Looking for Financial Advice

[CRCRFT78]

Just looking to clean up my credit and get my finances in order and clear up some debt. Are there any books or advice some of you can recommend?

[GregWeld]

Pay off your highest INTEREST charge accounts first... stop any and all charging. Get a second job if necessary to get some extra cash to pay down the debt QUICKLY so you can recover quicker. Call all companies you owe and try to negotiate a lower interest rate. The worst they can say is no.

[GregWeld]

PS --

Forgot the advice I tell my kids and their friends:

You can not SPEND your way to wealth.

+++++++++++++++++++++++++++++++++++++++++

A little quickie math:

If you're 21 years old and put away $2000 per year - for 10 years - until you're 31 - and from then on you never add another dime to the savings (just letting the interest compound) - you'll have almost ONE MILLION DOLLARS in savings....

HOWEVER....

If you start this savings account at 31 - and put away $2000 every year for the rest of your life - you won't even be close to the million dollar mark...

[70rs]

Send in as much as possible for payments. The minimum payments will NEVER get the cards paid off. Get rid of the charge accounts too. Too many people these days using them to live on, don't. If you can not afford to pay the balance in full each month don't buy it. Keep one with a decent rate for emergencies and dump the rest. Cut them up and close the accounts.
:cheers:

[jeff71]

Check out DaveRamsey.com you can also download his podcast if you cannot hear his raido/TV show. Also can go to your local book store he has several books.

If your ready for that life change he can teach you the steps!

[sniper]

That is way to opened ended of a staement, hence I suppose why you are looking for more info. Paying everything down, depending on the situation is NOT always the answer.

But here is a site with a wealth of information. But just like anything, read, read, read.
http://www.creditboards.com/forums/

The awesome thing about credit is that time heals all wounds, but there are things you can do that can reduce, or erase that time to easily prop up your credit outlook.

[buickfunnycar.com]

Cut them up and close the accounts....

Careful there...while seemingly good advice...closing accounts will limit your available revolving line of credit and that may drastically lower your credit score.

[70rs]

Careful there...while seemingly good advice...closing accounts will limit your available revolving line of credit and that may drastically lower your credit score.

Good point about the credit score being affected. My bad. Sometimes it is better to use them on a minimal use basis just to keep them active and open.


But again, if you can not pay that balance in full each month the cycle starts all over.

[Beegs]

Cut the cards but DON'T close the accounts. Credit score will take a hit if you do.

You might have to play hardball with credit card companies to get a deal...I am sure it can be done...you just need to play the game.

[slamdimpala]

As a loyal Dave Ransey listener he always says to pay off your lowest credit card off first. Meaning if for instance you have three or four cards, which ever card has the lowest amount of money on it pay it off first. He says that if you see balances and cards get payed off you will keep doing what you are doing, if you try to pay off the biggest one first you will get discouraged real fast as the balance never seems to drop. Hope this helps. If you choose to do Daves steps its for sure a life change so be prepared to do what ever needs to be done. Good luck.

[Ketzer]

Another Ramsey believer.
The problem is, a person (not neccesarily you) who has bad spending habits and a lot of debt is not going to like what Ramsey is going to tell them to do. His system flat works.

Jeff-

[70rs]

I think the underlying theme here is to make some serious changes in spending and focus on a new program of some sort. The key though is that you have to be willing to make those changes and stay commited to them.
Best of luck! And as with anything involving money do your research before you jump on something that might not be the right move for you. :cheers:

[Vegas69]

Blow every penny, it's not going to do you any good when your in the nursing home crapping you're own pants.

[MarkM66]

PS --

Forgot the advice I tell my kids and their friends:

You can not SPEND your way to wealth.

+++++++++++++++++++++++++++++++++++++++++

A little quickie math:

If you're 21 years old and put away $2000 per year - for 10 years - until you're 31 - and from then on you never add another dime to the savings (just letting the interest compound) - you'll have almost ONE MILLION DOLLARS in savings....

HOWEVER....

If you start this savings account at 31 - and put away $2000 every year for the rest of your life - you won't even be close to the million dollar mark...

That may of worked back when banks gave intrest, cd's had more then 2% return, and you'd be lucky to not be loosing on 401ks and IRA's. ;)

[GM Muscle]

Blow every penny, it's not going to do you any good when your in the nursing home crapping you're own pants.

AMEN!!
:captain:

[GregWeld]

Mark --

That why you have to have TIME on your side - thus the early start... interest rates don't stay static for 40 or 50 years...

Plus - it's an over simplification of the process - but the message is SAVE SOME MONEY...

Of course Todds version is more fun... But I can tell you from personal experience - I've been poor - and I've been rich - RICH is way way way way more fun... Money isn't everything - but it beats the hell out of whatever's in second place! And it DOES buy happiness. Just look into Charleys eyes! :rofl: :woot:

[CRCRFT78]

All I really have other than a mortgage and the usual monthly living expenses are a credit card under $2000 and a car payment with a little more than $10,000 owed. I'm just looking to set myself up a little better with for the future. Whether its by saving, investing or whatever I can do to help secure something for the future. My job pays just enough to cover the bills and little else.

