K? When I purchased it 8 years ago, it was $132K. And it continues to rise unlike the rest of the country because of where I am and we never had any housing bubble.

Don't forget where I live, renting anything decent is almost as much as my mortgage payment. So how would one save $11K a year on top of their regular every day living expenses? It's very expensive to live in the Northeast.
Everything costs more here from food to utilities to gas to toilet paper to car insurance.

And as for my one luxury in my life.....my $42K car...Yeah it was a lot. My loan is only 3% interest. I've had this baby for 4 years now and plan on saving it as my dad did with one of his vehicles. That car is worth some $$$ today and two of us kids are fighting over it.

Oh yeah.....add $42K to that $221 and how does one ever get a new car and a decent house? I don't live in a McMansion....far from it!

So because I didn't pay cash, I should drive an old clunker that 1) can't pass inspection without spending $1,000, 2) can't pass an NY emissions test, and 3) breaks down every month so I'm debt free? If I had to keep paying $500-$700 a month to keep my vehicle maintained and running like I was doing with my old car, then I am not saving a cent! My car loan in fact SAVES me money! Aside from an oil change and regular cheap maintenance stuff because it's new, I haven't had to put any money into the car.

And don't tell me to take public transportation. I don't live in a huge city with a great system. There's one bus a few miles from my house. Sorry, but I'm not walking on a highway through a snowstorm to get a bus. It's NOT happening. It's not safe and it's just stupid.

So if you want to keep putting money in Dave Ramsey's pockets by buying all of his "tools" by all means do so, but don't expect the rest of us to embrace it. Some of us DO live within our means!

We go on vacations every year. We go away for long weekends a few times a year. Do we have a million bucks int eh bank, but you know what? You can't take it with you when you die. And you never know when you're going to die so you might as well have some fun while you're alive and able bodied to do something.

And if I wanted to live like a Monk, I would have become a nun! I never signed up to live like a pauper....if I wanted to I could have saved myself several years of college. I could have stayed working at that same McDonald's I worked at in high school.
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Old 04-08-2009, 10:14 AM
 
Location: Somewhere in America
10,932 posts, read 8,432,841 times
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Quote:
Originally Posted by Whytewulf View Post
A different type of debt, this is secured debt, you have equity, so if you stop paying, the financial institution has something to go after. It's the revolving unsecured debt that is getting harder and more expensive to get. Also, people used to buy cars with cash. You would save up buy a car, save up buy your next car etc.
While it's true people used to save up money to buy a car to pay with cash, cars don't cost what they did in 1958. Nothing does. Salaries have not kept up with the rising costs in general. And many parts of the country costs way more to live than others.

With a car, you don't really have equity. Cars begin to depreciate the second you drive them off the lot. My car's value dropped by $10K the second I left the Chevy dealership.

My husband doesn't get raises every year. And when he does they are about 2%. This does NOT at all keep up with inflation. Yes, he makes a decent salary, but we are far from millionaires.
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Old 04-08-2009, 10:21 AM
 
Location: Right where I want to be.
4,508 posts, read 7,465,684 times
Reputation: 3291
I haven't had a car loan in over 7 years and never will again but we don't have a $42,000 car either. I'd rather drive a $10,000 used car than buy for $42,000 and LOSE $10,000 driving off the lot!! I don't have $10,000 to throw away like that (well, I do but I'd rather keep it, lol).
I know people on very average incomes who have saved cash for a house and people who worked their way through school with no loans. I don't know anyone who lives like a monk but in a few years I'll have a paid for house and we could live on minimum wage jobs if needed (taking the scare and sting out of the current economic crisis). I'm not a millionaire but I hope to be one day. I know I'll never get there if my entire paycheck goes towards debt, making bankers rich. I'll live with a little less now and have A LOT more later. We live on well less than the average income in America and still live very well with no payments. Someday we plan to live VERY WELL, like no one else.
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Old 04-08-2009, 10:25 AM
 
