Dealing with debt

[WalkaboutTed]

I'm watching a documentary on PBS where a man beat the crap out of his wife's for 4 1/2 days. She was covered with bruises. He beat her with his fists. He beat her with a maglite. He bit her.

The maximum he could be sentenced by law was 150 days.
Now tell me that bankruptcy is morally unacceptable and sentence someone to years of involuntary servitude .

 

[WalkaboutTed]

And BS on no credit after bankruptcy. I lost my house, I lost my job during the great recession. I filed Chapter 7 bankruptcy in 2011. I was able to finance a new car within 4 years at 1.99%. I had normal credit cards with no annual fees or other fees (which I don't abuse) a month after my BK was discharged. And if you think I shouldn't have gotten a credit card so soon after the bankruptcy, it is almost impossible to rent a car, and a pain to live without a new credit file.

Bankruptcy is meant to give someone a new start. I guess you think decent healthcare isn't a right either, it's a privilege.

 

[bullfrog]

Bankruptcy is not a crime. It is used by many prominent and now successful people throughout America. Any person, business or corporation that extends credit for a profit should be aware of the laws surrounding its use.

 

[poncho62]

The trouble with bankruptcy is that people think that no one pays in the end and that the lender loses.......Nope, everyone pays. The lenders just up the rates for everyone. They still make their money, just in another way. Its the same with insurance......and probably with health care too (increased taxes) if you want to get right down to it.

My problem is that I have always paid my bills, paid my taxes and not bitched about it (not out loud anyways)......I know too many people that my dollars are supporting, whether they need the help or not. Gets under ones skin sometimes.

 

[bullfrog]

Most Americans used to think the way our government handled our monetary system was equatable. When the government started printing money without the gold or silver to back it and borrowing money, especially from other countries, they lost control, like many people do facing bankruptcy. Because American government spent more than it had, it has put every citizen, even the ones that have always payed their bills, in the position of almost being bankrupt, whether the citizen realizes it or not, sorta like having a spouse that runs up a big credit card debt without the other's knowledge. Bankruptcy is a way for people to start over and in the long run hopefully be useful in society rather than a "slave to their debts" or in prison as it was before bankruptcy laws were made.

 

[wagoneer]

I am up to 900 dollars HS maybe 450 each month for 2 months, If my mother was alive she would freak out. Never went to college, started working and traveling the globe.

 

[Zizzer_Zazzer_Zuz]

The trouble with bankruptcy is that people think that no one pays in the end and that the lender loses.......Nope, everyone pays. The lenders just up the rates for everyone. They still make their money, just in another way. Its the same with insurance......and probably with health care too (increased taxes) if you want to get right down to it.

My problem is that I have always paid my bills, paid my taxes and not bitched about it (not out loud anyways)......I know too many people that my dollars are supporting, whether they need the help or not. Gets under ones skin sometimes.

There are always compromises.

When you invest in the stock market you take a risk. That corporation or commodity may lose money and you too will lose money. The same is true when you invest in a person by making a loan. You as the lender are hoping to make a profit (the interest) but you also take a risk that the person will default or stop paying the loan for whatever reason.

For tax purposes, you as an investor needs to be able to declare your profits and your losses. Bankruptcy, above and beyond everything else is a service to the LENDER so that they can declare the actual loss due to the default. If you simply default then the lender must pursue a lengthy and expensive process to declare the loss.

You see, we don't have debtors prisons in this country. The thought of saddling a child with the parents debts is socially reprehensible in very fabric of our nation. There comes a point when both people in a contract must be able to cut their losses and walk away. To leave someone destitute with no hope of ever being able to pay a debt and live a decent life is more wrong than a business taking an occasional loss. Situations change. Bad things happen. Contracts get broken. Businesses go bust. Peoples jobs are replaced entirely due to progress, etc., etc., etc. ...

I don't complain so much about the bills I pay. Those bills represent the choices that I make. I don't complain about paying taxes so much as I argue how they should be used. I support social safety nets of various sorts, birth control, head start, WIC, SSI, and others. What I object to is the capitalists who abuse the system for billions while the uninformed fixate on singular examples (often proven false or inflated) of individuals scamming 10's of thousands. Then of course they dream of being able to live in mansions and have servants to wait on them just like the corrupt bankers and wall street fat cats they claim to despise.

I also vote, volunteer, and gladly appear for jury duty when called upon. Too many fail to participate in society. We, even nomads do have a place in society and everyone needs to help contribute in some small way for the better good of all. There is that whole "We the people" thing. You know, and the "promote the general Welfare" thing. 