[Vegas69]

Of course I was kidding to some degree. I wouldn't save every penny waiting for retirement to get killed in a car accident at 42 or think life is going to be at it's high point at 65. Start with making a list of expenses and your average net monthly income. Figure out where you can widdle down your out of pocket cost every month and pay off your worst debt first.

I'm in a similar situation right now. I'm trying to get rid of every bill I can. Mainly so I don't have to work so hard and can take off even more time from the old grind. Luckily I don't have any credit card debt and all my toys are paid for. I recently refinanced my house from a 15 to a 30 after 5 years of paying down the note. That cut it down 1k by itself. Could I have kept making those payments? Yep, but I don't plan to be here forever and I may decide to lease this property instead of sell it down the road. That wouldn't make sense with a 15 year note. I also was able to lock in a 5% 30 year note and the rent would be much more than my payment. I've leased a brand new car for 10 years. 6 years of that being BMW's. I'm done with that crap too. I'm paying cash for my next car. It will be 2 years old with a warranty and I'll get a deal like I just scored on the Tundra I bought for Kelli. My goal is to have my montly nut down to under 2k a month by July. That will allow me to spend more time doing things I want to do than beating the pavement trying to make a sale. Let's face it, the gravy train is over for a while. Life's to short to work all the time. Business expenses are a whole different deal.

[GregWeld]

:rofl: :rofl: My buddies call and ask me what I'm doing today.... my response... "whatever I feel like"....

Ya know -- Todd has it right - it doesn't take that much "income" if you don't have any "outgo".... and that's the key.

:woot:

[ProTouring442]

Money is an excellent servant, but a most tyrannical master.

Happy New Year!
Bill

[Spiffav8]

After going without a job for nearly a year, I find myself in the same boat. Now that I am back to earning a pay check and can attack the debt that has built up. My plan is to go after the items that have the highest interest rate first. Also when I pay off one item I add the amount I was paying on it to the next one on my list. It starts slow at first, but soon it's like dropping a nuke and balances are dropping like crazy. It won't be long and I'll be debt free...with the exception of our house. I still take 10% of every check and toss it into a savings account that is my emergency fund and I set aside a little for going out with. If you put your self under to much pressure or to tight of a budget, you'll break.

Don't know if that helps you any, but I wish you the best of luck. Having a lot of debt hanging over your head can be very stressful. Hey...it's a short term sacrifice for long term gain.

:cheers:

[70rs]

[QUOTE=
Having a lot of debt hanging over your head can be very stressful. Hey...it's a short term sacrifice for long term gain.

:cheers:[/QUOTE]


Yes it is....well said Curtis.

The plan of adding the payment from the paid off balance to the next one is great advice, those balances will drop in no time at all and the credit score goes up like crazy. Never as fast as the card, but it will catch up and be looking good very soon after those are paid.

:cheers:

[GregWeld]

Curtis --

Good for you -- that's the way it's done buddy!
:cheers:

I have a very good friend - that I "help" him with his investments... the couple combined has never earned 80K a year... BUT he was ALWAYS a saver - and "debt adverse"... Now that he's near retirement - they have well over ONE MILLION DOLLARS in the bank (stocks / bonds / CD's) - ZERO debt including no mortgage. A pretty good "space" to come into retirement I'd day. The only reason they can do this - is because they always saved first.

So here's the problem that I argue with them about all the time --- he's saved for so long - and never splurged on anything - always used the old tv until it died - ditto cars - always used and paid cash etc... They've lived this way for SO LONG that now they can afford to "live a little", they WON'T... So they've done everything right - and now are frozen like deer in a headlight. They can't stand parting with a dime... That kills me!
:rofl:

[ProTouring442]

But the one thing they do not have is any bit of financial worry. They don't have to worry if they can afford to fix something if it breaks. They don't have to worry about whether or not they will have the money to buy a new water heater, or a new furnace. They don't have to worry about money to pay for health insurance, or for a medication.

You say they don't know how to live, perhaps they don't know how to live for their stuff.

Check out anything written by Dr. Thomas J. Stanley, very interesting.

Happy New Year!
Bill


Curtis --

Good for you -- that's the way it's done buddy!
:cheers:

I have a very good friend - that I "help" him with his investments... the couple combined has never earned 80K a year... BUT he was ALWAYS a saver - and "debt adverse"... Now that he's near retirement - they have well over ONE MILLION DOLLARS in the bank (stocks / bonds / CD's) - ZERO debt including no mortgage. A pretty good "space" to come into retirement I'd day. The only reason they can do this - is because they always saved first.

So here's the problem that I argue with them about all the time --- he's saved for so long - and never splurged on anything - always used the old tv until it died - ditto cars - always used and paid cash etc... They've lived this way for SO LONG that now they can afford to "live a little", they WON'T... So they've done everything right - and now are frozen like deer in a headlight. They can't stand parting with a dime... That kills me!
:rofl:

[GregWeld]

Oh I totally agree with you Bill... They have ZERO worries! But I'd still like to see them buy a new truck and trailer and go for a nice long trip... and they just have trouble even doing something like that - and yet they can afford to and deserve to.

