Posted on 12/13/2008 9:41:29 AM PST by RKBA Democrat
If you haven't yet had your credit limit slashed on one of your credit cards, it's highly likely you will -- if Meredith Whitney is right, that is. Whitney, an analyst and managing director at Oppenheimer & Co. who predicted the current financial-services industry meltdown, now says credit-card issuers will eliminate more than $2 trillion in available credit over the next 18 months.
Already, lenders have cut back on available credit due to their heightened aversion to risk and difficulty in funding loans. Before the financial crisis, consumer loans could be sold on a secondary market and the proceeds could help to spur more lending, but that market has largely dried up.
(Excerpt) Read more at marketwatch.com ...
“I have no idea what my “score” is. I never apply for loans or credit.”
You have the right attitude.
“As an aside, I saw a questionable charge on my VISA statement for a card that I have through my credit union and there isn’t a 24/7 customer service contact number on the statement anymore.”
Strange. Usually they want you to contact them asap with a potentially fraudulent charge.
“It’s also happening to folks for little apparent reason.”
The reason is that they carry a balance.
Anyone that doesn’t pay off their card charges in full every month should have their card revoked!
“My post was about your future, not anyone else’s past or present.”
Perhaps I wasn’t clear? I thank you for your warm wishes and offer you the same.
When they do lower your credit limit, if it’s below your balance, you’ll suddenly discover not unsubstantial “over limit fees”, which magically appear. What they don’t realize is that there will be a recovery, and when they want people to use their cards, they may find a shortage of customers. The US auto industry treated their customers with such disrespect 10-20 years ago, and look where they are now.
Thank you for this information. How does one go about finding their credit score online? I would probably like to buy real estate again in the future, but I doubt I have enough cash. Right now, I own nothing, and owe nothing.
I am a buy and hold guy. It's a great time to buy. VA has a 100% loan, FHA 3% down and conventional 10-20% down.
No payments. That was what I meant by life goal. As I said, I do have a mortgage — paying cash for a house is a step I am not ready to take yet, but I am working on it.
As for everything else, well, it’s been a “no payments” economy for me for some nine years. And no I have not stolen anything LOL! :-)
And even if I do one day have to finance something, well, I may be deluding myself but I bet 50% down will eat up a whole lot of “no credit history.”
Seems foolish to avoid home loans when the debt is preferred (tax deductable). You can borrow money for a net of 4% and make 8% tax free compounding. It’s called arbitrage. That’s how banks make money. Borrow from you at 2-3% and charge you 6-20% to borrow. Why not become your own bank?
Now let's say your house is paid off and it's worth $300,000. How much money do you have? None, unless you can take it out. Maybe when you need it, the bank won't let you have it because your injured or unemployed.
What if there was a natural disaster or a fire and the insurance company gave you $100,000, but it cost $200,000 to rebuild. The bank won't give you the other $100,000.
Let's say the market goes down and now your house is worth $200,000. You lost $100,000 when you could have protected about $80,000 and made money compounding.
Equity is not safe or liquid and it has no rate of return.
Let's say you put $100,000 into an investment paying over 7% tax free compounding. In 12 years you'd have $200,000. The 12th year you'd make $14,000 and the cost of the loan would be a net of 4%, so you pay $4,000. Pay 4 and make 14. How much do you want?
Let's say you can't sleep because you have a mortgage and can't stand making more than you owe. Take the money out and pay off the loan.
Oh, and there's a death benefit.
This is for people who don't like to borrow money for any reason and are working feverishly to pay off their mortgage.
If I offer you $20 for $10, you might take it.
But let's say, you don't have it. Now, your friend will loan you ten if you pay back 12. So you do it.
You give me ten and I give you 20. How much of this do you want?
This is what banks do. They borrow from you and pay you 2-4% and then they charge 6-20% when they loan it out. That's called arbitrage.
If you understand how money works, you can become your own bank.
Bingo...Dave Ramsey talks about this a lot. If you plunk down a large down payment, a lot of banks are going to sit up and take notice (he puts it a lot more intelligently than I, but that's why he's a millionaire and I'm not)
Besides, if you pay off that mortgage, and then a life event like losing your job happens, then you still have a roof over your head :) Not to mention doing something productive with that mortgage payment you no longer have like investing it or putting it away for retirement.
As Dave says 'If you live like no one else now, then later you can live like no one else.'
(We've paid off over $12,500 of non-mortgage debt since April with $4500 to go on a student loan, which we hope to dispatch with after tax time. We have emergency savings, plus other savings--a first in our marriage. We live on $3600 a month take home for a family of six--two kids in Catholic school with another heading there next fall. Anyone who says that we can't live on cash can ask us for advice :P Our whole Christmas is paid for--in cash, saved up since May)
Fifty years ago it was not a way of life to live on credit, yet today you're looked at strangely if you don't live on credit.
FYI #71
FYI 70 and 71. Respectfully Dave Ramsey is wrong.
You will have more than enough to pay the mortgage and a solid retirement or emergency fund if you become unemployed.
Dave should be teaching people how to become their own bank rather than how to pay off the mortgage.
As I said earlier, equity is not save or liquid (especially of your unemployed) and it has no rate of return.
What's the good of paying off your house and having a lot of equity you can't reach or make money from?
“Seems foolish to avoid home loans when the debt is preferred (tax deductible).”
To my way of thinking, it doesn’t make much sense to spend $1.00 to save 35-40 cents in taxes.
“You can borrow money for a net of 4% and make 8% tax free compounding. It’s called arbitrage.”
I’ve heard it called leverage. It’s great when things are good. But it’s horrible when things head downward, which they do from time to time. Like the last few years with real estate.
I owe you an apology.
I thought about your posts earlier this evening. I wouldn’t normally do so, especially when I think someone is trying to engage me in a flame. However there was...something...about your posts that forced me to reconsider them.
So I did and I came to the conclusion that you were correct in your initial post, and that I was rightfully being called on the carpet. You did so very artfully, and I was too obstinate to figure it out. To make it worse, I was less than polite and charitable in my posts to you.
I thank you for taking the time to post and provide me a needed rebuke. I also wish to apologize to you.
I did not suggest you spend $1 to save 35-40 cents in tax. I suggested you borrow money for a net of 4% and make 7-8% on the money. The tax deduction merely let's you borrow for 4%. Making more than you pay is arbitrage. Would be interested in your argument against that.
Leverage is putting a down payment of 10,000 on 100,000 house and having the value appreciate based upon the 100,000 not the 10,000. When the house appreciates over time your value increases based upon the total value not just the money you put into it. If you put 10,000 in the stock market and it doubles in value, you have 20,000. If you put 10,000 into a 100,000 house and it doubles you have 200,000. That's leverage.
have a zillion cards, only using 1 mostly now...others are just sitting..
I have taken advantage of the balance transfers.......
so....I have been getting lots of letters from cc companies about changing the "terms" and I even had one bank write and cancel my card since I haven't used it for over a year....I HAVE NEVER HAD THAT HAPPEN......
there is tightening of credit but why would they go after their good customers, except we are not really "good" customers since we pay off every month....
something is going on....
I have a dtr getting married in several months ...was hoping to use some credit for that.....
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