I take that shit pretty seriously.

I for one blame the bankers not the wellfare recipients. Apathy and inaction is the true enemy of democracy.

 

[grandpacamper]

Debt & credit are not unlike politics & religion. Everyone has their opinion. I choose to forgo credit when I retired. I had moved all my retirement accounts out of my chosen investment vehicles, trying to protect myself but along came 2008. Wanted to sell our home & move to a more hospitable climate. Owed about 50% of prior appraised value. On closing settling for the best offer which was 70% of that value. Walked away with less than 20%. Took it in the shorts, I knew something was amiss with my health but in my quest to move we/I delayed any medical input. Sold in 2011, driving away I realized I was homeless, a little in savings to relocate. Autumn 2011 discovered I had major health problems. Over lap in the surgery, follow up treatment spanning two years cost me somewhere north of $11,000 out of pocket.

In June 2012, I pulled most of my 401K out to repay the copays, clear up my credit card, auto loans & all my other debt. I still had my pension & SS. Early in 2013 I was hit with tax bills to the tune of $4,000. Then found out SS made an overpayment to me for over $6,500 & they wanted their money. My pension was fully taxable, I owed state taxes for my previous state & my new state while not taxing SS was standing in line with their hands out for the tax on my 401 draw & pension.

Zoom ahead to present day, I have cleared up all the debt, taxes & all MY other bad financial decisions. I learned to plan for tax time, have enjoyed a refund over the last 3 years, I started my plan (BUDGET) in late 2012. Went exclusively cash or ATM card. I canceled my credit cards, opted out of offers, put myself on a strict financial diet. We don't owe a soul, no credit (wife has a $1,000 limit VISA & one retail card she refuses to give up). I play my senior card everywhere & ask for discounts for cash, have walked a few times when they refuse, it puts me in charge. Money in savings again. I have 6 monthly bills (includes 2 $8 streaming svcs) (wireless, DSL /ISP, utility, space rent, streaming). My total expenses are $1,000 per month which includes $1,200 annually for Home/Auto insurance, HOA fees, property taxes, auto plates & memberships (CostCo/AARP).

My future in 2011-12 was bleak, had a little time so made my mind up to plan for my eventual demise & my wife's security. Became anal about budgeting, health & proper eating & exercise. Things right now are on an even keel, but I'm planning for the worst hoping for the best, knock on wood. I had discussed BK with a lawyer on 3 occasions but finally decided that I could somehow do it without filing. I can't say whether is was the wisest choice but I learned a lot about how dependent we had become with banks, credit card companies & slaves to the hype to keep buying more 'stuff'. My wife's more secure & was just saying yesterday that she is amazed at my restraint with money. She's always been one who was good but I made the largest income, & I was selfish. I'm amazed she has stuck it out for 49 years. Most women would have run.

 

[gcal]

So I'm in the hole with a credit card for a bit of money. I've got a 0% interest rate card that I'll be transferring the balance to. My plan was to be on the road this year but with this debt my mind tells me I need to work at least another year. I get paid pretty well in my current job and the thought of working for less and having a large amount of debt gets me worried. Has or is anyone working on the road have a lot of debt and are there any tips you would wish to share.

Thanks,

Paul

Work the extra year and pay off your debt. You don't want it dogging you on the road. Treat it as a life lesson and don't enslave yourself in the future for something you probably don't really need, today, anymore.

 

[gcal]

I'm watching a documentary on PBS where a man beat the crap out of his wife's for 4 1/2 days. She was covered with bruises. He beat her with his fists. He beat her with a maglite. He bit her.  

The maximum he could be sentenced by law was 150 days.
Now tell me that bankruptcy is morally unacceptable and sentence someone to years of involuntary servitude .

Involuntary servitude? Who chose to make the debt? Every person who skips out on debt dumps that burden on the resr of us. It does not just evaporate. Businesses have to pay higher fees, banks have to charge higher interest rates, insurance premiums for bad loans go up and it's all passed on to the customers in prices. If you can pay off your own debt, be a mensch and do it. Nobody owes you.

 

[mariasman]

Involuntary servitude? Who chose to make the debt? Every person who skips out on debt dumps that burden on the resr of us. It does not just evaporate. Businesses have to pay higher fees, banks have to charge higher interest rates, insurance premiums for bad loans go up and it's all passed on to the customers in prices. If you can pay off your own debt, be a mensch and do it. Nobody owes you.