That's what kills me... BTW - they have no children either -- probably why their hair isn't gray and they have money! :rofl: :rofl: Nobody to bail out - and nobody to leave a red cent to!

[gearheads78]

Another big Dave Ramsey fan and follower here. He says you should pay the lowest amount off first because it gives to mental accomplisment. As soon as the first one is paid off you go to the next and so on. The interest rate has very little to do with it when you are knocking out principle.

If you PM me your address I will set you his book Finacial Peace on the condition you pass it on to someone else in need when you are done.

[bigtyme1]

Become adopted by Greg Weld:rofl:

[Spiffav8]

Hey I'm all for getting the most for my money and making things last. Part of that is buying quality item that will stand the test of time. I could buy a new truck and very much so would like to, but my 2000 F-150 looks and runs awesome. Best part is...it's paid for. So I'll drive it till it dies and then get another one.

Dave Ramsey is 100% correct on the mental accomplishment thing, however I like my way a little better. It's really all in how you see it I suppose. For me the first one is always the hardest, but I take it in small doses and enjoy seeing the numbers ticking down. I figure the bigger the interest rate, the more it's costing me in the end. It might be a small amount in the big picture, but I want this gone...like now, so I'll take every advantage I can to knock it out. At the end of the day, I'm happy and that's all that matters.

[GregWeld]

Become adopted by Greg Weld:rofl:

You'd better become adopted by GWEN Weld.... Greg just sponges off of her!

LOL

I have to also add to this fun little thread... since I live in a land of AWE... It is estimated there are some 70,000 MILLIONAIRES in the greater Seattle area... and I can tell you that no matter how much you "make" --- you can spend more.

You wouldn't believe the amount of "epic fails" going on around here... and the houses that are for sale - and the cars... etc.

[GregWeld]

On topic a little more -- and I haven't done the math to back up my statement I'm going to make - but I think the math would back me up...

Some of these credit card companies are charging near 25% interest... so while you might feel better paying off the smallest amounts first -- the INTEREST is going to eat you alive while you're doing that.... which is why most advisors recommend you pay off the highest interest balances first.

[GregWeld]

Just "because".... I searched the net for a Credit Card Interest Rate calculator... and plugged in some numbers. I used a 1000.00 balance - an interest rate of 24.99% - with 2% per month payback - Monthly payment of $50... This would take you 27 payments (2.25 years) and you'd pay $306 of interest.

So if you just made a $75 a month payment instead. You'd cut your time down to 1.33 years and the interest to $184 (16 payments instead of 27)

For comparison - I'll use 1000 owed and 12% interest - same $50 payment vs $75

$1000 owed at 12% paying $50 a month takes 1.9 years (23 payments) and costs $121 in interest

$1000 owed at 12% paying $75 a months takes 1.25 years (15 payments) and costs $79 in interest

[tones2SS]

On topic a little more -- and I haven't done the math to back up my statement I'm going to make - but I think the math would back me up...

Some of these credit card companies are charging near 25% interest... so while you might feel better paying off the smallest amounts first -- the INTEREST is going to eat you alive while you're doing that.... which is why most advisors recommend you pay off the highest interest balances first.

Very good advice Greg.:cheers:
I've never been in debt, but if I had been, I would attack the higher interest rates first as those seem to only GROW if you do not pay them down. Send in as much as you can to pay it off asap. If not, you are not even putting a dent into the principal amount.
GOOD LUCK!!:thumbsup:

[70rs]

The only thing minimum payments do is make the card company more money. They do ALMOST nothing to actually pay the balance down.

[IndyNova]

I am currently in debt, but working to pay it off, but like dave ramsey says, credit scores don't mean anything. he says his score is zero b/c he pays cash for everything. i try to explain to my wife when she wants to go out and try and finance this or that, that we'll just save up and pay cash, we don't get the item right away, but we don't have that debt hanging over our heads. no one ever taught me the value of a dollar, or credit or anything like that, i learned, am learning, the hardway. my new years resolution was to become debt free, and I am going to stick to it, I am really tired of missing opportunities to get a killer deal on something because I don't have any money!!
(sorry, i didn't mean to get off track)

[Vegas69]

I disagree with Ramsey or you, credit does mean something. That is, until you don't need it anymore. Anybody that has done it the hardway has borrowed money to get to the point of paying cash for everything. The saying is, credit means nothing if you have cash.

[Spiffav8]

I disagree with Ramsey or you, credit does mean something. That is, until you don't need it anymore. Anybody that has done it the hardway has borrowed money to get to the point of paying cash for everything. The saying is, credit means nothing if you have cash.

Agreed! This is the use it or lose it type of thing. There is a simple trick that gives you the best of both worlds...or at least I think so. I use a credit cards to pay for most everything, but I pay off the balance every month. One card gets things like the cell phone bill and cable tv charged to it and the other I use for gas and groceries type of things. Not going over the budget is the hard part. I check my credit report bi-monthly and my accounts always show a balance, yet I paid my accounts off even before the bill was due. Best part is...my credit score is rockin!

