Hiding the Cost
TPM contributor Adam Levitin has an op-ed this morning in the Chicago Tribune that makes a terrific point: Complex credit card pricing prevents consumers from knowing the true cost of credit and, as a result, prevents the invisible hand of the market from working its magic.
In all the resistance to "regulation" of any credit product, it is easy to overlook the simple point that Adam drives home so forcefully. Markets work on full information. The implications are powerful: If a consumer can't figure out the features of a product, then the market won't price those features appropriately.
Adam focuses specifically on the complexity of pricing. He points out that there are many, many price points--interest rate, default interest rates, two-cycle billing, etc., so that the most straightforward question--what does this cost?--is obscured. Complexity can sometimes mean more customization to a particular consumer's needs (think of the shelves in a grocery store) or it can mean a more sophisticated product (think of a 2008 car engine). But complexity in credit cards has a very real cost when it hides the risks and charges associated with a credit card.
Take a look at Adam's article. But ignore the ads for more credit cards that will run on the screen.
Comments (102)
That consumers are ever going to be able to compare credit card contracts is wishful thinking.
I'd be satisfied if the credit card agreements were recognized as adherence contracts and subject to certain restraints, namely: that post-agreement changes in risk evaluation (leading to higher interest and service charges) apply to balances only if the credit card holder continues to charge on the card after notice of the change -- that is, using the card after notice of the changes would constitute acceptance of the new, harsher contract terms.
December 27, 2007 6:57 AM | Reply | Permalink
I like where Prof. Warren is going with this; however, the argument is built on two false assumptions. Commenter Ellen mentions the first above. Consumers aren't really looking for perfect information. They've been well-trained not to expect it. (Examples: Buying cars and homes are essentially hostile transactions in favor of the seller.) That assumption is fundamental to the irrational rationalism of "free market" thinking. Second, there is no real constituency for "free market" policy in the U.S.--that is, no one to champion this argument. This is a crony-capitalist/consumption-based economy. Free marketers exist only as a smoke screen and to discredit economic regulation in general with the happy benefit of the broad sweep being to discredit any regulation that limits cronyism or manipulation of consumption. Modern Democrats exist only to palliate the effects of these distortions, not to attack the root causes.
December 27, 2007 7:15 AM | Reply | Permalink
Corvid
Excellent post, and one can't emphasize too much the last point, about Democrats existing only to "palliate the effects" of these market distortions.
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I'm not a big believer in government programs but I do believe we need active citizen involvement in radically changing the ground rules for our so-called markets, about which there is precious little that is natural and a great deal of which is the product of warped, non-democratic institutions (namely, government) answerable to the pre-eminent, godlike and immortal wealth-generating entities of mid- to late capitalism (corporations and other limited-liability companies). One could do no better than to start with the credit card industry.
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Separately, what's to stop someone from coming up with a decent credit card, one with clear, simple, understandable terms of contract that can't be unilaterally changed and reasonable interest rates that would be astutely marketed as such? Granted, there are a lot of Americans who just don't give a damn and perhaps even prefer to be fooled and duped rather than have to pay attention to their finances. But still, there ought to be enough conscientious consumers out there--many of them fairly high-end consumers and therefore lucrative prospects--who would love to have such a card.
December 31, 2007 9:01 AM | Reply | Permalink
2) In the absence of regulations -- and actual enforcement of same -- it would be very difficult for a clear-and-simple credit card company to compete with the current companies. Credit card companies don't intentionally create confusing agreements because they're evil. They do it because they're amoral, because their only goal -- by legal definition -- is to maximize profit. Absent regulation to the contrary, being intentionally confusing is a great way of making money. The financial advantage of being deceptive makes it tough for honest people to compete.
January 3, 2008 1:51 PM | Reply | Permalink
Tha's funny you should use the words clear and simple.
Chase uses those exact words.
http://www.chaseclearandsimple.com/index.html
I don't believe it though.
I don't have a credit card at this time, but if I do get one someday it will be through USAA or a Credit Union. I belive they can be trusted more than many of the well known co's that flood the airwaves with advertising.
Bonnie
http://groups.yahoo.com/group/PaperMachePupArt/
January 3, 2008 1:49 PM | Reply | Permalink
.
sPh
January 3, 2008 2:16 PM | Reply | Permalink
Quite simply. No. Mom and Pop operations are legally disadvantaged and are taking a higher business risk than large corporations because of the way our banking system works. 96% of them eventually go out of business.
Also, the flaw is in the centralized banking system, using a fiat currency with fractional reserves, and operating as for-profit organizations.
Jim Anderson
The Truth About Credit
Facebook Profile
Ministry WebsiteJanuary 3, 2008 7:50 PM | Reply | Permalink
Corvid
BearPaw knows a lot more about this than I do, so I'll mostly defer to what he says.
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The one little point that I'd like to cling to, though, is the notion that credit cards at this stage in history are in such, such bad odor with much of the public that an honest card--even one with lower but consistent profit margins--would be able to gain a solid market niche on just that point--honesty and fairness--alone.
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Still, I'll have to concede, maybe not. Could be that the folks who would like such a card basically carry no balance on their existing rotten credit cards, so it just wouldn't be an issue for them and there'd be no market for such a product.
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So maybe it would just be better to have government step in and actually enforce the simple notion that one cannot be allowed to change terms of contract unilaterally. Now THAT's a wild idea.