While the affects are harmful, they are not necessarily reflected in higher nominal prices/fees/rates. Under the existing financial system, "credit" is not derived from savings. Hence, the feedback control system you describe here does not necessarily apply. Indeed, interest rates are at record lows today while savings rates remain suppressed. Again, the reason this condition exists is a consequence of the source of "credit" being the expansion of the currency supply (once properly understood as counterfeiting). So, even those who nominally repay their debts are swindling others on net balance - namely, the genuine capitalists (otherwise known as savers) are screwed out of their rightful interest payments. Those who practice financial leverage to acquire capital also are stealing despite often being nominally productive (their additional gains made possible through financial leverage is value stolen from others), those who use debt to purchase consumer goods also are stealing quite simply because interest rates are artificially suppressed thereby denying compensation to the savers, those who loan currency are using OPM (Other People's Money) without just compensation in the form of interest that reflects that actual rate of savings, and those who are neither debtor or creditor (like myself) are getting screwed due to price inflation and the economic/political upheavals caused by malinvestment. The only people who seem to gain on net balance are those who orchestrate the financial system and those closely associated (like governments and uber rich folks - including folks like Trump whose activities depend so much on artificially cheap "credit"). The end result of this perverse set of conditions is a disincentive to save resulting in a net destruction of capital. In turn, this introduces incentives to acquire outside resources to shore up the disintegrating capital structure of the economy (meaning war).

 

[Kevin H]

You will be much more proud of yourself if you pay off the debt than if you do not pay it.

How you got into your situation is not relevant to this discussion. Nor are any comments regarding your person for having the debt. Asking how to pay it off demonstrates your integrity.

The 0% card is a good tool. You are on the right path. Be sure you understand the rules. Normally, if you take longer than the 0% period, you will be charged all the back interest for the period.

Take the year. Work at your current job. Volunteer for every hour of overtime you can get. Get another part time job, or two and work, work, work. If you work every minute you will not be able to play and increase your debt.

Not sure how old you are. If you are young, you know there are many years ahead to enjoy. If you are older, you know a single year will pass in an instant.

Although you did not ask this, here is a tried and true method that really works - first hand experience, BTW:

Cut your spending to the absolute barest minimum and apply every single nickel you can to the debt.

Put the highest interest loans on the 0% card. If there is more room, put the second highest on there and so on.

Start making the minimal payments on all loans except the one with the SMALLEST balance.

I know, seems you should go after the highest interest loans first, but this method will keep you motivated. You will be working on the big interest ones soon enough.

Apply every nickel you can to that smallest loan first, regardless of it's interest rate. Making that final payment on the first loan will really feel good and motivate you.

Then, take all that payment and add it to the minimum payment on the next smallest amount and repeat.

Repeat for each subsequent loan amount until you have everything paid off.

Sounds simple, and technically it is. Staying motivated will be the hardest thing. That is why paying off loans starting with the smallest will help maintain the motivation.

Then - get out there and enjoy the freedom of the road and the freedom of being debt free.

For inspiration, look up Dave Ramsey. Listen to his radio shows and perhaps go to a free seminar. Rice and Beans, Rice and Beans until you pay it all off.

Good luck! You can do it and you'll feel incredible on that last payment date!

 

[user 13081]

Work the extra year and pay off your debt. You don't want it dogging you on the road. Treat it as a life lesson and don't enslave yourself in the future for something you probably don't really need, today, anymore.

Thanks for all the replies. I do have a stable secure job here in San Diego. I really don't like it very much but right now I am working on a budget which I've never done. So once I get this all figured out then I can look on getting on the road. At some point I'll need another van, I almost had a scare last night. I started my van and the engine was making a load knocking noise. I work at a dealership so I get a deal on parts and I trust the techs. It was only the lifters making noise so I'll be switching to a thicker oil and putting in a oil treatment.

