How smart people will handle the new Bankruptcy law

When life deals you lemons, make lemonade.

Here's a step by step process:

1) Stop buying anything but the bare essentials. There is no need for high definition surroundsound 50" televisions. Make due with what you have. Do not go shopping for needless crap. Don't spend that extra ten dollars because you thought the vase in Target looked pretty. If something breaks, save a few extra dollars out of each paycheck until you have enough money saved up to replace the broken item. Yes, this includes your television.

2) Put 5% of each paycheck into a savings account. Do not touch this money under any circumstances. If you want, when you reach four figures in this account convert some to Euros.

3) Stop using credit cards for anything except absolute emergencies. No, that high definition surroundsound 50" television is not an emergency. No, that cruise is not an emergency. Emergencies would be the plane ticket to fly across the country to get to your grandmother's side while she is on her deathbed.

4) Choose your credit card that has the lowest balance. Cut it up into little pieces, but keep account information handy for payoff purposes. The lowest amount to pay monthly is three times the minimum balance. Repeat these payments until you have a zero balance. Cancel the card.

5) Repeat step 4 until you get to your last credit card.

6) On your last credit card, the lowest monthly payment is still three times the minimum payment. Get this credit card to a zero balance. Lock up the credit card in a fireproof box with important papers. Keep and use only in case of emergency.

7) Everything you used to spend on your credit card payments now put towards principal payments on your mortgage.

8) When all debts are paid off, continue to spend very little money. Be thrifty and save for bad times that are coming.

The fact of the matter is, the credit card companies are going to realize a HUGE return on this bankruptcy bill on the front side. They'll even convince some idiotic Freeper types that insurance they sell for a massive premium price is worth it. They are going to squeeze deadbeat red state Freepers like squeezing blood out of turnips, but those of us who are good credit risks will be thrifty. We won't spend extra money on stupid crap. We will pay off our credit cards, and they will cease earning their monthly indenture payment from us.

Meanwhile, they will still have difficulties getting everything out of the Freeper red state deadbeats who are over extended on their credit and their earnings will start slipping again, so their rates will come down and they'll give credit to riskier and riskier consumers. Eventually, they'll drown in their own turnip juice because no matter how hard you squeeze, you'll never get blood out of turnips.

Folks, make good on a bad situation and take this opportunity to get yourself out of debt. Turn this around on the credit card companies and screw them royally. Legislation influences behavior, and the responsible consumers will alter their behavior accordingly.

Nobody ever got hurt following your advice, except maybe merchants and banks.

The only reason this was passed was for the cc companies. Cash only. Cash only. Cash only. If you don't have enough cash, you don't need it. That includes online purchases!

I don't need it. I know, my poor children suffer with a lack of i-pods and Game Boy games, but we go to the library a lot and get free books! Life is better without credit card debt.

The people living in the overmortgaged McMansions in suburbia, however, are screwed if the dollar slides anymore, the interest rates go up, or, heaven forbid, they get sick. Since most of them are repubs, however, I could care less. (Sorry - heartless, I know.)

Adjustable Rate Mortgages are certain death in the coming economic times. Fixed rate mortgages are the way to go. Yes, the rate is higher than that ARM, but damn, wehn the rates go back up you are SCREWED!

If you can't afford the payment, you can't afford the house. Don't bank on a huge appreciation, because the real estate market is no sure thing either.

If you only charge what you can afford to pay off in full every month...the credit card companies will make NOTHING :) but you will have the convenience of a card. :) If you ever rent a car...you will NEED one ...but remember not to make the trip if you can't afford it.

They do make money with every purchase. They just make it from the MERCHANT side, not the CONSUMER side. Believe me, they have every angle covered.

BUT, they still make significantly less profit with a pay-ever-month cardholder. In fact, the banking industry's term for us is 'deadbeat'! Look it up!

Enterprise takes a cash deposit and when I used them last Alamo let me use a debit card.

Smaller local companies may be availible to rent w/o a CC as well.

It's not a bad idea to keep one around for stuff like that, but it's certainly possible to do without.

I'm not sure of the technicalities behind it, but they can calculate interest based upon both last month's and this month's balance, meaning they get interest out of you no matter what (because the grace period doesn't apply to last month).

Sickening, I know.:puke:

Edit: I got a two-cycle credit card offer the other day, and while they disclosed the billing method, they did not disclose how that billing method is used to rape you.:grr: I therefore ignored the offer.

Why not switch to a debit card? Same benefits as a credit card when it comes to shopping convienience however this time you can only spend what you can afford.

I'm not suggesting everyone rip up their credit card; however, like the original poster said - put it in a lock box and use it for emergencies only.

God made Debit Cards...

value for people who only use them for basic monthly spending such as groceries and utilities, and pay them off every month. Additionally, there are many card that offer generous incentive mileage bonues when you sign up. I change cards fairly often and probably earn an award ticket per year this way, without paying them any interest. I am probably a net drain on their coffers. I realize, however, that they are ripping off the most vulnerable, while rewarding the shrewd.

Excellent advice.

8) Don't get sick if you cant afford it.

9) If you have a sick child and cant afford to treat him or her, use this as opportunity have them "build character". If they survive, they'll thank you when they are adults.

9) Don't lose your job until you can afford to do so.

10) If you do lose your job, don't put food on the credit card. Just wait till you get a job again to eat.

That's where that 5%/paycheck comes in. If you aren't already there, that money needs to be built to a point of six months of income, no exceptions. That's how you survive in Bush's America. You must have six months of income in liquid assets that is easily accessible and is insured angainst bank failure.

But starvation is worse than being financial irresponsible.

Those are valid, and good ideas, but for folks barely making it 5% might as well be 500%

Hell even 6 months isnt enough.

I know engineers who lost $100k jobs and it took them 18 months to find work at half the pay.

In order to truly be insulated against bankruptcy, you need at least $200k in liquid savings.

That's a fact, poor financial management during the tech bubble notwithstanding, of course. Those folks who went into BUY BUY BUY mode when they were offered all sorts of stock options to sign onto the McBiggeeMcHUGEMCLARGE.com website for selling delivery of McDonalds sondwiches to the convenience of your home probably didn't experience any poor economic times in their professional lives and were definitely not ready for what hit the economy when that bubble burst.

The folks making close to the poverty level won't have the half dozen credit cards unless they had one of those jobs in the 90's.

And folks who are not really making, fall short every month.

and still fall short every month.

And if the only credit card you had was an American Express, you wouldn't be in debt to a credit card company.

I know someone who was raking in 200k a year but lived WELL above their means. They had NO savings and NO investments. Their income tanked and they were screwed. It happens.

But when my husband first got sick, we were young. We thought it was some bizarre problem with his knee, at 24 I had just given in to a credit card. Well hell yeah our rent and food went on it, there was no way around it (note we hadn't saved up 6 months before hand and on our pay and age that would not have been possible yet). We really thought it would be brief, it lasted two years. Close to a decade later we have just paid it all off and our credit rating looms large.

So I guess I am saying excellent advice. Follow it to the letter every day you can, I do now, I may not have been saved earlier...but I have a newer appreciation of the hell of bad credit and I will do all within my power to prevent that slide again. But like many I am aware how few paychecks I am away from it.
Kathy

Toooooooo funny

I worked in the manufacturing sector during the computer age boom--70's/80's. Then that went away to SINGAPORE..did temp jobs after that, but held onto our good credit because we knew how to handle it. The other way to get credit is to BUY something on time and pay it off...like a car or a dept store/clothing etc. Anyway, we are low income/fixed income...close to poverty line and DO have several credit cards still. We Be Careful though; your advice is worthy.

$100K in credit, which, of course I never used nor would I; however, as soon as I become a part of the "poverty stricken divorced women's club", things began to tank.

Jenn

I'm making just barely above minimum wage. I can't afford to save *anything*.

Tucker

Even at minimum wage you should still be saving something, anything.

Take the change from your pockets at the end of each day, the quarters dimes, nickels and pennies. Put that into a jhar and do not spend it.

Repeated major medical emergencies, car accidents, major car problems, urgent home repairs, injured pets, etc. have drained our savings from six figures to four in the past few years. My husband's car is ancient and falling apart. Our utility bills quadrupled when California imposed energy deregulation (San Diego was first, and got hit harder than other areas) and our bills never went back down. Insurance premiums are soaring and coverage is worse than ever.