:captain:

[IndyNova]

if you have the cash, why do u need credit? suppose you have something unexpected happen, and you had 5 grand out on credit cards, and you were unable to pay it, what then? if you had just paid cash, then no worries right? I mean, how many people now have to worry about paying for the christmas gifts that they bought? I guess from my p.o.v, after seeing how hard it is to crawl out of the hole credit can put you in, i just as soon not need the burden or credit cards.

[Spiffav8]

if you have the cash, why do u need credit? suppose you have something unexpected happen, and you had 5 grand out on credit cards, and you were unable to pay it, what then? if you had just paid cash, then no worries right? I mean, how many people now have to worry about paying for the christmas gifts that they bought? I guess from my p.o.v, after seeing how hard it is to crawl out of the hole credit can put you in, i just as soon not need the burden or credit cards.


I see your point, but say you want to buy a house...do you really have that much free money that you can just buy it? Those types of big ticket items you need credit to get and the better your credit the better the interest rate, etc. If you can go out and pay cash for a car or daily items that's awesome. A lot of people seem to see a lot of credit as good credit, which just isn't true. You can make small accounts work really well for you if you play your cards right.

[ProTouring442]

if you have the cash, why do u need credit? suppose you have something unexpected happen, and you had 5 grand out on credit cards, and you were unable to pay it, what then? if you had just paid cash, then no worries right? I mean, how many people now have to worry about paying for the christmas gifts that they bought? I guess from my p.o.v, after seeing how hard it is to crawl out of the hole credit can put you in, i just as soon not need the burden or credit cards.

Your sword cuts both ways. What if you suddenly had to spend 5 grand for something you could not do without, to repair plumbing you could not repair yourself, as an example, and you did not have the money because you only pay cash and had no means to gain any sort of time payment?

We use our one credit card, and always pay it off, this has given us very good credit. It has also enabled us to get a Lowe's "project card" when we needed it to finish our home in order to put it on the market. We have no way of extending the date we put it on the market as we need to have it sold and closed by April. Without credit, made accessible to us because we pay everything off and thus can both afford the "loan" as well as the payments if everything were to go south and our home did not sell.

Credit is a tool. Like any tool, if used recklessly, or if abused, it can cause serious damage or injury to the user.

Happy New Year!
Bill

[Northeast Rod Run]

people that aren't rich NEED credit. there is no such thing as not needing credit. I learned (am still learning) the hard way. I have about 6 or 7 credit cards. I use them all (some too much at times), but only carry a constant balance on one of them.

I make a decent wage, but I am far from affording a very comfortable living. I'm not one of those people that live paycheck to paycheck, but I have to watch my pennies now and again.

I am in the process of buying a house right now, and I can only afford a small downpayment, so no one can tell me that your credit score doesn't mean anything. I just found out my credit score and it's just a touch over 800, so you mean to tell me that someone with no credit is going to come close to getting the same interest rates that I get? That isn't going to happen. no way.... no how...

[GregWeld]

I agree with you -- and even rich people need and use credit...

[Vegas69]

You got that right, the only way you don't need credit is if your retired. Any seasoned investor will risk YOUR money instead of his. How many times in the last 10 years could you have been burned loaning me 50k on anything. Ya, you just lost your 50k. :rofl: I have a brand new bottle of vaseline. Credit means more now than it ever has, and I'll prove it to you. Anybody could get a loan 3 years ago. It made sense to everybody. Now, you better be iron clad to stand a chance. I can't disagreee. Money was waaaaaaay to looose. I made a boat load of money off loose money. The good ol days. :_paranoid In this economy(I hate this term)if you can obtain money with CREDIT you can make it happen. END OF STORY. I need to get off my ass.

[tones2SS]

Credit means more now than it ever has, and I'll prove it to you. Anybody could get a loan 3 years ago. It made sense to everybody. Now, you better be iron clad to stand a chance. I can't disagreee. Money was waaaaaaay to looose. I made a boat load of money off loose money. The good ol days. :_paranoid In this economy(I hate this term)if you can obtain money with CREDIT you can make it happen. END OF STORY.

VERY, VERY TRUE!!!! :cheers:

[sniper]

people that aren't rich NEED credit. there is no such thing as not needing credit. I learned (am still learning) the hard way. I have about 6 or 7 credit cards.

I have to take issue with your statement. I am more inclined to think people that aren't rich need less credit. Most middle class to lower people use credit to purchase things they cannot afford to buy with cash. Hence there is NOT a NEED for credit. A home while nice to have is not a neccessity. And yet you can buy a home with higher interest rate, or higher down payment or puchase down points, or many other means to get a home. And with timely payments over a few years you can refi or pay down your mortgage earlier negating much of the interest no matter the rate.

Cash forces you to live within your means. Credit allows you the freedom to ruin everything.
Credit means more now than it ever has, and I'll prove it to you. Anybody could get a loan 3 years ago. It made sense to everybody. Now, you better be iron clad to stand a chance. I can't disagreee. Money was waaaaaaay to looose.

