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Credit Card Debt --- Unbelievable

Old 08-16-19, 07:28 AM
  #26  
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Originally Posted by RubeRad View Post
? Is that gross personal debt because of large mortgages? Or are you talking large net debt because of underwater mortgages? I have a large mortgage by national standards, but if you count the value of my house as an asset (which mortgage lenders certainly do), I have a LOT of equity and am not in debt at all.
Yes it is because those states have larger mortgages and higher housing costs in general. Except for Hawaii, they also generally have larger incomes. In those states people are still "betting" on the value of their homes holding up their net worth.
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Old 08-16-19, 08:26 AM
  #27  
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The only debt I have is with this guy named Vinnie.
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Old 08-16-19, 08:54 AM
  #28  
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Originally Posted by work4bike View Post
I heard on the news last night that American's credit card debt increased by 20-billion dollars in the last four months and is nearly a trillion dollars. That's incredible

Last I heard about credit card debt was during the Great Recession of 2008. I would think people would have learned not to incur so much debt, especially one that comes with a heavy interest rate.
I was dismayed by how soon I saw advertisements for ARM loans again after the financial crisis. Perhaps there's just so much money to be made, and people want to spend beyond their means, that things aren't going to change overall.
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Old 08-16-19, 09:26 AM
  #29  
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Originally Posted by RubeRad View Post
I think there's a high correlation between BFers, cyclists, anti-car-ists, and less consumeristic attitudes and lifestyles. So most of us will have our spending under control and no credit card debt, and will be horrified by the national trend.
If it wasn't for N+1 at BF, I might believe this.
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Old 08-16-19, 09:34 AM
  #30  
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Originally Posted by FiftySix View Post
If it wasn't for N+1 at BF, I might believe this.
And gear. Who doesn't need more parts/lights/clothes etc....?
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Old 08-16-19, 10:58 AM
  #31  
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Ok. I own one rewards credit card and charge 90% of my purchases and monthly expenses on that one card. I've also never paid a dime in CC interest in several decades.
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Old 08-16-19, 11:11 AM
  #32  
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Originally Posted by roadfix View Post
Ok. I own one rewards credit card and charge 90% of my purchases and monthly expenses on that one card. I've also never paid a dime in CC interest in several decades.
Rewards cards and full payment of the bill each month is a great combo. We've managed a few free airline tickets that way in recent years. BITD when I owned my own company, all our computer purchases, travel, office supplies, FedEx, etc. went on my Amex, sometimes $100K per year. That worked really well for piling up rewards!

It's not really "free" of course. Businesses price their products considering all expenses including the cut paid to the CC companies. But as an individual consumer I can't change this, so the best option is to leverage it as much as possible.
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Old 08-16-19, 01:37 PM
  #33  
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Originally Posted by jimincalif View Post
Rewards cards and full payment of the bill each month is a great combo. We've managed a few free airline tickets that way in recent years. BITD when I owned my own company, all our computer purchases, travel, office supplies, FedEx, etc. went on my Amex, sometimes $100K per year. That worked really well for piling up rewards!
I have an REI credit card. I usually end up with more than $200 to spend there every year. Or I can take the dividend in cash.

My ex-GF's dad used to own an engineering firm. He put all his expenses on his Amex. He had so many points that he let us use them for round trip flights to Venice when we went to a cycling camp for two weeks. The flight was $1,500/person round trip. The Amex agent told the GF that even after the tickets he still had a lot of points left.

And you are right about the "swipe fee." When you pay with cash you increase the merchant's profit margin, unless you get a cash discount, because the swipe fee is built into the price. When it came time to pay for my custom ti bike I asked the builder/LBS if there was a cash discount. He knocked off 2% for paying with a check. My guess is that he split the swipe fee with me. Better than nothing, and better than the 1% REI dividend I would have received had I used my card.
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Old 08-16-19, 01:49 PM
  #34  
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Originally Posted by spinnaker View Post

I also read that the average car loan is now $530 a month. That us insane too. People buy too much car too often. They don't have the old one paid off so they roll the old balance into the new.
That is insane. My monthly payment is $554 (I usually pay $600), but I have an income well above the average. And as noted above, my interest rate is 0%. Term is only four years, so it will be paid off next July. I decided to buy in 2016, just when the new 2017 Subaru's were new to the market, so they had all sorts of financing specials. Another cool thing is that I get a no-haggle discount through work. 2% below dealer invoice price.