I'm working so many hours I barely sleep. Same with my husband. We have a son who is #1 in his graduating class and we can't afford a good college, as the amount we've saved in his college fund will pay for about 1 year, sinc tuition's gone through the roof. Our daughter is just 2 years behind him, and supporting two in college is completely impossible.

I shop at dollar stores, thrift shops, garage sales and for a real splurge, Costco. We shop sales and use coupons whenever possible. We rarely eat out, unless we're away from home at mealtimes. We've had one vacation in the past four years, and cashed in frequent flyer miles for that. We don't own a big-screen TV or surround sound or any other high-tech equipment, except for my computer, which is used for my business.

I am totally frustrated by advice like yours, which sounds good on the surface, but just isn't helpful when you've already cut the budget to the bone and still can't save. The middle class needs help now--and instead we just keep getting shafted.

or you won't have a chance later.

That's the best I can do about your situation. I'm no economist, but if your situation is so desperate right now, you might want to declare now because you won't be able to when things get worse.

no really, i'm sorry to hear what you are going through. it's even more heartbreaking to hear you have a talented son who won't be able to attend a good college.

i KNOW that MANY people are in this predicament. i have no job, no realistic job prospects and am sickened by all these debt-rich people telling me that everything is hunky-dory.

put all the loose change into an old five gallon water jug. That sucker produced $300 when it was merely one quarter full!!!! It's AMAZING what change adds up to.

Grocery, misc, entertainment, clothing... all delegated in cash, to specific envelopes. You have to have a budget so the amount you add every pay stays the same. When you use out of a set cash amount it is easier to keep track of smaller spending.

If you spend less on groceries for example you LEAVE the money in the envelope and add to it with the next pays new cash. Over time the money adds up. It is slow going but it helps fatten a tight budget over time if you spend carefully. Eventually if one envelope grows to a fair amount it becomes savings.

Edited to add that it does not work if you get into a habit of "borrowing" from the envelopes. The idea is to KNOW what you have so you can keep within that amount.
I should have posted this as an addition to the original post as it sounds like advise to you specifically. Not the intent. Sorry. : )

Do not give credit cards to your high school and college age kids. Encourage use according to Walt's instructions, if the kid must have one.

many people can benefit

everyday all around good advice.

Been there, done that. We learned our lesson and changed our lifestyle to get out of debt. We sold the big house and bought a smaller one, paid off the credit cards first, then the cars and finally the student loans. It's been 6 years and we are still debt free (except for the mortgage which is only 50% of the value of our house.) We use credit cards but pay them off every month. The credit card companies are constantly sending us offers to entice us to spend more, but we toss them. If we can't pay for it now, we don't buy it. Hubby drove a 1995 Camry until last year when we could afford to buy him a newer (used) car. I drive a 1997 Volvo wagon with only 70K miles on it. I'm going to drive it until the kid gets his license and need a car, then he'll get a good, safe car to drive.

Shred, do not toss. And better yet, shred and divide and if you have a composter or worm farm, compost them!

Identity theft is easiest with those credit card offers!

...If you have good credit, quite a few of those offers are for zero percent interest on balance transfers for up to a year. If you can swing paying off a balance in a year, That's a pretty handy way of tossing away high interest rates off one card, and paying off basic principal only.

Good point!

We don't carry balances, but if we didn't taking advantage of the zero interest offers would make a lot of sense.

offers for "interest free" for a stated period.

used kitty litter.

Print out some of the amazing educational information you find on DU and send it back to them.

taped one of those envelopes to a brick the company receiving it would have to pay 37 cents an ounce for it.

I keep a "shred" folder & must have a years worth of credit card offers that I haven't shredded yet. I will pull those envelopes out & make good use of them!

Thanks for such a great idea!! Oh, this is going to be a fun weekend surfing for good info to put in them!

Somebody here started a thread with the idea a while back. It didn't get many responses, but I thought it was brilliant. I've been doing it ever since. It is fun. Spread the word! :hi:

A great idea means nothing if it isn't shared! Thanks to the originator and thank you even more for continuing to pass it on! :headbang:

It's very hard to do, but getting rid of credit card debt is like lifting a mountain off your chest. I made it out a few years ago, and have been chipping away at my mortgage with accelerated payments. I even have a few dollars in the bank for the first time since who knows when.

The impulse to buy! buy! buy! is incredibly powerful, because there are so many forces manipulating us to do exactly that.

An example: You sit down to watch TV and flip on a "home improvement" show. Half an hour later, you're looking around your house thinking everything is crap, and you need to rip it out and buy all new stuff. It's not just the commercials anymore, it's the shows that are making mindless consumers out of us!

I try to look at every purchase in terms of what I need and what I want -- and resist the urge to buy just because I want it. Yeah, the rooms of my house may be a bit bare by some standards. (I prefer "understated" :) ) But I'm feeling a lot better about my own prospects these days, and that's worth quite a bit.

1) Must Have - Food, electricity, gas for the car, body soap, laundry soap, cable internet connection (I work in the IT field and need fast access to my work network) etc.

2) Need to Have - Lawn care products, haircut, shampoo, etc.

3) Nice to Have - Morning coffee, morning bagel, that beer for the train ride home, etc.

4) Useless Crap - 50" Plasma Screen HDTV with surroundsound, new car, new major appliances, etc.

new major appliances are "crap"? what if the ones that you have now are 28 years old?? i don't mind spending money for a new dishwasher, range and fridge because it's money being shoveled back into my house.

You should only purchase new if you have the cash to spend. Of course, if your refrigerator breaks and it's cheaper to buy new than repair the old, this would qualify as an emergency.

more important than lawn care products - but hey, everybody's got their priorities.

Excellent advice overall.

we are selling our house now and plan to pay off all debts. then use remainder for down payment for new home. our only bill will be mortgage and associated utilities.

I would advise all young people --don't use credit cards. Make these bastards back down.

and then leave town and change your name. Make sure you gave the loan shark the address of the credit card company president when he comes looking for someone's legs to break.

Thank you for posting it. I must say, you are a problem solver.
I love it. Keep up the good work. I always enjoy your posts.

Paid off my car, paid off one credit card and paying the other one off within the next couple months. No way am I spending my money to keep credit cards and banks in business. They don't care about me and I don't care about them.

Thanks!

the mayor in Chicago. They put up no parking signs everywhere and cars were ticketed, booted and towed like crazy. Eventually, people stopped parking downtown at all. The city was left scrounging for fine money from other places. People won't keep losing their hard earned money to greedy city treasuries or credit card companies.

I use one credit card, it's really a debit card. I only carry extra credit cards in case of loss or emergencies. Credit is too important to the quality of one's life to abuse it.

Here are some good links on achieving freedom from debt:

http://www.daveramsey.com/

http://www.crown.org/

http://clarkhoward.com/

Also, when you're out of debt you can donate more to:

DNC

But it can be tough for a lot of people to follow with the consumer society constantly telling us to buy buy buy

But a little discipline and people can be in great financial shape if they try

It's a little late to buy into Euros in order to MAKE money, but it's still a good idea to convert surplus dollars if possible. If I HAD any money, I'd buy gold then move to South America when things get really bad. :)

They'll want the REPUBLICAN controlled government to implement strict rations on actual money you spend per month. However, people will be free put things on credit without affectioning your ration.

I could see that happening before the credit card companies reduce their outrageous interest rates because of favorable bankruptcy laws.

this is the only industrailized nation in the world where people lose their houses over medical bills.

rather than spending it.

Seriously, the Republicans are forcing consumers to stop consuming if there is no longer going to be a safety net. We have no choice but to provide for our own safety net and we all know medical emergencies are going to happen.

Save every last penny you can. You're going to need it.

You know better than anyone that our economy is built on a massive credit bubble and piles of consumer debt. Its the only thing keeping this economy lurching. If everybody followed your advice we'd be knee-deep in a recession.

I will remain thrifty and follow your advice but I hope everybody else spends, spends, spends like a drunken Republican.

</facetiousness>

go into debt up to their eyeballs. Hell, accept every credit card offer that comes in the mail if you're a Republican. It'll prop up the facade long enough for the Good Democrats to get out from under the crap.

in Bowling for Columbine (I think) that what keeps this mess afloat are four words: "I promise to Pay" Truer words not spoken.