January 7, 2008 7:08 AM | Reply | Permalink
People who create and maintain a credit card balance should also wear a "kick me--I'm stupid" sign on their backs. If they can't read the cards' terms, including information on high interest rates and penalties, and still persist, despite also the common wisdom of credit card problems, in thinking they can enjoy something for nothing then they deserve the financial whacking they will surely receive as a reward for living beyond their means.
December 27, 2007 9:44 AM | Reply | Permalink
Just one of the many things you can use a credit card for is paying medical expenses. Believe it or not (and I get the sense that you won't believe it) some people do not have ready cash on hand to pay for an unexpected medical or dental expenses. You can also use a credit card for an unexpected automobile expense. If you have only a modest income or an unexpected loss of income that caused you to draw down what little savings you did have, all you need is a couple of unexpected $1K expenses to get you started down the road of no return on credit card debt.
December 27, 2007 2:37 PM | Reply | Permalink
I think it's unproductive to defend the use of credit cards for "emergency purchases" since the borrower knows apriori that, even without interest, he/she can't pay back the loan.
policies such as "living close to where you work" and "living below your means" are good insurance, in my opinion.
i.e. I've had a wide range of incomes and those habits kept me out of debt.
To boldly go...
December 29, 2007 8:50 PM | Reply | Permalink
It's not always possible to live close to ones work, but I agree with you about living below ones means, or at least within those means.
Still, when one isn't prepared and they get into credit card debt the "punishment" doesn't fit the crime IMO. There are some violent criminals in this country who are punished less than someone who foolishly maxes out a credit card and finds themself unable to make but the minimum payments.
Maybe the credit card issuers should be very upfront about what will happen to those who are foolish with credit cards.
I suggest these words:
If you max out this card and only make the minium payments it will take you many, many years to repay the original amount. Chances are good we will see you are a risk and will raise your interest to 29 % or higher. If you have late payments that will compound your balance even more.
Chances are high you will end up with over the limit fees even if you haven't bought a thing.
We will call you every single day if a payment is late.
If we finally write off the debt it will be sold to a debt buyer who will make your life even more miserable. They will tack on their own interest and they may not even tell you. It doesn't make one difference if you have plodded along for years and actually paid the original balance.
Your credit score will go very low and you may find yourself paying higher insurance rates and if you rent an apt, you may be denied. You may also be denied a job, even if you are well qualified if your score is low.
You will be in a prison without walls...
Debtors Prison.
The choice is yours. Use credit responsibly and only charge what you can pay off at the end of the month.
Well, I am just being silly.. this will never happen. The credit card issuers make tons of money off people who don't know any better. So what's the answer. I don't know, except to start financial education at a very early age. And not taught by some crook who only wants to promote his/ her CC brand.
Bonnie
http://groups.yahoo.com/group/PaperMachePupArt/
December 30, 2007 5:46 AM | Reply | Permalink
Credit cards aren't worth what they cost. You have to be a fool or very wealthy to use one, and if you are very wealthy you are paying a bank for the privilege of spending your own money.
But once American consumers were convinced they don't need savings, credit cards were required to keep the economy running. Credit cards are another banker's scam.
December 31, 2007 5:26 AM | Reply | Permalink
Wanna take your life in your hands? Offer cash for an airline ticket!
December 31, 2007 5:41 AM | Reply | Permalink
Debit Card with savings behind it.
December 31, 2007 6:33 AM | Reply | Permalink
I'm no fan of credit cards, but there are some advantages for those who use them responsibly.
I know of someone who recently had $400.00 of merchandise stolen and because of the protection of using a credit card, she was able to get that $400.00 back. If she had used a debit card, she may or may not have gotten her money. Debit cards do not have the protection of credit cards. If this woman had used cash, she would have been out of luck.
What if you paid for a cruise and the co went bankrupt before you went. If you had paid cash or used a debit card you may not get a refund. If you used a credit card, you would. It's the law.
We all pay higher fees because of the merchant fees. There are not many places that don't take credit cards and whether you pay cash, credit or debit card, you will pay the same price which incudes the merchant fee. Those who are able to get good rewards cards and use them responsibility are the smart ones cause they get some of their money back.
Bonnie
http://groups.yahoo.com/group/PaperMachePupArt/
December 31, 2007 6:37 AM | Reply | Permalink
Credit cards are a great convenience and beneficial for purchase protection and for travel--in fact you normally need one to rent a car. I use a cc for these reasons, but I make sure, before I use it, that I can pay the balance (in fact it's automatic) at the next billing. If I were going to purchase a paper mache pup I would follow these procedures.
January 1, 2008 5:33 PM | Reply | Permalink
We can agree on this.
I don't believe that everyone who uses credit cards will have a problem down the road if they
pay their balance every month.
I know many people who have used them for years with no problem.
I will eventually get one, but not at this time in my life. Certain things need to be in place first.
BTW, Pup Art does not accept credit cards. Can give better deals without that added merchant fee! ;)
Bonnie
http://groups.yahoo.com/group/PaperMachePupArt/
January 1, 2008 5:43 PM | Reply | Permalink
Oh, BS.
I was living well within my means until my kid developed epilepsy
$700 a month for her drugs and no perscription plan will cover more than a fraction of that. Since there is no history of the disease in either my family or her fathers, according to you I should have "planned" on this happening. Right.