I cannot imagine being saddled with massive debt. I paid off my $247.5K mortgage in about 11 years. When I refinanced after 5 years and went from 30 to 15 yrs. I already had so much equity that my monthly payment went down despite the cut in the term. Often times the monthly payment goes up when you go from 30 to 15 even though you get a lower rate.

Buying a car was something I didn't want to do, but doing so became a necessity.
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Old 08-16-19, 01:57 PM
  #35  
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What I find interesting and don't understand the workings of, my wife and I use a rewards credit card for many purchases. Every month when the CC Company reports the outstanding balance to the Credit Bureau, our FICO score goes down. Every month we pay the card in full, our score goes up. Usually it drops a point or two more than the increases.
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Old 08-16-19, 04:35 PM
  #36  
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I was using my debit card like a payday loan, taking the $30 fee for like a $100 - $200 negative on my balance too often and they started threatening to cancel my account for leaving them in the negative too often for too long. Re-classifying me for declining me anything in the red side of "0" was the best thing a bank ever did for me.

Sometimes we want now what we could wait for until later.
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Old 08-16-19, 04:40 PM
  #37  
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Originally Posted by 02Giant View Post
What I find interesting and don't understand the workings of, my wife and I use a rewards credit card for many purchases. Every month when the CC Company reports the outstanding balance to the Credit Bureau, our FICO score goes down. Every month we pay the card in full, our score goes up. Usually it drops a point or two more than the increases.
Probably due to increased utilization use. If you pay off everything before the statement balance posts you should be good before they report to the bureaus.
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Old 08-16-19, 04:46 PM
  #38  
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Originally Posted by indyfabz View Post
And you are right about the "swipe fee." When you pay with cash you increase the merchant's profit margin, unless you get a cash discount, because the swipe fee is built into the price.
The fee for processing cards in person is 2.75% with Square, and a lot of small businesses use Square. The credit card processing industry is full of shady companies and fees for everything, I don't worry about 2.75% I give to Square for the few credit card payments I get as it would cost me more than that to go to the bank if people paid with cash. Checks are the easiest, but there aren't many people that use those anymore.

When the cash back concept came out my Dad was enamored with the idea. He went to buy a car once and wanted to put the down payment on his credit card, with enticing visions of the rebate he'd get from that. He was pleased and annoyed when the dealership told him they trusted him enough to pay them at the end of the month when the CD he was going to use for the down payment matured, he really didn't understand the idea that somebody is paying those rebates.
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Old 08-16-19, 06:40 PM
  #39  
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Unpayable debt won't be paid, but debt collectors are more aggressive in some nations. In China, borrowers may be required to provide nude photos. In Russia, borrowers face the threat of sexual assault.
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Old 08-16-19, 06:47 PM
  #40  
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Originally Posted by indyfabz View Post
Some people have TVs in damn near every room even thought they are not wealthy.
TVs are free on craigslist. Now it's a smartphone in every pocket.
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Old 08-17-19, 08:25 AM
  #41  
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There are several interesting stories ^above^. These stories get played out again and again by people who just don't get it. It doesn't take a genius to understand debt and how to either avoid it or manage it. Why some people seem to destroy their lives through crushing debt and act as if it was something they never saw coming is amazing.

1. Spend less than you make. Treat saving money like breathing, you have to do it.

2. Read #1 every morning.
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Old 08-17-19, 08:46 AM
  #42  
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Originally Posted by TakingMyTime View Post
There are several interesting stories ^above^. These stories get played out again and again by people who just don't get it. It doesn't take a genius to understand debt and how to either avoid it or manage it. Why some people seem to destroy their lives through crushing debt and act as if it was something they never saw coming is amazing.