My younger sibling would buy like there was no tomorrow during the good years, but those always come to an end. And my older sibling just could never say no to her kids when she couldn't afford it. Is it a birth order thing or what?

Thankfully i was raised with the ol' "penny saved is a penny earned" ideology. I and my wife both worked hard. Neither of us had what you would call great jobs, she at K-Mart, i at a textile mill, then furniture factory. We were always careful, we paid our house of in 10yrs, we lived fairly poorly. We had plenty to eat etc, but no expensive new cars, expensive clothes, hell my television is 14yrs old and i hope it makes 20 lol! We have never had a credit card, never accrued any large debts, we paid into our retirement accounts regular. I was saving $200 a week for many yrs.

Long story short, bad times have come. There are no longer jobs to be had here, both of mine had/have been outsourced. But because we live very frugally and saved we are ok. In fact in the long run it is worked out so well we have enough saved theres no worries. Due to this lifestyle she only works 20-25hrs a wk(Still at K-Mart)i deliver papers. Our combined income is just about $15,000 a yr and since we have no debt owe no money for the house we still save money.

I love it! I don't have to cut flips for some fool anymore. Nor am i in the position my sister is in. Her and her husband make much more money than we did, and a ton more than we make now, but they are in terrible shape.

The key is to make do with what you have or can get by with. Never go out on a limb and put yourself in debt for something you can do without, and as my man mentioned SAVE! Even if it's just a pittance, it grows over time and will be there for you if you need it.

... I've lived the same way. While my buds were buying new cars and bigger houses than anyone needs I packed it away.

Good thing too, I made the unfortunate mistake of being a computer programmer in Dallas. A year after the dot-com bust, there were 50,000 programmers out of work around here, including me.

My house and cars and stuff are paid for so I will weather the storm. I've moved on into another line of work, but it will still be a while before I make $$$.

A lot of the problems Americans have are caused by their own financial irresponsibility. If you are spending every dime you make, you are setting yourself up for hard times. This is the time to gather your forces, because the American economy is teetering on the brink for a variety of reasons, none of which our wonderful government can control.

Current balance: $3,450
One year ago: $8,500
Two years ago: $12,000

Fuck Wilmington! I hope they choke!

outsourced to India?

It's actually easier for them to call me at dinnertime, since it's mid-morning over there.

In fact, from Thanksgiving until the new year, I advise not spending a thin dime on anything other than an absolute MUST HAVE as listed in one of my responses above!

My economist father, who did grow up in the depression, taught me to live such as you suggest.

I don't have anywhere near the possessions and cool things of many of my peers, but I have a great education with no debt (including years living at or near the poverty level to do so, in one of the most expensive areas within which to live in the country), I have never bought a new car - but I have also never bought a cat on financing (only bought used, but bought out right - took longer to find some of the cars and learned to use all available resources to try to find a car that would not accrue high maintenance/repair costs). When I realized that I might save several thousand dollars over the years by considering AMOUNT PAID (eg including all payments including the financing) rather than "the monthly payment", it just made more sense to me.

When I recently bought my first home, I was more interested in money going into additional investments (now that I am secure enough to have enough money to invest as well as live) than into a mortage. Have seen a realestate bubble burst and watched friends lose more than 50,000... and don't buy that those mortgage dollars always end up as a "good investment." I could do better - don't economize on the daily level (even though I work long hours, I probably could cook more, rather than eat out or eat preprepared (frozen) meals.) It has taken a number of years to reach this point, and I don't feel secure yet (as that nest egg is still pretty meager - but it is growing rather than going additional bills). I need the gift of more years on this plan before I can safely weather the economic storm that seems to be brewing.

It is nice to read advice that fits the way I have been living - as many friends and acquaintances over the years have seemed to view my approach to living (and not consuming as much as I could) as being a bit... unique.

It's about financial traits of how people living simple lives work and save until they are millionaires. For example, they usually kept one major credit card (paid off every month), and a Sears card for convenience to replace appliances, etc.

Goodness, I'd love it if the American people would tell the CC co's to shove it!

servitude to the credit card companies, every liberal out there should tell the CC companies to shove it!

I created a little database to track how I spend money. I found that my biggest items by far was ordering lunches and dinners out. I've cut that out, and I'm saving $400 a month because of it. Just by taking my lunch to work and cooking dinner at home, I'm saving about $400 a month. I've put off all major purchases until I pay off my last two credit cards which should be done by summer time.

The people that need to file bk now have monthly disposable insufficient to pay off the principle of their indebtedness within a reasonable period of time if ever. These are the millions of Americans that the bankruptcy bill will harm. For those that haven't reached that point, sure, be more frugal, and hope you never get divorced, sick, injured, layed off, or fail in business. But for millions the horse has already left barn. And for everybody else, the wolf is never far from the door.

should file now before the law goes into effect!

If you are even considering it, do the homework. Find out what these changes will mean.

Under current law you won't lose your home and retirement.

For those who are low income and/or on fixed incomes where "saving" money is forbidden ie: SSI/welfare..........DON'T PUT IT INTO A BANK. Look for another way to "hide" money, even if it's only in a strong box.

We at the "bottom" of the financial totem pole already know how to go without the "fun stuff". But, the urge to splurge still exists and it's possible to get oneself into trouble even as a low income household. Many of the fixed income sources will NOT allow persons to save any appreciable amounts of money. Stunning I know, but true. So, we just don't put it into the bank where it can be tracked.

We go for years without vacations (a trip to Yosemite, not Paris ahem). We go very long periods of time without new clothing. We allow ourselves a few "luxuries" now and again to make life worth getting up for--like lotions and soaps, dinner out, or something small like that, but that's it. That way, we save a few bucks, however, if those few bucks accumulate in the bank...we are PENALIZED for having TOO much cash on hand. We are ORDERED to "spend it down" or lose our award!! (#&!@?#)

We came from a position of comfort with credit intact. The cost of living flew right past us and left us in the dust. We are aging and disabled now. We still own credit cards but use them as in the original post....only for special circumstances and when small enough, we pay those buggers off PDQ. We SHRED statements and offers of further credit.

We use tax returns to pay off bills and/or pay for medical needs. I have a check for back pay from Social Security and I'm using that puppy to go see the dentist. REAL NEEDS FIRST... luxuries come after the big stuff has been paid (if there's any left over ;)) We drive a 10 year old mini van that we've kept in tip top shape. The registration is much cheaper, it's paid off, and it drives cleanly. Who needs a new car when an older one works just as well.

We are even growing a "Victory Garden" in a patch of broken up "back yard" where we live. It's cheaper to "grow your own"

Besides avoiding a bankruptcy situation, this is just a sensible way to live, especially during these weird, uncertain times. NOT buying new appliances so often, rather keep the ones you have running, is also beneficial to the environment. There's a lot of pollution and toxic waste created in terms of producing all the things we buy.

I'm in a position now to pay off my credit card and hopefully I will have it done by summer, if not sooner. The one rule that I am going to follow is the 5% rule for saving. Great idea if you can do it.

File now. When this bill passes (not if, but it just got out of committee today), I believe there will be a six-month lag until the new law takes effect.

File during the grace period, or you may not be able to realize any of the benefits which bankruptcy now affords you.

Can't foreclose on millions of desperate Americans without serious social and political fallout.

Eat. Drink. Be merry ... well, you know the rest.

