131–140 of 369 posts
Better question: why do people buy things they can't afford and most often don't need, putting themselves in this position? So many of my peers don't make a lot of money, but then still go out and buy a new or newish/used car and put themselves on a multiyear payment plan. "Oh but it's only 200 a month, I can swing that". Repeat for like 3-4 other things and suddenly they're always complaining they have no money and…
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While I agree in that it obviously is not the smartest way of doing that, if it gets people to actually feel like they have a plan for taking care of their debt and to start making progress on doing so, then it's worth it. Obviously they probably shouldn't have bought a bunch of things they didn't need, but hindsight's always 20/20.
This whole idea that "oh you have multiple creditors obviously you've made bad decisions" is misguided and naive in the extreme. People have medical bills. People need the counsel of attorneys. You generally need a reliable car to get to work and a roof over your head. You can have huge mountains of debt and be forced to dig your way out by the skin of your teeth through no fault of your own. Paying hundreds a month…
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I don't understand these reward schemes. Surely they are being funded by higher merchant fees, which means merchants charge more, which just means that the rewards are a transfer scheme between people who pay by cash/unrewarded cards and those with rewards cards.
There's a lot of truth to that (cash paying customers pay the same, even though the cost to serve them is less). But unrewarded cards aren't really any different. Most merchants still have to pay the same high fee for them. Since the bank/processor is going to take the maximum amount of money they can regardless, and most merchants will have to pay that full fee regardless, you might as well use a rewards card over a…
"The greatest shortcoming of the human race is our inability to understand the exponential function." --Albert Allen Bartlett Considering that 97% of the survey participants allocated their debt payments in financially suboptimal ways, perhaps the second greatest shortcoming of the human race is our inability to understand the compound interest. "Put God in your debt. Every stroke shall be repaid. The longer the paym…
Not understand that is our greatest shortcoming :-)
Could someone well-versed with bankruptcy please explain the pros/cons of going that route? I have heard that credit card debt is essentially free money because filing for bankruptcy will wipe out all the debt. If you already own a home/car, and have no intention of getting a loan in the next 10 years, what is wrong with this strategy?
A pesky thing called morality and the fact that incurring debt with the intention of later going bankrupt is fraud?
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I would advise people not to lend money to friends and family. I have done it several times and every time it led to problems and a lot of pain.
Giving money, that can work. With a glad heart.
When a late payment is $39.99 and a mark on your credit record, even the smallest, lowest-interest debts become high-risk. Reducing the number of risks (and mental energy managing them) easily outweighs the interest differences. When you have to spend a 1/2 day to refinance a credit-card to an unsecured personal loan, it's not always a clear win: you might not get the loan, or the loan offered might have significantl…
Now I'm also not saying that your situation doesn't happen either, so I'd still say this article is useful if it helps anybody who is truly misevaluating their debt situation to rectify it and pay less interest overall.
This is showing that the Dave Ramsey "debt snowball" (pay off smallest debts first to get a psychological win and some breathing room by having fewer minimum payments) is a more effective way to get people to pay off many separate debts than paying off "highest interest rate first" even if it is less optimal for a rational actor. Just another case of people aren't 100% rational that many people have known for a while…
Yes, in his course he explicitly explains this strategy is in deference to human psychology. Even if paying towards highest interest debts is mathematically optimal, better to have a strategy you are likely to stick with, than a theoretically better strategy you are more likely to eventually abandon.
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Giving money, that can work. With a glad heart.
People won't accept gifts. Give a "loan" but treat it like a gift --never mention the balance ask for the repayments.
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American Express has a card "Blue Cash Preferred". You get 6% back on Groceries (up to $6k/yr), 3% back on gas, and the card has a $75 annual fee. If you only use the card to spend $100/week on Groceries, you get $312 in cashback rewards. Subtract the $75/yr fee, and Amex paid you $237 to use their card that year. (Amex isn't the only card like this -- there's lots from MasterCard and Visa as well. This card in parti…
I don't understand these reward schemes. Surely they are being funded by higher merchant fees, which means merchants charge more, which just means that the rewards are a transfer scheme between people who pay by cash/unrewarded cards and those with rewards cards.
Depending on agreement, card type, and other factors, the swipe fee is sometimes higher than 2%, so I don't always get all the difference back.