And here again. I know a few small business owners with "iron clad" credit that cannot get increases or more credit to grow their business's. Banks and business are withdrawn and holding their credit and reserves because of the uncertain future. Remember a lot of that bailout money was supposed to be passed down to business to continue the business of business. That didn't happen.

[Northeast Rod Run]

I have to take issue with your statement. I am more inclined to think people that aren't rich need less credit. Most middle class to lower people use credit to purchase things they cannot afford to buy with cash. Hence there is NOT a NEED for credit. A home while nice to have is not a neccessity. And yet you can buy a home with higher interest rate, or higher down payment or puchase down points, or many other means to get a home. And with timely payments over a few years you can refi or pay down your mortgage earlier negating much of the interest no matter the rate. and that is exactly why credit is needed, when you aren't a very wealthy person. if you didn't make timely payments, you wouldn't be allowed to refi because you wouldn't have built up good credit, not to mention that good credit makes things affordable. if I had bad, or no credit, there is no way I could buy a house because the interest rates would make it totally unaffordable for me

[Vegas69]

I have to take issue with your statement. I am more inclined to think people that aren't rich need less credit. Most middle class to lower people use credit to purchase things they cannot afford to buy with cash. Hence there is NOT a NEED for credit. A home while nice to have is not a neccessity. And yet you can buy a home with higher interest rate, or higher down payment or puchase down points, or many other means to get a home. And with timely payments over a few years you can refi or pay down your mortgage earlier negating much of the interest no matter the rate.

Cash forces you to live within your means. Credit allows you the freedom to ruin everything.


And here again. I know a few small business owners with "iron clad" credit that cannot get increases or more credit to grow their business's. Banks and business are withdrawn and holding their credit and reserves because of the uncertain future. Remember a lot of that bailout money was supposed to be passed down to business to continue the business of business. That didn't happen.

Business credit is a different discussion.

[70rs]

I think it's safe to say that there are both good and not so good things about having and using credit. If it is used wisely it can be a great thing. If used (abused) it can be a very bad thing.

So we can all agree that we don't all agree......:beathorse

[tones2SS]

And here again. I know a few small business owners with "iron clad" credit that cannot get increases or more credit to grow their business's. Banks and business are withdrawn and holding their credit and reserves because of the uncertain future. Remember a lot of that bailout money was supposed to be passed down to business to continue the business of business. That didn't happen.

It's the "current state" of the banks. Hardly any businesses are getting credit. The company I used to work for had their credit cut in half. I do agree with the bailout money comment, but that is another story for another time.

[Flash68]

Business credit is a different discussion.

Well, yes and no...

The backbone of this country is built on small businesses and their payrolls, and the very large majority of these small businesses (like my 2) are dependent on credit/financing that is applied for based on personal credit. I am dealing with this right now with both of my businesses.

Banks just aren't lending like the govt is asking them to, and I don't necessarily blame them from a business perspective, but it surely isn't helping solve the problems.

[Vegas69]

I have no experience obtaining credit personally for my business. I get offered business credit at the bank but I'm sure it's not much. When I said business credit is a different discussion, I meant the guidelines between obtaining a loan with business credit and personal credit are different.

[Flash68]

I have no experience obtaining credit personally for my business. I get offered business credit at the bank but I'm sure it's not much. When I said business credit is a different discussion, I meant the guidelines between obtaining a loan with business credit and personal credit are different.

Ageed. At the end of the day, many small business loans often require signing a personal guaranty anyway, so you're on the hook regardless.

However you slice it, it's a terrible time to be needing financing.

[tones2SS]

However you slice it, it's a terrible time to be needing financing.

Actually,.....it's just a terrible time, period!!!:(

[GregWeld]

I think the financing angle is all just wrong.... and that what you're really experiencing is a just a "return to normal financing"... You actually have to show you can pay a loan back... there are percentage of income calcs that went out the window with all the phony come on teaser rates and no doc loans.

When I owned a business the bank would make us do a audit... and an audited inventory. They held our feet to the fire. We used to have to "clean up" our line of credit for 30 days (in other words pay it off) every year. We had lunch once a month or so with our banker and it usually included our accounting firm management. They watched us like a hawk. We had 750K in cash on deposit - and a one million dollar revolving line. This was in 1975 and our sales were 3.5 million a year - with a 63% gross margin. We were hugely profitable and had very positive cash flow. They didn't trust us one bit.

Now - for someone to say they "can't get credit" - that only means they don't QUALIFY under the CORRECTED real world credit we have returned to. People typically are "needing" credit to bail themselves out - not to "expand" - or to take advantage of an opportunity. They're needing credit to EXIST. They're already over-extended or have a lack of assets and a lack of capital (aka cash on hand). There used to be a saying - you can get credit if you don't need it. That actually was ALWAYS TRUE until this crazy credit came about.