1. Spend less than you make. Treat saving money like breathing, you have to do it.

2. Read #1 every morning.
That might be true except for one thing:

Its call advertising -- and its a very powerful and effective tool of the rich. It supersedes all logic and good sense.
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Old 08-17-19, 10:33 AM
  #43  
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Also, just by having an unused open line of credit can affect your credit.
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Old 08-17-19, 11:11 AM
  #44  
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Originally Posted by EJ123 View Post
Probably due to increased utilization use. If you pay off everything before the statement balance posts you should be good before they report to the bureaus.
Yes, even if you pay the full monthly revolving balance on the bill every month, they will still report the current balance at the time they report to the credit companies monthly. There is no indicator on a credit report that you paid the full amount. Only the balance and the limit. Pull your free credit reports from annualcreditreport.com and check it out. You can pay them weekly or daily if you desire to have the absolute highest possible credit rating. The variance is not that much though, maybe +-10 points a month. I use CC's for everything. A decent percentage back (at least 2%), price protection, extended warranty, loss/theft, able to dispute, and other perks. All for 0 in fees because I pay the balance off. Win-win.
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Old 08-19-19, 10:04 AM
  #45  
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Originally Posted by ldmataya View Post
Yes it is because those states have larger mortgages and higher housing costs in general. Except for Hawaii, they also generally have larger incomes. In those states people are still "betting" on the value of their homes holding up their net worth.
I'll stipulate that it's a gamble whether any particular house will hold its worth in the future, at any point in time when the value of a person's house is worth more than the principal on their mortgage, the house is a net asset, not debt. And as the CA market is rather Up right now, there are relatively few CA homeowners who are underwater. During the 2008 crisis there were millions.

Although the principal on my mortgage is more than the cost of most houses in the country, my net equity is also more than the cost of most houses in the country. It's reassuring to know that (as the market stands at the moment, and is likely to remain) I can sell my CA house and buy a house free and clear with cash in flyover country, and could probably semi-retire now. In a situation like that you just need enough money for food, property tax, and utilities. $500/mo maybe could probably do it.
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Old 08-19-19, 10:08 AM
  #46  
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Originally Posted by no motor? View Post
And gear. Who doesn't need more parts/lights/clothes etc....?
me. And 10 bikes ~ 1 car, and bikes don't require insurance or gas, and the long-term maintenance is much less.
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Old 08-19-19, 10:12 AM
  #47  
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Originally Posted by spinnaker View Post
I also read that the average car loan is now $530 a month. That us insane too. People buy too much car too often. They don't have the old one paid off so they roll the old balance into the new.
Originally Posted by work4bike View Post
That is a good link!!
Here's another great one from the Mr Money Mustache archives.

Remember BITD when the 'standard' car loan was 3 years? Seems like at some point that standard changed to either a 3-year lease, or a 5-year loan
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Old 08-19-19, 12:02 PM
  #48  
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Originally Posted by roadfix View Post
Also, just by having an unused open line of credit can affect your credit.
Having no credit can affect your credit. But you want to use your credit for it to be of any value. Just letting it sit idol won't mean much. Even when you have the cash its better to pay through your CC then simply pay it off.
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Old 08-19-19, 07:14 PM
  #49  
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Originally Posted by RubeRad View Post
Here's another great one from the Mr Money Mustache archives.

Remember BITD when the 'standard' car loan was 3 years? Seems like at some point that standard changed to either a 3-year lease, or a 5-year loan
72 months is a common offering for a car payments now. Considering that many compact cars are priced $20K to $30K now, I guess that isn't surprising.

I'm not looking forward to buying my next car at all. The most I spent on a car was $16K for a new Toyota in 2006. My current car was bought two years old for $15K in 2015.
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Old 08-19-19, 09:15 PM
  #50  
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Originally Posted by FiftySix View Post
72 months is a common offering for a car payments now. Considering that many compact cars are priced $20K to $30K now, I guess that isn't surprising.

I'm not looking forward to buying my next car at all. The most I spent on a car was $16K for a new Toyota in 2006. My current car was bought two years old for $15K in 2015.
Good luck with that. Too bad they don't make the Yugo anymore. 😕

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