You're a callous idiot, and perhaps you need to consider that a selfish lifestyle such as yours, may keep you personally out of debt, but it will also make you a rather unpopular and heartless thinker. Be sure to thank Belle and I for having kids to provide your SS and Medicare. We sure arn't going to thank you for being a mere taker of benefits, and not a contributor to the future of your society.
CSPAN junkies visit http://spannerbackup.ipbhost.com
January 4, 2008 5:59 AM | Reply | Permalink
I don't havbe a clue what you are talking about!
BTW, Belle is my Chihuaua!
Bonnie
http://groups.yahoo.com/group/PaperMachePupArt/
January 4, 2008 6:06 AM | Reply | Permalink
My apologies, Bonnie.
I was refering to the utter claptrap that seems to be mcs's mantra, that people are in debt due to living beyond their means.
That's demonstrably false. It has more to do with stagnant wages, the loss of income, or unexpected large expenses such as an illness.
Tell me mcs, did you "plan" for a 700% increase in Medical Insurance or a 300% increse in Energy? My, my, you're in the wrong business. You should be buying futures in the stock market.
CSPAN junkies visit http://spannerbackup.ipbhost.com
January 4, 2008 6:40 AM | Reply | Permalink
Whew! Apology accepted! :)
I know what you mean about some folks who lump everyone together and assume they are living beyond thier means. Everyones case is different.
Bonnie
January 4, 2008 9:45 AM | Reply | Permalink
On some of these long and deep threads I have to hit "parent” to the right of the "reply" button to be sure what is being replied to.
When I post I have seen my replies so far below the comment it was a reply to I always hoped everyone would use the "parent" button to understand the post and maybe save some hard feelings.
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Since it has been a long time since we have discussed these helpful LINKS, do you use the discussion tracker Link?
http://www.tpmcafe.com/tracker
This link will show in order the topic and how long ago a post was posted. It is a sequential list from the last poste anyone posted on the site backwards with how long ago it was posted. It will also have # of new posts to the right like the personal tracker link below.
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The above is a must use along with the personal tracker below. Or the personal tracker? you can check to see if there are any new comments on topics you have posted comments in.
Before the last / put you user name in. For example mine would be http://www.tpmcafe.com/user/thinking/track
To track your own, “BabyBelle” it would be http://www.tpmcafe.com/user/BabyBelle/track
For anyone else just replace BabyBelle the with your screen name.
If there is a new comment posted since you last viewed ANY OF THE TOPICS YOU POSTED there will be “1 new” or #new on the right side of the screen. Click on the “# new” and it will take you to the first [new] of the # of comments.
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These links will make the experience much better. Even if you never plan to post those who just read this blog should register and use these links to track new posts.
There have been much better posts about the tools of the board, maybe some members could go back and repost some of them.
+-----------------------------------------------
Today, are we searching for I deals or Ideals?
-Thinking
January 4, 2008 9:30 AM | Reply | Permalink
OK, Thanks for the info.
Bonnie
http://groups.yahoo.com/group/PaperMachePupArt/
January 4, 2008 10:13 AM | Reply | Permalink
Don Bacon: people who maintain a credit card balance but that have the ability to pay it off are stupid; unfortunately many folks are deeply in debt because they had unexpected expenses and are now in a hole they can't get out of.
December 27, 2007 9:57 AM | Reply | Permalink
JB,
You're wrong. The over-riding problem is excessive spending and insufficient saving. As Jimmy Buffett (almost) sang: "Some people claim the bank is to blame but I know it's my own damn fault".
news report:
Economists also cite America's long-standing attitude that debt - even high-interest credit card debt - is not a big deal. "The desires of consumers to want, want, want, spend, spend, spend - it's the fabric of our nation," said Howard Dvorkin, founder of Consolidated Credit Counseling Services in Fort Lauderdale, Fla., which has advised more than 5 million people in debt. "But you always have to pay the piper, and that can be a very painful process."
http://www.baltimoresun.com/business/bal-bz.creditcard26dec26,0,1907571.story
December 27, 2007 1:45 PM | Reply | Permalink
Re: The over-riding problem is excessive spending and insufficient saving.
Excessive spending maybe, but the insufficient saving points to a deeper problem: insufficient income.
December 27, 2007 7:28 PM | Reply | Permalink
Hoppy in Sacramento
December 28, 2007 6:46 PM | Reply | Permalink
didn't labor unions stop their "blind support" of democrats after Clinton signed NAFTA and normalized trade relations with China?
and how many people buy Chinese goods because their cheap? even though such a purchase isn't good for our local communities...
and, I've met republicans who support unions.
and, if you remember, Hillary Clinton was on Wal-Mart's board and, depending on who you believe, Hillary seemed to support union busting at wal-mart.
To boldly go...
December 29, 2007 8:56 PM | Reply | Permalink
It's hard to 'not spend' when everywhere you turn there are advertisements that assure you your life will be perfect if you just buy Corona Beer or get the newest ipod or whatever. Most marriage age women won't look at a man driving a ten year old car, and they frequently plan on $25,000 weddings. And of course it is expected that anyone who is 'successful' owns their own home. It's all part of the propaganda. The downside is the payday loans and the ridiculous costs of carrying a credit card. Check the annual interest rate on Income Tax refund anticipation loans. They allow you to get your refund about two to three weeks sooner than if you waited for the IRS to send it to you directly, and the annual rate is around 400% to 500%. The working class and lower middle class exist in the this economy to be farmed for money by the banks and big retailers, and it is best if they can never get ahead.