When I "grew up" you couldn't buy a house unless you had AT LEAST a 20% down payment - and you QUALIFIED for a fixed rate 30 or 15 year mortgage. They did a REAL credit check - and if you were late paying the electric bill once - you had to document why. The fixed rate was designed so that you knew EXACTLY what your payment was going to be - and so that over time - the percentage of your income that made that payment was LESS not more.

You walk into a bank now - and your credit cards are about maxed or carrying large balances -- your house payment is 40% of your gross -- your business revenue is down -- you owe on 3 cars.... Guess what... NOBODY is going to loan you anything. And they shouldn't because you can't pay it back -- and CREDIT means that you can pay back - not just borrow more. Sorry.

[Flash68]

I don't disagree Greg, but like most bubbles, there is an overcorrection and the banks' overtightening is exactly just that. It should settle back to where it should be at some point.... rational sensible lending. Gee, what a novel idea huh?

[ProTouring442]

I think the financing angle is all just wrong.... and that what you're really experiencing is a just a "return to normal financing"... You actually have to show you can pay a loan back... there are percentage of income calcs that went out the window with all the phony come on teaser rates and no doc loans...

...You walk into a bank now - and your credit cards are about maxed or carrying large balances -- your house payment is 40% of your gross -- your business revenue is down -- you owe on 3 cars.... Guess what... NOBODY is going to loan you anything. And they shouldn't because you can't pay it back -- and CREDIT means that you can pay back - not just borrow more. Sorry.

I couldn't have said it better if I tried. The entire idea behind credit was to make it so people or business could buy now what they normally couldn't buy until later. It was never intended to make it so that people could buy what they normally couldn't have purchased on their own at a later date.

Shiny Side Up!
Bill

[WILWAXU]

Check out DaveRamsey.com you can also download his podcast if you cannot hear his raido/TV show. Also can go to your local book store he has several books.

If your ready for that life change he can teach you the steps!
Another vote for Dave Ramsey :thumbsup:

[Vegas69]

The definition is gunshy. You cut off the tip of your finger using a circular saw and your going to be careful until that becomes a distant memory. I can't say I blame them, most lenders have lost there ass and they can't afford another run of losses.

I can't honestly say I feel anybody that deserved a home loan has been denied in the last 3 years in my presence. You can still obtain a loan as a veteran with $1 down and an FHA with 3.5%. Not exactly much assurance for the lender. If it wasn't government insured, it would never happen today. Conventional loans require a minimum of 10% and that's if you are iron clad and it's a primary residence. Mortgage insurance won't be as inexpensive as it was 3 years ago. In many cases the lender will loan the money but there aren't any Mortage insurance companies that will write the policy. With that being said, almost every conventional deal I've done in the past 3 years has been 20% down. Over a 1/3 of my transaction in 2009 were Cash.

Then there is buying power. Sure the low down payment government loans are available, but they stand little to no chance against a conventional buyer. That's the way it should be. Those that are most financially able should have more buying power and obtain the best property. That's a variable that went by the wayside. Anybody with a fico score and a pulse could get a conventional loan 3 years ago.

[GregWeld]

BTW -- I'm not ragging on anyone -- nor pointing fingers -- nor trying to show anyone is better or smarter.

I'm merely stating what I "see", and feel, to be the facts.

We (wife and I) sit on several boards.... some have finance issues - most do not. I'm a "lender" and an angel investor on a personal basis. I can tell you that I'm hit every day with, "invest in my great game changing idea" - and, "I just need some help" - and, my personal favorite line, "I don't really need to but....."

Had I been really smart -- I would have shorted all the home builders to zero... because the people that I hang with all saw this coming. None of us (and admittedly we're on the older side) could understand why financial institutions were lending to the LEAST credit worthy folks (those with no downs) and giving them the "best" (lowest) rates. I knew then as I know now - that isn't going to work. In my life - the least credit worthy didn't qualify for loans - and the "on the edge ones" got little credit and PAID A PREMIUM rate.... only the most credit worthy got the Prime plus rates...

When you see credit issued to those that deserve and EARN it... things will return to normal. I also agree with Dave (Flash) when he says the pendulum tends to swing too far to one side on both sides. That is what we're seeing now, but if you have good (top tier) credit - you can get it without too much hassle. What's too much -- is open for debate... but expect to actually have to PROVE that you can pay it back.

[Flash68]

Very sound analysis Greg. Whether it's real estate prices, or IPOs, or conventional lending, most asset bubble pops overcorrect and here we are.

Regarding your homebuilder shorting, I essentially did that with an ETF back in 08-09 with SRS - a "double-short" real estate index fund. It worked out quite well.

[Bow Tie 67]

I'm not sure if it was mentioned, but " Credit Score " can and will effect job prospectus and insurance rates. I would venture to guess there are other things I dont know about.

[Flash68]

I'm not sure if it was mentioned, but " Credit Score " can and will effect job prospectus and insurance rates. I would venture to guess there are other things I dont know about.

I know some jobs might run your credit if you have some substantial financial or collections aspect to your role, but definitely not the majority of jobs out there.

And what types of insurance carriers use your FICO score? I am not aware of any. ?