This new bankruptcy provision coupled with historic high debts and historic low savings is going to accelerate mortgage foreclosures. Throw in a little unemployment or lowered wages, and you have a recipe for disaster. Grandma and grandpa wont be living in a paid off house after 40-50 years in the workforce, they will be in trailer rentals.

http://64.233.161.104/search?q=cache:Etkq3t0LQikJ:www.fdic.gov/bank/analytical/working/98-2.pdf+mortgage+foreclosure+rates&hl=en

Long Term trend in Increasing Foreclosure Rates

This paper identifies and analyzes the long-term rising trend in single-family mortgage foreclosure rates. Traditional measures of mortgage risk, such as house appreciation rates and loan-to-value ratios (LTVs), appear to explain some, but not all, of the long-term trend. In an effort to explain the remaining part of the trend, several non-traditional hypotheses are explored.One is the notion that the incidence of shocks to individual lifestyles or “trigger events,” such as divorce, have increased, thereby increasing the likelihood of mortgage default. The second is that the risk posture of individuals has increased, especially as individuals increasingly leverage their homes as part of a broader strategy of managing their overall wealth portfolio. The third is the possibility that structural changes in servicing, arising from the trend toward securitization,have increased foreclosure rates. While evidence exists supporting these hypotheses, the risk posture hypothesis appears more consistent with a variety of disparate incentives and trends relating to household financial management.* The authors would like to thank Anton Haidorfer, David Olson, Bob Schafer, IsaacMegbolugbe, and George Nahmi for helpful comments. The views expressed are those of theauthors and not necessarily those of the Federal Deposit Insurance Corporation.
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are not out there to do you any favors. They WILL take your home.
I saw it all the time in my last job, and it was not my employer doing the taking.
You will not receive any money.
I could not believe what I saw happening.
Get another job, take in roomies, sell off un-needed stuff.

Take your lunch to work. If you see a chunk of turkey or ham or whatever on sale...take it to the deli counter and have them slice for you. Much cheaper than their deli prices.
Your grocery stores often have online sites...go there and see what is on sale and plan your menus around their sales.
I wish you well.....

And many do turn to predatory lenders, as you noted. It could happen to anyone. That's the scary part. ANYONE could be out of work for a while and there is no refuge or safety net.

I have noticed more foreclosure notices on houses lately. It's sad to think that someone who worked for 40 plus years, gets into one bind, and they lose their home.

Before I end up living under some bridge in a cardboard box, I will take my own life either with pills or sticking a bobby pin in an electric socket or something like that.
I refuse to have myself degraded anymore. Thinking of being raped by toothless smelly men is more than I can stomach.
I have a long ways to go before I get to that point, but the thought of people having to make this decision makes my blood boil.

What happened to respect for our seniors? Where is the compassion for the people who are down on their luck?

That's why the poverty rate is increasing and in spite of this, Bush slashed a bunch of social programs.

insurance.

they will simply fall through the cracks and die. It's inevitable.

best of our abilities, this could make a HUGE change not only in our personal lives but in the credit card industry.

I can't say how many times,as a low income household, we've watched the glorified commercial ads on TV showing some BEE U TI FUL woman along side a panther and a swimming pool as the cat dashes off to show a JAGUAR vehicle for sale and wondered, HOW and WHO in the world NEEDS that, who can afford that and why is it on my TV?.

I drive down the road past lovely new homes crowded together in some subdivision (with price tags that would support a small third world country) and wonder HOW ANYONE can afford to live in them. I wonder if the insides of those houses are EMPTY because they can't afford anything else or whether the inhabitants are NEAR BANKRUPTCY.

I venture into Costco for Meat but have to pass all the ENORMOUS elaborate (digital, flat screen, HD, jump and shout) TV's....do we NEED this? Then there's the automobiles, all shiny and ever sleeker with more bells and whistles.........Jebus!

The American Dream: BUY EVERYTHING YOU SEE, GO INTO DEBT UNTIL YOU PUKE.

The ads, advertising, and promos drive us CRAZY. We feel like we're living in one large shopping center, a parallel universe! :crazy:
...................................
Ultimately though, while we do endeavor to live within our means, the new bankruptcy laws are a total fuckover for the everyday citizen, while giving the BIG GUYS all the perks. Not good.

we've been paying off CC and other debt for years and are finally almost to the end!

We have about six months before the only debt we have is our house.

Amazing. We don't have enough in savings, though, gotta work on that.

and can't think of any big-ticket crap that I'd have to put on the never-never.

only use your ATM bank card (spend only what you have, if that much).

Fuck credit cards!

Don't go into debt to these sharks!

Switch your accounts to local banks and Credit Unions, and stop supporting these huge corporate banks.

declare bankruptcy. MEDICAL BILLS are the cause of more than half the bankruptcies. Have you ever had a serious disease that needed surgery and lots of in-hospital care? The bills are unbelievable - and insurance companies, with their deductibles and 'the cost of this treatment is over and above the mean cost in your area' that the bastards don't cover - well, credit cards are sometimes the only way to pay basic bills like food, rent, and gas.

Your advice is fine, for healthy people who don't have a crisis, and who have good paying jobs that meet their needs. But that isn't realistic, especially in Bush's Amerikkka. Lecturing these people about not buying and saving is really quite condescending.

but it is so true.

I had an addiction that propelled me into bankruptcy, but I so feel for people who get hurt.

My dad did, fell 40 feet and broke his back and he was self-employed and had signed some kind of exculpatory clause with the company whose equipment he was using so he had no workman's comp and no recourse.

and my advice applies to people who are healthy now with an income at middle class level. My advice is so that WHEN those unplanned medical bills hit, you are ready. Notice too, I said when, not if.

The best advice I can give to those who are close to bankruptcy now is, file ASAP before you can no longer file.

to follow my advice should cut off their internet connections and sell their computer.

Harsh, but true. If they want internet access and they are that poor, use a public library.

Have you ever been fired from a job and looked for employment for more than a year - or two, or THREE?

Have you ever had a serious medical illness and had tens of thousands, if not hundreds of thousands, of dollars of bills that insurance (if you're lucky enough to have it) won't cover?

If not, geez, act like a Democrat and think beyond the box. Not everyone lives your life.

I've lost a job and spent more than a year unemployed at one time in my life.

I've had a major accident requiring major surgery when I had no health insurance at another point in my life (couldn't afford it). Thousands of dollars in bills.

I've never declared bankruptcy, but only by the skin of my teeth.

I'm being harsh because this new bill will not be forgiving in the least! Had I encountered my troubles in a world under the laws of this bill, I'd have either died or become completely homeless.

Maybe we should go back to having only those who own property have the right to vote. We're right on schedule for that reality to happen so you should be happy.

I'd tried to give you the benefit of the doubt in my last post, but now I see that your condescension knows no bounds.

‘Go use the free internet’ at the library: Here’s how I determined that $14.95 month was a good investment to keep in touch with friends worldwide and get my non-whore M$M news to stay informed as a citizen in this former American democracy. Since I work two jobs –I often check my e-mail and read the news late at night, so bear this in mind as a further arguement against using the "Free" public library internet access. If you want to give advice to people who are highly proficient at managing their meager finances, you really should check your figures before you clickety-clack on your keyboard.


Unlimited Home Internet Access with a decent connection, 56 K: 14.95/month

“Free” Internet Access at the Public Library: Round Trip Bus Fare: 2.50/day X 30.5 days: $76.25 Or 50% of Daily Cost of Gas, Car Insurance, Car Maintenance, Compact Car: $81.58

Round Trip Commuting Time to Library (for me); no traffic: 30 mins / with traffic: 40 mins. Waiting in Line at Library for one of the computers to open up: 30 mins. 1 hour of time at min wage.: 5.25 hour x 30.5 days= 160.00 mo. (I make much more than this, but just for the sake of arguement we'll low-ball the value of my time.)

Available Library Hours: 9-9 p.m. M-Th 9-5:30 F, S 9-4 Sun.

Cost of Travel: avg between bus & car = $79.00 mo
Costs of Time: 30.5 hrs mo @ $5.25 hr. min wage: $160.00 mo
Total Costs of “Free” Library Internet Access: $239.00

"Free" Library Internet: $239.00 month
Home Internet: $14.95 month

One more thing: One of the best techniques the corporate neo-con fascists can use to further weaken the non-rich American people is to get them to turn one against the other. Divide and Conquer. Once people in the Democratic party start saying things like "It's time to push the others out of the lifeboat because they're screwed anyway and I've got to do for me and mine" - what are the chances that we will be able to present a united front to argue for our basic decent American middle class values like jobs, insurance, social security, and a living wage?

Lets not allow the corporate pigs to manipulate us like this. We're on the same side, so don't play into their hands by thinking those of us with bills and debts are solely responsible for our financial constraints, with few exceptions. It's the same thing as blaming the rape victim.

/End of Rant/

I certainly agree with Walt and believe that this is an excellent way to both get out of debt and screw the credit card companies, but, Walt (and I say this with love!) I don't think you've taken enough account of the fact that true emergencies happen. One illness of yourself or a family member, even if you have insurance, can ruin you and even if you're in the best of health, illnesses and accidents can and do happen to even the most responsible people.