Advertising works to increase spending, or no one would buy the ads, and there is no profit in a counter-spending propaganda effort, so such information simply isn't out there unless you ask for it. Credit cards for the middle class are just another element of getting everyone to spend above their ability, and then work harder to pay the next bill.
In addition, the social stigma of not paying your bills keeps you on the treadmill. This social stigma is created by bankers and other lenders to keep the middle class in line.
So what happens when every second person in the neighborhood simply walks off and stops paying their mortgage? Will this artificial spend-spend-spend treadmill be able to continue?
I do expect a lot of propaganda in the near future about how 'good people' pay their bills at whatever cost. It's going to be needed to keep people spending beyond their means, especially as the upcoming recession gets bad.
December 31, 2007 5:57 AM | Reply | Permalink
No, the Piper doesn't always get paid. I recently had a conversation with an older guy who had way too much debt including credit card debt. I asked him what his plan was. He said he was going to die on them someday. I thought that was cute, and I am rooting for him. He is a lonely old guy, nobody to leave anything to, and he is spending it all now, including all that the credit card people will give him. Furthermore, I doubt seriously if our children and grandchildren will one day pay off the massive deficits that our governments are amassing. When it comes time to actually pay off all those loans, in real goods and servicesm the rich people's children/grandchildren who own the Treasury Bonds will find out that it was all a little joke. Those debts, one way or another will be repudiated.
December 28, 2007 7:11 PM | Reply | Permalink
The recent sharp drop in the value of the dollar is one way that debt will be paid off. The rise in the cost of the Euro to $1.40 recently means that dollars outside the U.S. have dropped in value to 71.4% of what they were worth at the beginning of the Bush administration when $1 bought 1 Euro.
Inflation here in the U.S. will have the same effect for our grand children who will be paying the debt. The only real problem is that the percent of the federal budget going to pay interest is still climbing. (Grover Norquist is delighted.)
I have a fixed rate mortgage I'll pay off with depreciated dollars, and I expect increased inflation this year along with the recession. Both the recession and the inflation are a direct result of the combined stupidity of the Libertarian-Republican Alan Greenspan and the man he was manipulating the economy to reelect, Bush.
December 31, 2007 6:02 AM | Reply | Permalink
Nice. Dr. Warren can't survive four commenters without attracting someone of the "Screw those idiots! They got what they deserve!" mentality. I swear if she wrote about car stereo theft, someone would reply, "Screw 'em! They should've installed an alarm!"
December 27, 2007 11:58 AM | Reply | Permalink
Obviously your strategy is to blow smoke and change the subject when you can't address the problem. Do you go along with the "I was forced to charge stuff" gambit or do you have another theory?
December 27, 2007 1:34 PM | Reply | Permalink
:) Great post. That is funny. What is with the people that have zero compassion? Where do they get such attitudes? Were they picked on a lot as kids? I have noticed over the years that those who have zero concern for others usually have some bad grades they aren't showing to their parents.
December 28, 2007 7:24 PM | Reply | Permalink
folks like yourself simply like spending "other people's money" (OPM). Those who spend OPM, I've noticed, were spoiled growing up and didn't have to work for their wealth.
To boldly go...
December 31, 2007 7:05 AM | Reply | Permalink
Me, other peoples money? You got me figured wrong. Not that I don't like the idea. I grew up with the working class, and never inherited a nickle. I do have a friend I grew up with and he learned how to get other people's money. I admire his unique ability to talk the rich out of their money. He has live good. Oh, and don't think I am a broke. You would be wrong there too.
January 1, 2008 12:31 PM | Reply | Permalink
Me, other peoples money? You got me figured wrong.
often when people talk about "compassion," it's about "tax and spend" or "borrow and spend."
Oh, and don't think I am a broke.
typically, those who don't want to pay the bills-- and wish to horde their money, will often suggest that others aren't compassionate to pass the burden onto someone else.
You would be wrong there too.
one of the reasons why I didn't join the democratic party was because most of the organizers I met had money but were too cheap to spend it. that's why the two parties are so similar; the leaders of both take care of themselves first.
To boldly go...
January 1, 2008 1:35 PM | Reply | Permalink
since sphealy didn't like my characterization, I rated your post a 2 since you unfairly suggest that folks who don't like handouts have zero compassion.
To boldly go...
December 31, 2007 11:13 AM | Reply | Permalink
Many business products only succeed because of limited information. Perfect information will never be available, and business will never be happy to provide it. Think "non-disclosure agreements" and "proprietary information." Do clothing manufacturers advertise their labor costs?
We have no reason to trust business to offer informative comparison data---why should they hurt their advantage? We can force it by having laws that apply after a complaint, or we can have oversight to limit the range and prevent excess. I vote for the latter.
December 27, 2007 2:50 PM | Reply | Permalink
The cost causer should be the cost payer is a viewpoint for the Common Good.
Requiring another to pay your expenses to achieve greater profits is what
American politics is about!
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Today, are we searching for I deals or Ideals?
-Thinking
December 28, 2007 10:27 AM | Reply | Permalink
The so called "invisible hand" of the marketplace is invisible alright. The credit card companies are about the best at the invisible hand moves. They hide their tactics in obscure language that takes an Indian guide, two hound dogs and a lawyer from Philadelphia to track down. I think the Adam Smith crowd should start calling it the sleight-of-hand of the marketplace.