Location: State of Being
35,886 posts, read 62,030,127 times
Reputation: 22153
Quote:
Originally Posted by NCyank View Post
I haven't had a car loan in over 7 years and never will again but we don't have a $42,000 car either. I'd rather drive a $10,000 used car than buy for $42,000 and LOSE $10,000 driving off the lot!! I don't have $10,000 to throw away like that (well, I do but I'd rather keep it, lol).
I know people on very average incomes who have saved cash for a house and people who worked their way through school with no loans. I don't know anyone who lives like a monk but in a few years I'll have a paid for house and we could live on minimum wage jobs if needed (taking the scare and sting out of the current economic crisis). I'm not a millionaire but I hope to be one day. I know I'll never get there if my entire paycheck goes towards debt, making bankers rich. I'll live with a little less now and have A LOT more later.
You go, NCYank! It is all a matter of decisions. I have always thought that paying off one's home is a great idea simply b/c it is the most secure feeling to know you have a roof over your head no matter what!

I don't have mine paid off but hope to in the near future. I don't care what the experts say about interest deductions from mortgage loans, etc. Having your house paid off is a big step towards having security in this life.
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Old 04-08-2009, 10:27 AM
 
Location: Huntersville
1,852 posts, read 4,408,221 times
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Again, we are talking apples and oranges (Ani, thanks being the OP, I don't think half the comments are directed at you or your lifestyles, more in concept about banking and how it effects people's lives).

1. Unsecured debt is what got this nation in trouble. This can be a number of things, even a mortage, because if you buy a house with $0 down and market goes down, you are now under water and have unsecured debt. This didn't happen 30 years ago, because you had to put 10 to 20% down. Then they created PMI, that helped people buy with less down, but they paid more for extra insurance to the Banks in case they defaulted. Credit Cards, revolving loans are unsecured and rates have skyrocketed, because people can't pay and Banks have nothing to go after. All these back end swaps of equities are also unsecured, hedging on the future.

2. Secured loans. Ramsey and his ilk are not against mortgages and most car loans. But they will say, put at least X% down. Homes are one of the few investments, they shouldn't have been going up as quickly as they did, but they don't lose value, or shouldn't have. So the loan was secured up to a point. Even if they were under the Bank could get 90% of the value back. A person defaults on the credit card of $10000, nothing to go after in many cases.

I have a credit card I use often. I don't need to, but it actually makes me money. I pay it off every month, which allows me to generate a little extra money (very little these days) by paying most bills in a 45 days after I would have with cash. I also get points, thats "money" in my pocket. I also use it for protection, with extra warranty, no cost to me. I also like being able to track my monthly expenses and it makes things easier putting my monthly bills on it, so I pay one bill on-line each month, a save of money and time. So in the end credit cards aren't evil if used properly. They also can be used for emergencies, and practically required for renting cars, booking trips, playing online video games ... These companies can make money without the interest, as the stores pay a fee to the cc for allowing them to use the services. They willingly pay because it helps their business. Some places used to charge extra for credit card use, and many Gas stations are NOW back in that business. They have a cash price and a credit card price (not all have this or advertise it well, so look out).

Car loans.. My next car will be on loan. But I could pay for cash. I will negotiate a cash price then look into financing and if I can make more on money with financing vs. cash I will. Which today with the 0% and 1% financing options it would be worth it. Yes, you lose equity driving off the lot, but thats why I put money down. They do have some value. So I won't get a loan for more than the car would be worth if I drive it off the lot. That way I am never under water. If a car is worth $30,000 at the dealer and $20,000 when I get it home, I better put $12,000 down. So I know I have equity in my car. If I can't afford that, I don't buy the car.

At the end it's the cost of doing business. We are seeing shifts, 2009 will be very different than 2004 not just how we bank, but how we drive, how we interact, etc. We need to adjust our thinking. Communications are electronic, tracked and stored. Any photo can become public. Gas is expensive, public transportation may be wave of the future, houses will not be a tradable commodity and unsecured debt will be expensive.
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