Also, too many people do not make enough to save enough of a cushion to soften the blows of the unexpected, especially with the rising cost of everything. Yes, it's important to forgo what you want versus what you really need and it's important to save whatever you can, however little, even a couple bucks a week. But today, that often just isn't enough in a lot of cases. I've seen responsible people on solid financial footing ruined due to cancer or another illness, or sudden job loss or injury. Even if they had substantial savings, it often just wasn't enough. That being said, though, your advice should be followed at least in some form by anyone who reads it.

Walt, is there a journalist you trust, or maybe even two or three, that you can email this to and see if they can get on the bandwagon with it and let the repukes and the fucking creditors know we're onto them and get as many people as possible to go along with it? I think that would possibly make a real impact.

My dh got cancer at the age of 25, when we had just bought our first house, married only 2 years. We had a little bit of savings that were immediately eaten up by the $20,000 of hospital bills that the fucking insurance company would not cover (which is how I learned about the 'costs of this treatment are above the median cost in your area'). And this was 20 years ago!!! The only way we could survive was credit cards.

Like I said, Walt, have a little compassion.

a tremendous amount of compassion, he just might not be fully aware of this particular angle to things. A lot of people don't until they have to deal with it themselves. My uncle and my best friend have had to deal with that, they both got cancer and even with insurance suffered horribly financially.

Is it always possible to do it with the textbook perfection that he outlines in his original post? Of course not, and I don't think even he would suggest that it is. But it IS possible to do some of that some of the time, even while struggling through a crisis.

So much of it is about changing your own mindset about what you need vs. what you want, and that's not an easy thing to do.

Every piece of advice Walt offered is good advice, and should be followed when possible. When it isn't possible, when one IS in a crisis, then you do the best you can, and go back to doing what he suggests when the crisis subsides. If you don't, you will continue to relinquish control of your life and your finances to those corporations who would sooner eat you alive than give up a penny of profit.

He never said it would be easy---it isn't--but his advice was in no way condescending.

Seriously, thank you.

Having been through crisis after crisis in my life, I know they usually don't stop coming.

Some people's lives aren't very easy; some are truly in a death spiral, and some of those suggestions (especially telling those in financial trouble to get their internet connection through a library) were just plain not nice.

You're apparently assuming that I've never been through a crisis of my own--ha. My husband was recently disabled (we're still praying it's only temporary), and in a move to curtail ALL of our spending, we did exactly that for over six months (got our internet access through the library). The money we saved on that, and through other cutbacks, allowed us to put food on the table.

I don't care how "not nice" you think it is--it IS a sacrifice that can be made, and I've personally made that particular sacrifice. It wasn't fun (especially since our library limits you to 60 minutes a day on the internet), but it was an easy sacrifice to make given our circumstances at the time.

medical crises and been forced to charge major surgeries and medical care in order to remain healthy enough to keep working. Even with medical insurance, which I no longer have, my medical bills in the last 5 years came in around 8-9K. If I hadn't been insured, I'd have been looking at around 35-40K in bills.

I've been living close to the edge of poverty my entire adult life, and I've taken care of myself - no husband, no rich friends. Without my parents having stepped in when times were truly dark, I'd be homeless. However, I'm a traditional proud hardworking American woman who doesn't like accepting help - I like to take care of myself.


There is nothing that makes my blood boil more than a lecture about how to save money and pay off the CC's every month from someone with a great-paying job who lives in a two-income family. No kids - I didn't have kids because I knew I couldn't afford them.

Walt if you're reading this, I'm not trying to be obnoxious because some people do need the lecture. But I wish people would acknowledge the role the 'luck of the draw' plays in their financial stability or lack-thereof at the same time that they are dishing out advice.

And Walt, if you're reading this, you haven't answered my questions. Have you ever been unemployed for years (my husband was fired DIRECTLY because of Minnesota Governor Tim "Asshat' Pawlenty's budget cuts)? Have you ever had a major illness in your family and been suddenly presented with tens of thousands of dollars of bills?

If you haven't, then why don't you donate a little money to your local food bank, quit lecturing, and count your blessings?

don't pay off the credit card with the lowest balance, pay off the credit card with the highest interest rate first, it only makes sense. Otherwise you are going to shill out way more dough doing it lowest balance first.

1) Most people with multiple credit cards maxed out have never paid one off before in their life. It's easier to pay off and cancel that credit card maxed out at $500 than the one maxed out at $5,000. This gets the ball rolling and makes the debtor feel good about getting completely out from under one credit card which makes inroads towards getting out from under the rest. This is a behavior change and actually dumping one card goes a long way towards altering the behavior pattern.

2) It's a fact that as you go deeper into credit card debt, you become a higher risk and thus interest rates on new credit card offers go up. Most people who have maxed out multiple credit cards will discover the highest interest rates are on the cards they last accepted with lowest maximum balances, thus the card with the lowest balance will also be the card with the highest interest rates.

Other than getting the ball rolling, though, you're right. If a person only has four or five maxed out cards it could be that the one with a $3000 limit actually has a lower interest rate than the one with a $2000 limit. It;s also very possible that there are some hidden charges on that one that on the surface appears to have a lower interest rate. If there's one that has a 0.2% lower interest rate but also has an annual fee, it may actually be a higher rate card once the fee is factored in. Also, if you actually bought into that insurance scam on the credit cards, you will find that an insured credit card costs so much more than a card with a lower interest rate.

...unfortunately, quite a few people don't have jobs, or they have jobs and will never be able to climb out of debt.

I've been holding off declaring bankruptcy since 911...and going deeper in debt because jobs in my field are non-existent. You can bet your last dollar that I will do what I have to do before this new bill becomes law.

As mentioned above, make use of zero percent introductory rates. Yes, read the fine print. Search for fees, limits and length of time. Transfer your ballances and get agressive with the payments. It's best to use the year long types. When it comes close to ending, transfer to another one.

We saved hundreds doing this. Now, the cc debt is gone.

I anticipated this...not by divinity, by what Reagan did...so I went into stinginess mode...my usual behavior for Repug periods of time...I can wait them out...


On edit: I save, but not in the bank, no interest anymore, I'll be damned if I'm going to let them even USE my money for investments...no,no, no I have a safe in the attic...

that it's too late for a lot of people who are already in over their heads. And liberals are just as prone to fall into the trap as "freepers". A lot of people who fall into debt do so because of buying things they NEED, not luxury junk - their incomes are just not enough to pay rent AND get all they need. It's like back in the old days when you had to buy your own tools to work at a job, but if you were poor, you had to borrow the money from the company store, and buy the tools from the company store, then you'd get paid in scrip, only good at the company store, and they'd take out a huge chunk for your debt and the rent on your company-owned shack, and you would never, ever, ever get ahead.

THAT is what the corporations and the right are trying to re-create by keeping the bottom half's wages unconscionable low, while offering all kinds of easy credit - and blocking bankruptcy as an escape - it's a trap that creates ready-made slaves. Eventually, they will have to go into credit counseling and get a repayment plan, since bankruptcy is no longer an option.


Again, I don't really disagree with your advice, but your blanket judgment that anybody in trouble with credit cards is a free-spender or a freeper is just untrue.

And then there's the whole catastrophic illness scenario. What would your advice to people in that situation be? Die within their means?

It's a fact that the pretzledent is pushing SPEND SPEND SPEND to prop up a failing economy.

The Freepers buy into that shit.

This is a way that Liberals can stick it to their dumb asses.

I understand your desire for schadenfreude, but it's not good for the country. I'd rather the rich bastards go broke than the freeper lemmings who buy into their con jobs.


And like I said, there are plenty of us liberals struggling with finances. Being a human being with a brain (ie a liberal) doesn't mean you can necessarily make ends meet.


But I do hope that all the people who CAN follow your advice, WILL follow it. The nation's credit card debt is mostly held by rich investors, so If we tightened our belts and paid that crap off sooner, they'd get less of our hard-earned money as interest.


(But I still think the bankruptcy bill is unconscionable)

Because if everybody who has credit card debt in America right now stopped buying and started practicing this advise, the economy would crumble because the lack of consumerism would bring most of it to a halt.

I'd rather the Freepers drown than the DUers.