December 28, 2007 7:36 PM | Reply | Permalink
If you play the game, you lose. Maybe not the
farm in one day, but you lose. It took 3 years
thereabouts of 'iron rations' more or less for
me to get out from under my cards and my car
loan. I hope they enjoyed all those interest
payments, because they'll never see another one,
from me anyway...
December 30, 2007 6:03 PM | Reply | Permalink
As ever the trolls are trolling in the wrong direction. It's not about will I or will I not use credit, that is a choice I make one that I know has a cost, its about who is willing to provide that credit at the lowest cost to me as the consumer. The market will determine who I am going to chose to provide the service provided it is a free and open market. If the market is rigged (few providers or providers colluding to fix prices) or the costs are hidden then I do not make the "right" choice and the market fails to work.
The market fails to work in several ways, I may chose the wrong (more expensive) provider introducing inefficiencies, the very thing the market is supposed to remove. I may simply determine that there is no way to judge who is the best provider and not use credit at all (several posts indicate that this is their choice). This is as many have noted the biggest loss for the provider as consumers chose not to use the service and they make nothing.
All this comes down to the providers who are trying to control the market (increasing profits) and the consumer who is trying to get the best possible deal from the market (reducing profits). If I can control the information from a to b, or make the flow of information so complicated it is not understood by any one, then I can control the market. That I believe is the point being made, not that credit is inherently good or bad, but that those who attempt to distort markets cause damage both to themselves and the consumers of their product.
December 30, 2007 7:24 PM | Reply | Permalink
You only need the credit because you are buying too much for your income, and demand the goods before you save for them.
From the point of view of your personal decisions, all you have to do is stop using credit, start saving, and only buy what you really need instead of what you want "right now!"
Everything you wrote above that does not fit into that plan is obfuscation. You are ignoring the reality. Credit should never be used for consumption. Period.
Using a credit card and not saving for big purchases is a fool's game, like walking into a casino and thinking you will walk out a winner. Both are decisions you make, and both are decisions you make with the odds against you. It's a set up, and the fiction that you are making a decision that might be good for you has been fed to you by those who want to farm you for money. You end up working to support their pleasures instead of your own.
December 31, 2007 6:28 AM | Reply | Permalink
I don't think the problem is a problem with a free exchange of information, there is already an information overload in all loan agreements. The consumer just believes the government is going to protect them, and they will focus solely on rates and payment terms. The problem lies in the extreme unbalanced business relationship, which is abused by the more powerful party. The average consumer doesn't have the capacity to understand the complex legal arrangements made in the contracts they sign, and the implications of the carefully worded terms. The lenders know that, and the loan officers will pretend to care that the customer understands those terms but dismisses them as inconsequential. They are simply salesmen. Those who have been educated by experience will know what to look for, but less experienced and less educated borrowers will agree to almost anything if they can make the monthly payment when they take out the loan.
If the borrower truly understood the implications of entering into these loan agreements that are served today, they wouldn't borrow the money. They'd scale back their lifestyle and live below their means and save for emergencies instead of using credit cards as emergency funds. It is hard for some people with lower incomes, but they are still better off not borrowing and recognizing the need to save 3 to 6 months of expenses in an emergency fund.
I have a bumper sticker on my car, "Debt is Normal, Be Weird." Everybody is misusing borrowed money, it is normal and expected today. It is only responsible to borrow when you can pay back the entire balance at a moments notice. Otherwise, the loan should be made out of charity, without interest. Both borrowers and lenders are at fault. Unfortunately, the hardest hit are borrowers, and the lenders have the power to pass the consequences of their irresponsible lending practices to their customers, while they collect their high salaries, and pay for their luxurious offices. (not to mention the large sums of money they set aside to pay lobbyists to change laws in their favor to increase the legality of their immoral practices, and for their large campaign contributions. See www.opensecrets.org )
Speaking of debt, anyone notice how much one of the Republican candidates has borrowed? See how much Mitt Romney has borrowed to finance his campaign at http://www.opensecrets.org/pres08/index.asp . I surely wouldn't want this guy as president if that is how he manages money. For that matter, the two leading democratic candidates are pretty loan happy too, along with McCain of the Republicans. I wish the press would cover this aspect of the characters of these candidates.
For those who like Hillary, take a look at her top contributors here http://www.opensecrets.org/pres08/contrib.asp?id=N00000019&cycle=2008 Notice the domination of the top banks? And the astronomical amounts? I doubt that bodes well for consumers in the issues we are concerned about here if she wins the Whitehouse. The same for Obama, Romney, Guiliani, and McCain. In contrast, look at the contrast in the contributors to Ron Paul's campaign, and no debt.
Jim Anderson
The Truth About Credit
Facebook Profile
Ministry WebsiteDecember 30, 2007 11:23 PM | Reply | Permalink
If the borrower truly understood the implications of entering into these loan agreements that are served today, they wouldn't borrow the money.
I would suggest also PayPal’s Agreement. One should open a separate bank account if you use them. You are giving them Power of Attorney over you account and maybe your financial life!
Links Below:
User Agreement for PayPal™ Service pdf
User Agreement for PayPal™ Service HTML
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Today, are we searching for I deals or Ideals?
-Thinking
December 31, 2007 12:09 PM | Reply | Permalink
Jim, I disagree with your statemnet that "everybody is misusing borrowed money".