 

[gcal]

While the affects are harmful, they are not necessarily reflected in higher nominal prices/fees/rates. Under the existing financial system, "credit" is not derived from savings. Hence, the feedback control system you describe here does not necessarily apply. Indeed, interest rates are at record lows today while savings rates remain suppressed. Again, the reason this condition exists is a consequence of the source of "credit" being the expansion of the currency supply (once properly understood as counterfeiting). So, even those who nominally repay their debts are swindling others on net balance - namely, the genuine capitalists (otherwise known as savers) are screwed out of their rightful interest payments. Those who practice financial leverage to acquire capital also are stealing despite often being nominally productive (their additional gains made possible through financial leverage is value stolen from others), those who use debt to purchase consumer goods also are stealing quite simply because interest rates are artificially suppressed thereby denying compensation to the savers, those who loan currency are using OPM (Other People's Money) without just compensation in the form of interest that reflects that actual rate of savings, and those who are neither debtor or creditor (like myself) are getting screwed due to price inflation and the economic/political upheavals caused by malinvestment. The only people who seem to gain on net balance are those who orchestrate the financial system and those closely associated (like governments and uber rich folks - including folks like Trump whose activities depend so much on artificially cheap "credit"). The end result of this perverse set of conditions is a disincentive to save resulting in a net destruction of capital. In turn, this introduces incentives to acquire outside resources to shore up the disintegrating capital structure of the economy (meaning war).

How, exactly, do you think all that verbiage excuses buying a lot stuff one can't afford and running out on the bill? Do you really think cost of doing business has no effect on prices? REALLY?!?

 

[mariasman]

How, exactly, do you think all that verbiage excuses buying a lot stuff one can't afford and running out on the bill? Do you really think cost of doing business has no effect on prices? REALLY?!?

Excuse? No. I merely describe a problem. The cost of doing business does not necessarily get reflected in prices, and certainly not in an accurate or timely manner, and this is precisely the perverse set of conditions that allows the financial shenanigans to continue. This does NOT mean it does not manifest in other ways - all destructive on net balance. Indeed, this failure in the price system augments the damage by obscuring the effects. So, it becomes more difficult or impossible to see how capital is being destroyed - and everyone follows everyone else off a cliff. The main point I emphasize is everyone who taps the expansion of credit is engaging in theft even when the loans are (nominally) repaid. It is a subtle dynamic few come to understand. Hence, it it generally not appreciated.

 

[gcal]

And what can an individual do to fix this "existing financial system"?

Guy

I am not sure where that financial system idea came from. I never ran across it in my Economic or Finance classes. The idea that if you borrow money (a resource) and then engage in productive behavior to pay back that resource plus interest (whixh is actually rent for using that resource), and that makes you a thief, is somewhat bizzarre.

 

[Every Road Leads Home]

Involuntary servitude? Who chose to make the debt? Every person who skips out on debt dumps that burden on the resr of us. It does not just evaporate. Businesses have to pay higher fees, banks have to charge higher interest rates, insurance premiums for bad loans go up and it's all passed on to the customers in prices. If you can pay off your own debt, be a mensch and do it. Nobody owes you.

While I can agree that it's not fair to dump it on everyone else.  It's one perfectly legal and two you're basically agreeing to pay some of the cost of default loans the second you take out a charge card or loan because it's all pre built into the interest rate you get.  To the bank it's all in the cost of doing business.

 

[grandpacamper]

I estimate I spend upwards of $12,000 annually for goods, services & food. I pay cash for everything, I have been able to get a small discount from some retailers but not many. I get miffed when I know that others buying the same goods for the same prices & are using their debit or credit cards. The retailers have a built in 2.5% to 3.0% to the credit card issuers & raise their prices to get compensated. My cash is exactly that, CASH! The retailer pockets my 2.5% - 3.0% with little thought. Their excuse is that they have to make it up somewhere else so I'm subsidizing the credit worthy while they make an additional 1-2% for their rewards. But the credit card issuer makes that back with the exorbitant interest rate they charge sub-prime members. The only one who loses is ME. I chose to stay out of the loop so to speak, don't want to deal with the rewards game, getting too old just to pay my grocery bill & trying to get off the grid without being tracked for my spending habits.

 

[blars]

Handling cash costs money too, labor involved in counting, depositing, stocking change, etc. as well as higher theft. For some businesses it may exceed the cost of accepting credit cards.

 

[grandpacamper]

Handling cash costs money too, labor involved in counting, depositing, stocking change, etc. as well as higher theft.  For some businesses it may exceed the cost of accepting credit cards.

Do you mean there are actually businesses that hire people to count cash?  The only places I know they need cash counters are casinos.  That's probably the only place your rewards cards is worthless, if you are forced to use the ATM machines they will also take their cut.  Have you ever tried to use a card at the tables? 

But on the other hand I don't have a lot of yard sale items that my children will have to handle after my demise, just because I was trying to built up my miles or rewards.  Spending cash gives you a moments hesitation before you make your purchase.   I always look at an item & wonder what I can get for it at a yard sale or on Craigslist in 3 years.