She gave me the "Awwww Mom" thing, but I told her straight up.
I don't feel apart of this uncompassionate world and no longer wish to partake of it.
Yep, I am having grins and giggles while I am newly terminated from my job, left with no health insurance. I have already decided I don't give a flip anymore. The flip thing took two months after the election, and the rest came after I lost my job. I have detached already, so now I just enjoy as best I can.

except essentials from now on, and I meant it!

I was raised in the South, and we have a saying. "You make do with what you have." :)

you get sick or lose your job. Since most bankrupcies come from one of or both of those factors, your advice, good as it is, will only go so far.

when you get sick or lose your job.

And, as has been shown, the matter is when, not if these things happen.

to beware of is...

PROVIDIAN had a 0% offer late last year. I called for info, gave them a bit of my info, and emphasized not once but THREE times, NO transactions (balance transfers) were to be initiated until I contacted them. My reasoning was I wanted $X to put all my debt onto 1 card. I got the info around Thanksgiving but didn't get to it until after Christmas. While I had not been given the credit line requested, I thought I would go ahead and activate the card for potential future use. When I went to do that, I found THEY HAD INITIATED A $10K BALANCE TRANSFER...AN UNAUTHORIZED ONE! When I called to complain, I was told, pretty much, TFB! Because of this new debt, AAA Visa canceled my card, that I had had for 4 years, even though my credit rating is 789, I was NEVER late on a payment, ALWAYS paid much more than the minimum, and my balance with them was $12.66!!!!!!!!! This, according to them, was due to my "new debt" vs my income. According to everyone I have spoken with, I have NO recourse because I gave these bastards information.

Moral of the story...representatives of cc companies can, will, and do lie (i.e. me being assured nothing would be done with the PROVIDIAN account without my authorization, only to have the $10K balance transfer initiated WITHOUT MY AUTHORIZATION).

That said, I like your ideas, Walt, however, as one poster stated, many cannot afford to put back even 5% and I sure as heck cannot afford to pay 3x minimum due. I do, however, always pay more than the minimum.

Jenn

Jenn

20 sneaky credit card tricks
By Amy C. Fleitas • Bankrate.com

Credit card companies can be as slippery as a handful of greased Jell-O. They have all kinds of tricks to gouge your wallet and drive up your bill. While arguably unfair, all these tricks are legal, leaving you no alternative but to stay as informed as possible to protect yourself.

Read your statement, report any irregularities immediately and watch for these 20 sneaky credit card company tricks. Start saving on fees now.

http://www.bankrate.com/brm/news/cc/20021106a.asp

for the bankruptcy bill is LACK OF CASH. DO NOT USE YOUR CREDIT CARD! PAY IT OFF ASAP! THIS IS THE ONLY THING THEY UNDERSTAND! (Sorry to scream like a lunatic, but this is driving me seriously nuts. While we're at it, let's begin working to oust Biden. He's joined at the hip to the credit card companies.)

of course, that doesn't make it bad advice.

1) Do not under any circumstances be one of the 45 million Americans without health insurance. If you get seriously ill, you will have tens or hundreds of thousands of dollars of medical bills that you will not be able to pay.

2) Do not under any circumstances allow your working spouse to divorce you. This is also a leading cause of bankruptcy. If your spouse is threatening to leave you and take their paycheck with them, have that spouse killed and then collect their life insurance.

3) Do not under any circumstances start a small business and borrow money to fund it. If it goes under (which 80% do in the first five years), the banks will get a judgment against you and seize your assets. Do not take any entrepreneurial risks.

4) Do not under any circumstances get laid off from your job. This is a leading cause of bankruptcy as well. If you are about to be laid off and cannot find another job, jump off of a very tall bridge

If you follow the advice above and get to a point where you have 6 months worth of income saved, you will most likely be able to handle any one of your four issues.

Have you gotten a a hospital bill for a routine surgery lately? ($35,000 for a routine gall bladder removal without complications)

This is fine advice for folks making in the high five figures with health insurance.

This advice is meaningless for the folks I represent in my practice, including the 45 million without health insurance, or a mom and pop business owing a bank half a million bucks who go under, or similar situations.

You're shooting craps and the house always wins. That's a fact. I know most people who are uninsured are that way because they are poor, but some are that way because they choose not to be insured, and that's financial irresponsibility.

Most Americans fall into a category where they will be able to follow my advice.

Those who are close to bankruptcy now need to file before this law goes into effect to gain at least those marginal protections in place today.

So, we just ignore the 45 million without insurance? Financial irresponsibility? Because you want to eat, pay your rent and light bill and buy a jacket for your kids and when you have nothing left over you are irresponsible because you don't have health insurance?

I'm amazed at that perspective. What about 'financially responsible' people like a client I had two months ago? Let me tell you their story. Couple in their 20's. He worked as a union carpenter which paid for medical insurance. She's a school teacher. He gets laid off and after six months his insurance lapses. He asks about paying the premiums himself. Sure, no problem only $840 a month. On her salary there is no way to pay rent, food, transportation (modest) and pay the health insurance premium. She has baby. They have enough saved to pay for delivery.

Baby has horrid medical problems (despite prenatal care) and in six months time they have a one million plus medical bill.

THIS is what bankruptcy is for. It is a safety valve for people who get into situations that they cannot get out of through the natural ebb and flow of problems that arise. We do not have universal health care in this country, unlike the rest of the civilized world.

1.6 million familes had to file for bankruptcy releif last year. They got a fresh start and a chance to climb back up the ladder of financial fortune. This bill will hold many of these folks down, millions over the next decade. It is godawful.

Your advice is very good for those making 200% plus over the median income. For the rest, they are screwed.

:eyes:

Get outraged all you want. I spoke the truth. There was not a word of untruth in what I wrote.

Be outraged all you want. I did not write the bankruptcy law and I lobbied against the bankruptcy law. I am trying to save somne of the 255 million people who ARE insured so they don't have to face what the 45 million who are not insured will be facing without a doubt. Yes, I understand what will happen to them, but you know what? I CAN'T DO SHIT TO SAVE THEM! THEIR FATES ARE SEALED ONCE THAT LAW IS PASSED AND SIGNED AND THAT LAW WILL BE PASSED AND SIGNED!!!! I can't do shit to stop that now. Those 45 million people will most likely end up dead within the next ten years because they will have no homes, no healthcare, and no hope of anything changing. I can't stop that, but I can try to help the liberals who fall into the other 255 million who do have healthcare from suffering a similar fate when they experience the catastrophic healthcare issue or lose their job.

So get off my back. We must face reality, and there's nothing that can be done for those 45 million save charity, and in Bush's world, we must first be concerned about our own well being. I hate to say it, but when the bakruptcy bill kicks in, it's lifeboat ethics and trying to pull others into your lifeboat will swamp it and you'll be in the water too.

From your post:

"So get off my back. We must face reality, and there's nothing that can be done for those 45 million save charity, and in Bush's world, we must first be concerned about our own well being. I hate to say it, but when the bakruptcy bill kicks in, it's lifeboat ethics and trying to pull others into your lifeboat will swamp it and you'll be in the water too."

That is where we disagree. I don't think that pulling up the ramparts to save ourselves while allowing those less fortunate (who among us might be among them with the ebb and flow of fortune?) will do any good in the long run. I understand that is your position. We simply disagree.

I can't. I have to be concerned about my own family's financial well being right now.

some people want to trash good advice because it doesn't happen to solve every single earthly problem at once.

You gave good tips that should be followed if possible. You didn't say it would cure the world's ills. Don't be sucked into defending things you did not suggest or advocate. It's a waste of your time and energy.

just my 2 pennies.

By Joe Dominguez and Vicki Robbins. You can get it from the library. It really helped me step back and separate wants from needs.

Track what you spend. I started doing this and was appalled at the amount of money I was spending on fast food and books. Most people are pretty good at keeping track of big amounts of money, but let the $5-$20 purchases go unnoticed. But, they can add up to real money. I write down everything I buy and plug it into the computer. I had a lovely lunch out with a friend at a wonderful restaurant last weekend, so I know my eating-out money for the month is gone. Fine...I'll cook at home. I still buy some books, but for the most part if I want to read something I'll request it at the library.