[Bow Tie 67]

I know some jobs might run your credit if you have some substantial financial or collections aspect to your role, but definitely not the majority of jobs out there.

And what types of insurance carriers use your FICO score? I am not aware of any. ?

Some jobs, in the financial sector. Allstate is one.

[Flash68]

Allstate is one.

Coverage for what though?

[70rs]

Coverage for what though?

State Farm too, on every policy we have. They use it to determine what kind of "risk" you are.

[GregWeld]

Very sound analysis Greg. Whether it's real estate prices, or IPOs, or conventional lending, most asset bubble pops overcorrect and here we are.

Regarding your homebuilder shorting, I essentially did that with an ETF back in 08-09 with SRS - a "double-short" real estate index fund. It worked out quite well.

Great playing - acting on what you saw and feel. Personally I NEVER SHORT. The downside is almost unlimited and the risk more than I want to take, regardless of my gut feeling. I've personally tried to invest in things I thought were going "well" rather than betting on something going bad. I can't tell you how many times I could have made some serious ROI shorting... but I just won't do it. I stick to what I "think" I know. :rolleyes:

I bought Apple 5 years ago when I was at the mall - and noticed the only store in the entire mall that had people coming out the front door waiting to pay for the stuff they'd bought.... I came home and said - hmmmmmm.... That looks like a growing business to me.... Some call that the Peter Lynch version of investing. I tend to agree with that version of investment style. Something I can see - no analyst required. I wish I could repeat that "winner" on a more consistent basis. I have others we won't mention. :rofl:

I'm not a "gambler" -- I don't day trade - I don't short - I don't buy anything with money I can't afford to lose. People say that - but they don't stick to it. I'm a stick to it kinda guy. I came from nothing... got lucky a couple of times - and have a total fear of returning to my roots... I DO NOT GAMBLE - that is different from "I never lose" because I lose all the time... I stick to the 5% rule - never more than 5% in any investment EVER... if the investment grows and is 8% - I take some off and invest in something else - I'm never a pig. I never "average down". I have a separate bucket of risk investment - think "Venture Capital"... that is a completely different investment play than the apartments I own. BALANCE is the way to not go broke. I've been broke - it's not nearly as much fun. I do take calculated risk... and sometimes they don't work out... but it never affects my lifestyle... nor causes me to have to bail on a winner to cover.

A quick story - neighbor comes over 3 years ago - says he just inherited 3/4's of a mil - and wants to know what stocks to buy. I asked him about his "other" investments - to which he says he has none. I asked him how much does it cost you to live a year? He tells me - I say where's that come from... He's retired - but he's NEGATIVE CASH FLOW... So I said - here's the way I'd go about this: Take 4 years of the negative flow - stick it in laddered CD's... SO THAT YOU DON'T HAVE TO SELL IN A DOWN MARKET.... and then pick 10 or so stocks - and buy into them over TIME... not all at once. So if you target Apple, for instance - and want to invest 10K in it - buy 2500 worth every quarter - up or down - stick to that... BUT DO NOT BUY ALL AT ONCE... I tell him.... There's a guy on Wall Street - when you buy -- he yells to his buddies "okay guys - he's in - take 'er down!" -- then when you sell -- He says - "he's out -- take 'er up!"

Needless to say he did what he wanted to do and his house is for sale. :willy:

Am I smart -- Have any of you ever met me? :wow: The answer is ABSOLUTELY NOT... but, better lucky, than smart! is my favorite saying. And I want to live to be able to play another day. I don't do anything well - I do it all "average" - I realize this and I stick to it. Right now - I know lots of really broke smart people. They were greedy and margined their accounts and they leased their cars - and bought way more house than I... and have way nicer cars and toys. I hope they enjoyed them.

[GregWeld]

It just occurred to me why I'm an "average" guy...

I'm more afraid to loose what I have, which is way more than I ever dreamed of - than I am of loosing out on something better, or bigger, or more.

I never dreamed of having a Ferrari, ever, not once so just because I could now have one why would I? I've always dreamed of owning/building a decent hot rod. I never dreamed about owning a "yacht"... but always wanted a decent boat...

I try to keep that in "perspective". I have way more than I ever dreamed of and I intend to keep it at that.

Does that make sense?

[ProTouring442]

It just occurred to me why I'm an "average" guy...

I'm more afraid to loose what I have, which is way more than I ever dreamed of - than I am of loosing out on something better, or bigger, or more.

I never dreamed of having a Ferrari, ever, not once so just because I could now have one why would I? I've always dreamed of owning/building a decent hot rod. I never dreamed about owning a "yacht"... but always wanted a decent boat...

I try to keep that in "perspective". I have way more than I ever dreamed of and I intend to keep it at that.

Does that make sense?

Very much so!

Shiny Side Up!
Bill

[70rs]

It just occurred to me why I'm an "average" guy...

I'm more afraid to loose what I have, which is way more than I ever dreamed of - than I am of loosing out on something better, or bigger, or more.