That bumper sticker is what Dave Ramesy wants everyone to believe . He's promoting his costly books ,programs and a lot of other merchandise .
I shared my own financial problems with a close friend and family member a couple years ago when I was in debt and I know these people manage their credit cards well and have no problems. I am sure there are many like them. They are are very cautious though and that is what all of us need to be.
Bonnie
http://groups.yahoo.com/group/PaperMachePupArt/
December 31, 2007 5:27 AM | Reply | Permalink
He's promoting his costly books ,programs and a lot of other merchandise.
costly? I went to his website and you can get everything he wrote, and 2 DVD's, for $50.
the most expensive part of "financial success" is the time commitment. I typically spend at least 8 hours a week studying financial markets and, especially recently, I made some 401k adjustments to hedge against "current threats" and those moves stopped big losses!
To boldly go...
December 31, 2007 7:28 AM | Reply | Permalink
$50.00 to someone in debt is a lot to pay when they can go to a library and check out a number of good financial books for free. Or go to Amazon and buy used copies.
And someone in debt doesn't need "designer envelopes", bumper stickers etc, all to promote Ramseys website and "university" . Ramsey has some good common sense advice, but the guy is really full of himself!
Bonnie
http://groups.yahoo.com/group/PaperMachePupArt/
December 31, 2007 7:41 AM | Reply | Permalink
the bumper stickers are simply a way for people to externalize hope before they achieve their dreams!
if he gives "good, common sense advice," does his personality matter? why shot the messenger?
To boldly go...
December 31, 2007 11:18 AM | Reply | Permalink
SOME of his advice is good common sense/ Some of it is not.
Example:
Ramsey: Sell everything you own that even your kids wonder if you are going to sell them. Ramsey continues: And throw that money towards the debt. He has recommended selling on eBay. Also having a yard sale.
I had a yard sale and made all of $64.00. There is no guaratee you will sell your things at a yard sale. At most all you have to lose is time. But time is money!
Ebay is another story. I have sold on eBay. Sometimes you sell, others times you don't, but eBay fees need to get paid whether you sell your items or not.
So if I took the meager amount I made from my yard sale and eBay,and threw it at the debts I owed I wouldn'even cover the interest. Lets see... Sending MBNA $138.00 amounted to less than $8.00 being credited to my accout. Oh, and the crooks at the collection agency that kept me in the dark about interest they were charging... Every $150.00 I sent them was like a Christmas gift to them . I was so scared and intimidated by them I didn't find out until throwing almost $2000 to them that NONE of the money I sent them was reducing the debt. They were in fact INCREASING it.
Sometimes it makes more sense to stop throwing good money after bad and consider filing for bankruptcy protection!
I have listened to Ramsey on the radio when it was broadcast in this area. Some of what I heard was pitiful. I read an online interview Ramsey gave where he said he would never say bankruptcy or divorce to anyone who came to him for advice. That is ridiclous and it takes a hell of a lot of nerve to say that when Ramsey filed for bankruptcy himself! And many who divorced are alive today because they got out of abusive relationships! Divorce and bankruptcy are sometimes the best and only sensible choice a person can make!
Maybe Ramsey has so little confidence in his listening audience he feels that anyone who files BK is going to not learn from it. That may be true, but to not recommend it when it is clear a person needs a fresh start is a pretty sorry financial counselor IMO.
I may still be drowning in debt throwing good money after bad if two reputable credit counsleors and a very good friend of mine hadn't told me to consider filing bankruptcy. I am grate
ful to these people who could see the whole picture more clearly than I could at that very stressful time in my life.
I didn't read any articles by Professor Warren until after I had filed bankruptcy, but I am very grateful to her wisdom that I have read online and in her books.
December 31, 2007 12:01 PM | Reply | Permalink
I [would be] drowning in debt ... if ... [I didn't] consider filing bankruptcy.
I'm glad you drew the line in the sand!
but I am very grateful to her wisdom that I have read online and in her books.
Luckily, my parents told me this when I was young:
[from professor warren's book "All You're Worth"]the problem: those in debt have a hard time reducing the MUST-HAVE pile. My father used to tell my mother: "you dream up three ways of spending each dollar I make!"
To boldly go...
December 31, 2007 4:08 PM | Reply | Permalink
It is indeed wonderful to have parents who teach us well, and are good examples. But I believe there is a large percentage of people who are more like the prodigal son and end up learning the hard way! Who knows why the prodigal son in the Bible went wild and his brother stayed on the straight and narrow ? They both had the same parents.
Both of my parents have been dead many years. I am sure they would be shocked and disappointed that I ended up in such a financial mess and ended up filing BK, yet on the other hand they would also be shocked at the dirty tricks the CC issures play on people, the loan shark interest rates, the dirty low down debt buyers and law makers who are in the pockets of these big corporations and allow all this stuff to go on.
Bonnie
http://groups.yahoo.com/group/PaperMachePupArt/
December 31, 2007 5:13 PM | Reply | Permalink
Who knows why the prodigal son in the Bible went wild and his brother stayed on the straight and narrow?
because we're all sinners who make mistakes but, through god's grace, we can reconcile (make right) our circumstances through repentance.
that's unlike the "legendary Jesus" who was tempted by the devil but always saw through the devil's dirty tricks....
To boldly go...
January 1, 2008 10:55 AM | Reply | Permalink
. . . the "legendary Jesus" . . . .
I beg your pardon! Just the other day I happened to be speaking with Jesus and . . . .
January 1, 2008 10:58 AM | Reply | Permalink
I'm using "legendary" as a synonym for "famous" or "well-known" and I've also met with him during meditation. That's why I consider myself religious.
I don't think i'm crazy since Quantum Physics, as you know, suggests that the cat is both alive and dead at the same time! so no opinion about Jesus, or Elvis-- for that matter, is wrong! ;-)
To boldly go...
January 1, 2008 5:19 PM | Reply | Permalink
Funny. I say the same thing about Suzy "FICO" Orman. Except I believe she is cleverly misleading people into thinking that credit cards can be a good financial tool for the user, and tells people to make investments that don't make sense. She also has a terrible attitude.
The key is Dave Ramsey genuinely cares about the people he is helping.
Jim Anderson
The Truth About Credit
Facebook Profile
Ministry WebsiteJanuary 3, 2008 7:58 PM | Reply | Permalink
I guess we see Suze very differently. I have been watching Suze Orman every night this week .
My sister has been watching her too, and just today we were commenting how how genuine and caring she is.
January 3, 2008 9:44 PM | Reply | Permalink
Suze O must know her stuff. She has done very well! I am sure she has made her mistakes. After all, like the old saying goes... those who don't make mistakes usually don't make anything!
Suze never made mistakes big enough to need to declare bankruptcy. That's very impressive.
Many who achieve success had to file , some more than once!
Bonnie
http://groups.yahoo.com/group/PaperMachePupArt/
January 4, 2008 5:27 AM | Reply | Permalink
You are free to disagree all you want. What is, is, whether either one of us is right or wrong, and whether we like it or not. Dave Ramsey has helped a lot of people, and his advice isn't influenced by any sponsor, like other financial advisors are. There is one lady who gives terrible advice about "responsible" use of credit cards, she is heavily sponsored by the makers of the "FICO" score and appears on public television all the time. She instructs people to use credit cards, suggesting it makes good financial sense, while at the same time scolding them for getting in debt in a financial emergency. Dave is funny, and truly cares about the people he is helping. He tells them what they need to hear. That is the difference. Of course he wants everyone to believe what is on the bumper sticker, because it will encourage them to stay out of debt. That is something your local banker doesn't want.
There are a lot of people who use credit cards and have no problems. That is not the point. It is what is in those agreements that is putting them at risk. Take it from someone who was a loyal Citibank Visa Card user for over 2 decades, faithfully paying off the balance every month, using it "responsibly". I loved racking up the miles. I thought the purchase "protection" was worth it. The reality is that someone pays for it, and it isn't the credit card company.
When the time was right, Citibank pounced and tried to use a hidden policy to trap me, and it worked because I wasn't aware of it. They made a lot of money, even though I fought it all the way to court. It turns out that the laws that protect consumers are full of holes, and enforcing them in court is next to impossible without a consumer rights attorney that will accept your case to further the consumer agenda. Even they are skeptical of your case. They may agree in principle, but they need cases that they have a strategy for changing law. The system assumes a defendant being sued for a debt is guilty. One claim turns the burden of proof on the defendant, "I don't owe the debt." It is a statement of fact, which you must prove. The court usually turns to the defendant first and asks for that statement. Once it is made, you've lost your case, unless you have proof that can be admitted as evidence according to court rules. All that to reiterate my warning. It isn't responsible to use credit cards, or borrow money, because of what is in the contracts. The contracts are ridiculously onesided and overly complex to expect the average consumer to understand what they are getting into, and then properly fulfill them. Believe me, it isn't just about making your payments on time.
Your comment about debit cards being inferior in purchase protection is understood. But that is no reason to get yourself into a contract that opens you up to the "legal" theft that credit card companies commit through their contractual terms. It is a poor trade off at the end of the day. The legal issue seems subtle in daily life, but it is real, and it is deadly.
Jim Anderson
The Truth About Credit
Facebook Profile
Ministry WebsiteJanuary 1, 2008 8:30 AM | Reply | Permalink
I know you are speaking of Suze Orman. Her show is on every night this week on CNBC. :):)
I don't agree with everything she says, but she has also helped alot of people. She has the good sense to suggest someone file bankruptcy if that is the best thing to get them back on track.
My bankruptcy lawyer told me there were so many people who were just like me and plodded along for years paying, paying, and paying and not getting very far with set backs and fee, after fee, after fee.
Maybe Ramsey has changed his tune now that he is offering classes that are required under the new law and that can bring him more $$$.
I don't know, but the online interview I read a couple years ago has him stating some very
cruel words about those who file bankruptcy. He doesn't know everyones case and his words in that interview were so judgenmental.
Here is a comment from Ramseys interview:
Most people aren't morally ambivalent and think it's just ok to go file.
There's a sense of relief but also a deep sense of shame.
It depends on the indiviual and how much intergrity they have as to how much impact it has.
So tell me how does Ramsey know that "most people aren't "morally amblivant" and think it's just OK to go file?
And who is Ramsey to judge anyones integrity??
He filed bankruptcy.
I certainty don't know everyones situation, but I suspect and believe that most people are honest and agnozize over the decison to file bankruptcy.
Does Ramsey speak out to the big corporations that file for bankruptcy protection and tell to eat beans and rice, have a yard sale, etc ? I doubt it.
I have been on a Ramsey yahoogroup and I think he has all his "fans" convinced bankruptcy is
something that needs to be avoided at all costs.
When I even mentioned the "B" word on that group some of the members attcked me worse than a Pit Bull would attack.
That's pitiful .
Some people would be living in the street or even kill themself had they not filed for bankruptcy protection.
A wise financial counselor doesn't discount bankruptcy as an option to get ones life back on track. And they certainly don't make statements to
make a person feel guilt and shame!
http://groups.yahoo.com/group/PaperMachePupArt/
January 1, 2008 9:28 AM | Reply | Permalink
[shame] depends on . . . integrity . . . .
I'm with Abbie Hoffman.
January 1, 2008 11:05 AM | Reply | Permalink
When I even mentioned the "B" word on that group some of the members attacked me worse than a Pit Bull would attack.
well, when we die, we all go bankrupt since "we can't take it with us." just as long as u have a heart of gold, that's all that matters.
To boldly go...
January 1, 2008 6:41 PM | Reply | Permalink
Most people aren't morally ambivalent and think it's just ok to go file.
if the federal government went bankrupt and stopped sending out social security checks, would you still feel the same way?
i.e. breaking a promise is always morally wrong.
of course, when the "sh!t hits the fan," everything smells whether you like it or not.
To boldly go...
January 1, 2008 7:00 PM | Reply | Permalink
i.e. breaking a promise is always morally wrong
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Well, lets see..
Many years ago I promised to love, honor and "obey"
I broke that promise and divorced a man who was physically abusive and shirked his responsibilty to his family.
I ended up raising the child we both brought into this world by myself with absoutely no child support.
Breaking a promise is NOT always morally wrong! It all depends on the circumstances!
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January 1, 2008 7:06 PM | Reply | Permalink
Breaking a promise is NOT always morally wrong! It all depends on the circumstances!
Morally, it's always wrong;
Based on the wedding vow:
I, Mister BabyBelle, take you Miss BabyBelle, to be my wife, to have and to hold from this day forward, for better or for worse, for richer, for poorer, in sickness and in health, to love and to cherish; from this day forward until death do us part.
your husband broke the vow and annulled the contract. i.e. based on your side of the story, there were irreconcilable differences that you guys couldn't over come.
i.e. In your case, you claim that your husband was immoral since he didn't "love and cherish" you and, instead, he defaulted on his promise and, thus, effectively annulled the contract.
To boldly go...
January 2, 2008 7:09 AM | Reply | Permalink
MCS,
I am beginning to wonder if you live in a fantasy world.
This whole subject started because I wrote a quote
about what Dave Ramsey said .
Why don't you go preach to him about breaking promises. He filed bankruptcy .
Of course you don't know his situration at the time, and you don't know mine or anyone elses for that matter. But that is not going to stop you I am sure! LOL!
Bonnie
http://groups.yahoo.com/group/PaperMachePupArt/
January 2, 2008 7:05 AM | Reply | Permalink
I am beginning to wonder if you live in a fantasy world.
not really. folks who keep vows are pretty respected in our society.
Why don't you go preach to him about breaking promises. He filed bankruptcy.
I agree: it's humanly impossible to keep all promises and I don't doubt that Ramsey is a skunk but he's a hero for telling people to reconcile their lives before bankruptcy becomes unavoidable.
While you claim that I live in a "fantasy world," your posts suggest that you never prepared yourself for the possibility of lean times and divorce so weren't you living in a fantasy world?
My parents, who are still married, planned for those possibilities and my mother had my father put a portion of his paycheck into her private account "just in case."
What I like about Ramsey's message is that he makes it clear that there's no convienient way to make ends meet and people have to make sacrificies and set priorities. To me, that's a credible message and one that applies to many things in life.
Believe me, it's too bad that your husband didn't realize his moral obligation and, out of duty, let go of his petty rage-- and selfishness, to live up to his promise.
To boldly go...
January 2, 2008 8:49 AM | Reply | Permalink
See,,, there you go again.. thinking you know the circumstances behind my bankruptcy and my divorce.
Does it make you feel superior to try and convince others that you are better than them? That is the impression I am getting of you.
I wasn't living in a fantasy world, except to believe some crooks at a debt buying operation when I made monthly payments to them and they kept me in the dark about interest they were charging. .
I paid all of my creditors the original balance of what I owed plus so much more and anyone who tries to make me feel that I am less than anything but a decent honest person is wasting their time.
I feel good and absoutely no shame that I filed bankruptcy.
My parents were married for close to 60 years and never had financial problems and that's wonderful, just as it is wonderful that your parents did well.
I have no doubt that Ramsey helps some people, but I am convinced he delays the inevitible for others. On another forum I am a member of someone recently wrote that she had learned about budgeting from him, but after plodding along for way to long, only being able to make minimum payments she is turning to bankruptcy.
Like so many others, what a shame to spend so long before you realize that you just need a fresh start.
What I would love to hear is someone call Ramsey with a story that is identical to the situation he was in and hear the hypocrit Ramsey tell them to go eat beans and rice, sell everything they own, and maybe get 2 or 3 jobs !
This person got it right when giving a review one of Ramseys books.
Here it is:
This book is good for making one person a millionaire: Dave Ramsey!
I found nothing but a slew of personal statements...
Bankruptcy is the root of all evil... because if you go bankrupt, why on earth would you need Ramsey's seminars and books?
Ramsey is making a