Make up a weekly menu and stick to it. Groceries can be a big money grabber if you buy food and don't eat it or if you buy expensive convenience items. I don't bother with coupons cause I can almost always beat the coupon price by buying store brands, but I do watch the sale ads.

Don't buy anything you have to finance. My parents told me that I'll never get ahead if I pay out interest instead of making interest. I keep my cars for 8-10 years and then pay cash for the replacement. Not having a car payment is wonderful. I do have a home mortgage, but I pay extra on the principle of the loan every month. I never buy anything else if I don't have the cash at hand.

In "Your Money or Your Life", the authors advocate becoming conscious of where your money is going. Mindless spending is what gets many of us in trouble. Think before you buy.

Unfortunately, our culture seems designed to train people to do just the opposite. That's great for big business ... but it's a recipe for disaster for many Americans.

... excellent advice well stated.

Now is the time folks, do whatever you can do enhance your financial security because hard times are coming, they may be postponed a few years but that is the best case scenario IMHO.

sense.

The reason I'm pushing common sense at this time is, bankruptcy will no longer be an option for folks who get into trouble, which means all people need to start now to prepare for the eventuality of catastrophic healthcare issues or losing your job.

Now, if every middle-class employed American suddenly today decided to follow every last bit of this advice, our economy would tank because consumption levels would drop through the floor. Fortunately, there will still be some people in BUY BUY BUY mode and that's fine with me. I'd just prefer them to be Freeper types.

And the merchants pass on the cost to all consumers, regardless of whether they pay cash or use credit. Discovered this by accident as someone was complaining heartily to a gas station manager about why they did not accept credit cards.

I refuse to get a credit card under any circumstances. These are some of the things I've discovered about never having had one.

Yes you can TOO get a hotel room. You do not have to have reserved it in advance but you do have to pay for the entire stay up front at check in time. If you do get reservations, most hotel chains will be OK with this, but some will want you to send a check right away for the entire amount.

Yes you can TOO buy a house. Your credit is not using credit cards. Your credit is your bank account balance (checking or savings), how timely you are in paying bills, paying off large purchases.

You will eliminate interest, and some cards charge such a ridiculous rate in the 20's percent. Who can afford that? No one gets free money from me unless there is absolutely no other way. (I'm not rich, I had to get a house loan and those are another ball of wax. I recomment paying more than the minimum payment if possible and apply it to the principle. The first year especially since that year is when your mortgage goes almost entirely to interest with a token payment to principle)

Some movie rental places won't rent to you. They don't get my business and I tell all my movie renting friends to go elsewhere. There are plenty of places that have ABSOLUTELY NO PROBLEM with you not giving them a credit card number.

You need two forms of ID and most people use credit cards as #2. You can use a library card instead. It just needs a signature.

You wouldn't belive how much aggravation and debt I've avoided. And I've had people call me unAmerican because of it. As if it's your patriotic duty to drown yourself in debt.

It has been pointed out above that in the event of a true catastrophe such as an expensive illness, you need SOMETHING. True. This is why universal health care is important. With my lack of health care coverage, no matter what I'm screwed anyway. Credit card or no credit card.

By the way, when I had o get a loan back in the Clinton era of prosperity, the credit report showed me as being in the best credit rating bracket possible. You can indeed build credit without credit cards.

Again, weaning from credit cards when you've become dependant on them is probably not for everyone. Your mileage may vary.

cards for. If you're reserving over the phone, the hotel has no way of knowing that the account number is a debit card, not a credit card.

They ran the debit card number then came back and told me they could not accept a debit card and required a credit card, even though the debit card normally functions as a credit card!

:-(

Well, I do have a credit card lying around somewhere, if need be. My debit cards work for things like catalogue orders, though.

We can, we should, and we will!

I've been doing it for a long time. As soon as I made a decent income I began paying off considerable credit card debt. I thought I would never own my home, but here I am. Now I keep savings, 401 K and basically except for some expenses needed for my new home, I pay for everything through a check card.

I'm going to pay all this off when I get my tax refund.

and a credit card and go out to buy that 50" widescreen Plasma HDTV with a surroundsound DVD player.

Buck Fush.

Sorry, I wasn't clear in the OP as I've had a few PMs. No, this is not retirement. This is above and beyond retirement. If you are not investing in a retirement plan, DO SO IMMEDIATELY. I'm sorry I wasn't clear. Everybody should put the maximum possible into retirement funds such as 401K's or whatever your employer offers. If you can also do Roth IRA's, do so. If you work for a gonvernmental agency, you are particularly susceptible to having issues with retirment because in many cases you are making no contributions to SS and will be ineligible for SS. There are other retirement plans for you and you should put the maximum allowable into such funds

This 5% is specifically designed to work towards having 50% of your annual income in extremely liquid assets. This is an emergency fund. This is your fallback position when you experience catastrophic medical issues or lose your job. If you can put more than 5% into such savings, do so. Once you hit 50% of your annual income, start putting this 5% into investments that will give you a better return, but keep 50% of your annual income in extremely liquid assets as that is your emergency fund. You dip into it before you touch other investmenst and certainly before you touch your retirement funds. Using your retirement funds for emergencies should be your absolute second to the last resort, the last resort being going into debt to cover your bills.

both here and in the gardening forum! Thanks for caring about us.

Here's the deal with me, in brief: I have a good income, pay off cc balance almost every month (okay last month I slipped up; will pay it this month), but I owe more than 3X my annual income in STUDENT LOANS (not the kind you can consolidate, interest rates in the 6-7.5% range) and MORTGAGES (3 loans on my house: 2 bank, one family). Since January I qualify to have a 401(k) through my job so I am maxing that out each month. The "extra" goes to paying down my highest rate student loan a little faster.

Do you think i should put LESS "extra" into my student loan until I have 6 months' salary saved in "easily liquid" form? Right now I have an EMBARASSINGLY SMALL savings account (as a % of income). Maybe I need to get serious about this.

And what "liquid" do you recommend other than a bank account?

Thanks again for your help.

Seriously, most student loans can be deferred for a period of time during hardship (six months usually, and sometimes up to several years). If yours can, pay the monthly payment for now and get yourself into a better position with an emergency fund. Should you encounter an emergency, that extra money to the student loan corporation would mean squat and you'll be deferring payments for a period of time any way.

Been doing it ever since I got my first and only credit card (with renewals) 10 years ago.

So I'm already way ahead of the game.

BTW, according to Ben Stein in the PBS/Frontline special on credit card debt last month, someone like him, someone like me is considered a "DEADBEAT" by the credit card companies!!! What a Bizzaro world, indeed!

Link:
http://discuss.washingtonpost.com/wp-srv/zforum/04/style_frontline112404.htm

(snip)
Washington, D.C.: Hi,
I really enjoyed the program last night, it was very informative. But why did you have Ben Stein on? This seemed pointless to me, except to show everyone that he has lots of credit cards, goes to fancy shops, and pays his cards off every month. I felt this was a waste of valuable time in this important program. Is he a friend of someone on the show?

Lowell Bergman: Ben Stein was interviewed and selected by the producers, Nelli Kheyfets and Dave Rummel, to illustrate the 'non revolver' and present the upside down language of the industry, 'Deadbeat'. In other words you would expect a company to want someone who pays on time. Not the case here.
(snip)


Like I said, Bizzaro World out there!

:evilfrown:

marry into the bush klan somehow.

shit, by that affiliation, you could get some kind of job, a somewhat direct line to all kinds of power brokers, and maybe even an ambassadorial appointment.

...it will destroy our economy, which is <i>completely based</i> on people spending more than they earn by using too easy access to credit (i.e., unsecured borrowing). Companies decide how much to manufacture by projecting sales based on people spending too much. If everyone stops spending, unsold inventories will build up, factories will shut down, stores will have to discount and lay off employees, etc.

I'm only slightly serious about this. It's a great post, but it truly would shake up our economy. Probably for the good, but nevertheless a great shakeup.

are the ones who will do this.

And stupid Freepers who worship the very shit that goes into the White House toilet will continue to SPEND SPEND SPEND propping up the economy long enough to allow the rest of us to get our financial houses in order.

Not everyone is capable of what you recommend. Poor people often have no choice but to spend whatever they make.

In any case, my point is not that you're wrong about recommending that people "get their financial houses in order," but that if everyone did it, the economy would collapse.