I never dreamed of having a Ferrari, ever, not once so just because I could now have one why would I? I've always dreamed of owning/building a decent hot rod. I never dreamed about owning a "yacht"... but always wanted a decent boat...

I try to keep that in "perspective". I have way more than I ever dreamed of and I intend to keep it at that.

Does that make sense?



Makes perfect sense Greg.:cheers:

[IndyNova]

I get what you guys are saying, and honestly, I fell victim to the "college credit card" out of high school, and not having a lick of financial smarts, it ruined me. And know I am paying for it, in more ways than one. But as of this year, short of my house and small car payment, I will be debt free, making 70k a year. I am just upset that it has taken me until I am 30 to finally figure it out, however, my wife and I would like to have another child, and move to a bigger house (the house we have now is not above our means) but my past will haunt me once again, so what are my options? Credit seems like it takes so long to build back up, but so easy to ruin. And I ghfear that when looking at the next house, it will be unbeleivably hard to get a decent loan. what are your guys opinions on this? (sorry if this is off track or a hi-jack)

[GregWeld]

I love that kind of question INDY ---

Well.... Yes and no... :lol:

I'd say - stay where you are for at least 2 years - with no debt other than as you stated - make sure you don't change jobs either... unless you're taking a big move up.


STABILITY and track record will help you. It's kinda like your GPA -- everybody screws the pooch the first quarter at college - but if you figure it out and start doing what you should from then on - GREAT.

Todd can jump in and tell you what you need to qualify for a house - he deals with that... so would know what the banks are demanding currently - down - rates - FICO - etc.

This whole "housing" thing gets me. Back in the day - the sole reason you bought a house - was to work to pay it off - so that you could live for "free" when you retired. So a 30 year mortgage was paid off when you were 60... earlier if you were "smart". People raised whole families in 1400 sq ft ramblers and post war bungalows. They knew all their neighbors - and their kids... they started out young families and grew old together. Why is it we all have to have "more" house now? I didn't have my own bedroom til my brother went to Vietnam! Now a married couple no kids (DINKS?) have to have 5000 sq ft 4 bedroom 5 bath house in the burbs... they live there 3 years and move - never knowing anyone. WTF is up with that? :rofl: You (not YOU personally - it's a rhetorical "you") have to be a complete moron to be 50 years old and taking out a 30 year $4,000 a month mortgage!! How are you EVER going to pay that off - let alone retire? Oh -- wait -- I know!! You're hoping like hell that it DOUBLES in price... good luck with that.

[Bow Tie 67]

I love this thread. Greg your advice is simple and straight forward. I'm hoping my next move will be into a larger garage / shop and smaller house.

[GregWeld]

^^^^^^^^^


NOW YOU'RE TALKIN' !!!

A man after my own heart -- a man can NEVER have too much shop... the house is just a place to eat and sleep. :hail: :hail: :rofl:

[Bow Tie 67]

^^^^^^

Dont forget Sh*t :rofl:

[70rs]

I love this thread. Greg your advice is simple and straight forward. I'm hoping my next move will be into a larger garage / shop and smaller house.


I'm hoping my next move will be into GREGS shed.......:lol:

[Beegs]

You (not YOU personally - it's a rhetorical "you") have to be a complete moron to be 50 years old and taking out a 30 year $4,000 a month mortgage!! How are you EVER going to pay that off - let alone retire? Oh -- wait -- I know!! You're hoping like hell that it DOUBLES in price... good luck with that.

The answer is simple...most people don't "own" anything anymore and......THEY ARE COMFORTABLE WITH THAT. Different set of values, they don't lose any sleep knowing they are breaking a $4000 nut. Hell..everything they have is financed, right down to the toaster oven. Very sad but true.

I'm almost 40 and have never paid a dime in credit card debt, my vehicles are paid for, I buy what I can afford, I know a ALOT of people and I'm alone in the way I handle my finances...to the point where I have been made fun of....I must be doing something right. :D

[tones2SS]

The answer is simple...most people don't "own" anything anymore and......THEY ARE COMFORTABLE WITH THAT. Different set of values, they don't lose any sleep knowing they are breaking a $4000 nut. Hell..everything they have is financed, right down to the toaster oven. Very sad but true.

I'm almost 40 and have never paid a dime in credit card debt, my vehicles are paid for, I buy what I can afford, I know a ALOT of people and I'm alone in the way I handle my finances...to the point where I have been made fun of....I must be doing something right. :D

We're in the same boat Bryan. I cannot stand the fact that I have any debt hanging over my head. Nowadays, people think that it's a way of life to finance everything and have debt. NO THANKS!!!:_paranoid :willy:
I did finance my vehicles, but, had them paid off way before the time was up to help avoid finance charges and to save what I can.:thumbsup:

[Beegs]

We're in the same boat Bryan. I cannot stand the fact that I have any debt hanging over my head. Nowadays, people think that it's a way of life to finance everything and have debt. NO THANKS!!!:_paranoid :willy:
I did finance my vehicles, but, had them paid off way before the time was up to help avoid finance charges and to save what I can.:thumbsup:

That's what I'm talking about! :thumbsup: