341–350 of 690 posts
I left the U.S. several years ago and have completely forgotten about "credit scores" in this sense. I get reminded every once-in-a-while how things that used to feel so obvious and inevitable and necessary for society to function are completely artificial.
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Average American household budgets are dominated by housing, transportation and taxes. Maybe some of that problem is about spending too much money, but it cannot be denied that housing are unaffordable and that transportation is inefficient and is a mess.
> Average American household budgets are dominated by [...] transportation Huh? Doesn't the average American live in a city? The whole reason for accepting being squeezed in tightly with other people is so that you don't have to worry about transportation; enabling everything you could ever want and need to be found in short walking distance. Transportation is for people in rural areas. Yes, it is expensive, but that…
Theoretically, credit should be used for one thing: to make more money. (not less) However, instead of using it to buy or construct a machine to triple what you can produce in an hour, the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later. At some point, you run out of hours available and the house of cards collapses. i.e., credi…
> It'd have been nice had they taught me this in school. Yeah, even at a basic level, it should be made clear that cars depreciate and real estate, by and large, appreciates in value. One of those is "good money" and the other is "bad money". Kids should learn coming out of school to be able to distinguish which of the two they are throwing "good money" at.
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That's not true. Wages have generally outpaced inflation as long as we've measured inflation properly. Up until the early 1970s this was very palpable, since the early 1970s the delta has been much lower, wage increases have been very slightly above inflation. Why does it feel different? 1: the amount of stuff we buy has increased a lot . Anybody who owns what would be considered solidly middle class in the early 197…
Average American household budgets are dominated by housing, transportation and taxes. Maybe some of that problem is about spending too much money, but it cannot be denied that housing are unaffordable and that transportation is inefficient and is a mess.
Earlier quoted context omitted.
Average American household budgets are dominated by housing, transportation and taxes. Maybe some of that problem is about spending too much money, but it cannot be denied that housing are unaffordable and that transportation is inefficient and is a mess.
> Average American household budgets are dominated by [...] transportation Huh? Doesn't the average American live in a city? The whole reason for accepting being squeezed in tightly with other people is so that you don't have to worry about transportation; enabling everything you could ever want and need to be found in short walking distance. Transportation is for people in rural areas. Yes, it is expensive, but that…
Pretty much any time you hear "city" or "urban" it's either a direct or indirect reference to US census data (or follow on research by other academics that uses their definitions) which play fast and loose with the word urban in a way that results in the population of even the most far out municipalities within a city's economic area being countable as urban in some capacity depending on what data set you want to use (some of the data sets draw economic distinctions rather than lifestyle ones, so a rural farmer who exists in the eoncomic gravity well of a major urban area will be counted as urban).
This is all magnified by substantially less than honest people omitting the potentially misleading nature of the term when it suits them and the people who they've informed going on to parrot it without actually understanding it.
INB4 nitpickers, it's been a decade since I've done any work with this data, if my knowledge is out of date and it's no longer misleading to the layman then good.
I left the U.S. several years ago and have completely forgotten about "credit scores" in this sense. I get reminded every once-in-a-while how things that used to feel so obvious and inevitable and necessary for society to function are completely artificial.
Society itself is completely artificial. Money, property rights, laws, taxes, even the words I'm using to write this very comment... all of these are just human inventions, reified mythology.
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No, an average person uses it to improve liquidity atop overall solid fundamentals. Literally hundreds of million people worldwide do it with no adverse effects and improved quality of life. Irresponsible people are relatively a minority (although they tend to make the news). And aversion to financing is in itself a poverty marker more often than not.
Of those who carry credit cards in the US, 60% of them carry a balance [0]. There are also all those reports that have come out about how nearly 40% of Americans don't have $400 for an emergency [1], with the median being just $600. If the rule of thumb for an emergency fund is 3-6 months of expenses, and we can agree that paying interest on a credit card is a bad finical decision, then I'm not sure how the "average"…
Carrying a balance is not automatically the worst choice. I have a massively positive net worth (for a working stiff), so could effectively have $0 debt at any point in time, inclusive of my mortgage, but all debt is not equal, nor are all investments. Credit card debt is clearly one of the worst forms of debt with the harshest interest rates, yet even in that case selling investments and paying taxes on them and forgoing future earnings on those investments to pay off a credit card immediately vs over a few months is not necessarily the right decision.
Credit cards are about providing you float so you can smooth out cash flow. As an example, I am about to do some home renovations, I expect to spend ~$40k to do so, I also expect to earn and pay off that $40k over the following 4 months. My options are I can carry a balance on a credit card, I can keep my home in a partially renovated state for longer to pay cash, or I can take our a HELOC which has a high origination cost and acts as a secondary lein on my house. The credit card + carrying a balance for 4 months and having my home back in a finished livable state faster is clearly the best choice, but it means I'm in that 60%.
These choices aren't binary, the problem is that many people are not financially literate enough to consider their options and outcomes and choose the best choice, they either have a default choice with no consideration, or no real choice, both with negative outcomes.
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I do. Housing prices are constantly rising, when you take a loan you are buying an asset which (with some luck) may appreciate in value more than mortgage interest rates. That's why in some countries it's worth taking a loan as soon as possible without saving for too long. Sure, without mortgage you may not be able to afford a house at all but it does not change the fact that mortgage is a "good" loan (i.e. you benef…
Mortgages with low interest rates are also one of the (main) reasons houses are so "expensive" in the first place. The cheaper money (credit) is, the "higher" the prices will go. It's not so much that houses became expensive, it's more that money to buy a house (specifically mortgages) became relatively cheaper. Low interest rates did that.
I left the U.S. several years ago and have completely forgotten about "credit scores" in this sense. I get reminded every once-in-a-while how things that used to feel so obvious and inevitable and necessary for society to function are completely artificial.
From my extremely naive understanding, obtaining credit and low rates is, in general, much easier in the US than other places. So it makes sense to me that it has “artificial” tools to help determine risk. How do other countries handle this and provide the availability that can be found in the US?