I've been operation under most of your suggestions for a long time. Ever since we went into business for ourselves 8 years ago, we paid off all our credit cards and now only use one for business which gets paid off every month and one for household emergencies.

In the last couple of years, we've cut back so much that we really don't spend much outside our regular bills unless we have cash in hand. Our income fluctuates too much to live any other way.

This bankruptcy bill should make people avoid credit cards like the plague. Unfortunately, there are so many people out there who know nothing about money and banking who will fall for bank/credit company crap over and over again.

I have one suggestion to add. Find a good credit union and I mean good - one that really does operate in the best interest of its customers - and check out their options for credit cards. In these days of ridiculous fees and tiny payment windows that's where I've gone for the two credit cards I have and I have decent deals with good terms that don't expire after six months or if I'm 3 days late with a payment. Don't take the offers that come in the mail. Don't fill out applications to get a discount at retail stores. Go out and shop for better deals. They are out there.

A few other random ideas:

Get a library card, and use it (saves you $$ from buying books, and gives you access to a world of information). If things are REALLY tight, you can, in most cases, use your library card to get internet access from the library's computers, and save yourself the $20-25 bucks a month.

Consider canceling your cable or dish service (that'll save you more than $600 a year, at least). You may be amazed at the "extra" time you find yourself with, and there are countless ways to use it to your advantage (read, spend time with your family/friends, garden & grow some of your own food, volunteer in your community, etc.).

Unless you are required to use it for business purposes (and are reimbursed), change your cell phone account, if you have one, to the lowest available, and use the phone only for emergencies.

There are so many other ways to save a few bucks here and there, and it all adds up (and much faster than you think it will). Put it towards clearing debt, and then SAVE SAVE SAVE.

If this accursed bankruptcy bill goes through, we may end up like Japan, where loan sharking is legal and personal bankruptcy is almost impossible.

With a rudimentary form of national health care, people don't get into trouble with medical bills so much as with job losses or lack of awareness of how much a loan shark's interest rates can cause a debt to balloon.

However, when it becomes impossible to pay their debts, Japanese people have only two options: abruptly abandoning their current lives and starting over under a new identity in the underground economy of another city, or committing suicide.

It's terrifying what is happening in this country. When I saw that the Republicans denied an amendment that would limit the highest credit card interest rate to 30%, I knew we were screwed. Banks can charge whatever they want, change payment due dates, change rates & agreements, however they like, and we have NO RECOURSE.

THROW THE BUMS OUT, RED AMERICA! LOOK WHAT THEY'RE DOING TO YOU!

will force me to declare bankruptcy RIGHT NOW.

I cannot take the chance of losing my job and not being able to even make the minimum payments.

I just going to take my lumps NOW and rebuild again.

Walt, at the rate you recommend (5% of pay each month) it's going to take 10 years for someone with no current savings to reach the savings goal you recommend, 50% of annual income. (Am I right, or did I move a decimal point somewhere? Math is NOT my long suit!) Financial catastrophe may come a heck of a lot sooner than 10 years from now for many of us.

Since you've got me thinking about getting my financial house in order, I've done some calculations and figured out what it would really cost me to survive okay for 6 months and not lose my house if I lost my job. I would suspend the "soft" loan repayment to mom & dad, defer the federal student loan, etc. That figure, my Savings Goal, is equal to about 3 months' worth of my current salary.

Again, at just 5% a month, it would take me FIVE YEARS to save even that amount. So I am going to do some budget- and soul-searching this weekend and get myself on a track of saving at least 10% of my salary starting now, maybe more later. It will still take me 30 months (2 1/2 years) to meet my more modest Savings Goal. This math is a wake-up call for me.

gulp.

thank you thank you thank you for slapping me in the face when i needed it!

When I was pedalling my bike up the east coast of Australia, I spied a paperback in Cairns. It called something like How to Survive Hard Times, with a yellow cover. Lots of do-it-yourself advice. Growing a bit of food in milk cartons etc. That evening in my tent, I thought it would be good to have. So did someone else. The next day, I returned to find the book gone. Once the Internet came along, I've searched high and low for it to no avail. Are there any other books like that about?

I also sock my pocket change away. Every six months, I accumulate $40 - 60 to plop into savings.

American Skills'. I know the title is a bit nauseating but the book is very comprehensive about farming, building, canning, pretty much pioneer pre-modern age skills. It's by Reader's Digest of all publishers.

The Big Book of Self-Reliant Living:

http://www.amazon.com/exec/obidos/tg/detail/-/1592280439/qid=1109979243/sr=8-1/ref=sr_8_xs_ap_i1_xgl14/103-7960136-9523016?v=glance&s=books&n=507846

Take a look on Amazon, and you'll see about 10 more very similar to it. They're a great resource to have (and mine is almost 700 pages of info, which is a great bargain for $13.57).

7) Everything you used to spend on your credit card payments now put towards principal payments on your mortgage.

This doesn't make a lot of sense to me unless you're already really close to paying your house off. Say you have $20k in the bank and a $2000 per month mortgage at a fixed rate. If you suddenly lose your job tomorrow you'll be able to pay your mortgage for 10 months while you're looking for other work (ignoring other expenses for a minute). On the other hand if you pay that $20k right back into your principal you're only making a tiny dent in your monthly payments and if you're suddenly out of work you have no saftey net.

I suppose this strategy could make sense if you somehow bought a very inexpensive house and yet you make a lot of money. But I'd imagine for most people, the amount of money they are able to save relative to the total they owe on their mortgage makes paying down the premium more risky than building up savings. Does my line of thinking sound correct here? It feels intuitively right but I'd be curious to see what other people with a more in-depth knowledge of finances have to say.

and open home equity lines of credit are available as a credit card which you don't have to use. The interest is deductible just like mortgage interest.

If you can, make a home equity line of credit your one and only credit card that you use only in case of emergencies. In most cases, you'll have a credit line equal to your entire home equity.

I wouldn't advise just anyone to tie their home into their credit card.

That is why we're, for the most part, still doing okay, even though I just got laid off about three weeks ago.

Great advice Walt! My mother would always tell us this old expression from WWII...."Use it up, wear it out, make it do or do without."

When I was a teenager I would cringe at this saying, now I try and live by it.

I keep my discover card at a zero balance by continually paying it off so I don't get charged interest. I use it to pay for everything that gets me a 1-5% cashback bonus. Then I use the cashback bonus to get the gift cards that I can use at a "BuyBlue Business". This way they are effectively paying me to use their crappy card. Stay on top, Discover will screw you if you're not careful.

I use another zero balance card to transfer balances. If you leave it empty long enough they'll give you a 3.9% to 0% rate for six months to a year on transferred balances. This way I have 3 no or low interest cards and only one of the 3 with a balance. As the low interest period approaches its end I decide if it is worth it to leave the balance or transfer it back at another low interest card. If it is not worth it transfer it back to the last zero balance card I just close it and apply for another zero balance credit card. You can also close the card all together or wait it out and see if the card does eventually give you a low rate to transfer.

I saved $2000 in interest last year and should save at least that much again this year. Obviously early on my credit was overextended but if you hang in there and keep your credit good by paying the minimum on your best cards and as much as you can your worst the snowball will begin to roll in your favor.

It may not sound feasible but I don't think most people start out nearly $50Gs in the whole. I had 9 credit cards now down to 5 and will be 3 if all goes well this year. With so many low interest cards I don't think you should use home equity to rotate balances assuming you own a home.

First, there are no finance charges or handling fees.

I got rid of all my debt exept the home mortgage 10 years ago following just this advice.

Ever gone into a car dealership with an 800 beacon score and the ability to pay cash? I have and trust me the cars are alot cheaper.

Great ideas, yes, but it still signals defeat for the average American. We are so screwed.

We already do most of it and I'm going to get even more frugal soon and start paying extra on our mortgage. We have no cc or car payments, and bought our house 7 years ago before this insane housing market came into play. We couldn't afford to buy a house on our on street today! I get cc offers and home equity/refi offers every single day. I shred those suckers. My goal is to be completely debt free, not in up to my eyeballs. We're in the low end of the middle class income bracket too, btw, with 3 kids. It can be done. The thing to do is to sit down and figure out what really is a "need" and not a "want". A "frugal living tips" thread would be a good companion to this one. I'm always on the lookout for ways to trim our expenses!