REVscene Automotive Forum - not paying off credit card

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yeah its pretty smart... take advantage of introductory rates, just dont make it a habit to pay CCs with other CCs.

Credit can be an awesome tool and it can save you.

Credit can be a weapon of mass destruction and completely fuck you and your life over.

The trouble is, both the people who know and understand, the extremely sophisticated individual, and the moron, are all able to get credit cards.

Credit cards are an awesome way to make money, save money, buy things, etc. The options are endless when it comes to any debt tool.

What hurts people is what they buy with that credit and how they manage it.

Our friend above used a low interest rate card to pay off debt and then pay the card off quickly before the introductory rate was cut off.

This is what a sophisticated person does. Now, the trick is to make sure that the new balance is paid off. The problem with many people is rather than take advantage of the low interest rate to get out of debt, they use that card to buy more stuff and get further into debt.

I purchased some shit a while ago and it was interest free for 12 months with a $30 fee.

As I was buying some furniture and the bill was for over $20k I looked at the options.

I can buy the furniture outright today and save $30 or I can pay $30 and have that $20k to invest with for 12 months.

$20k at even 3% is $600 for the year - after tax is about $330
So I end up making an extra $300 by waiting a year to pay.

HOWEVER!

I see people who buy things with good intentions but when the year comes up, they don't have the money and they end up making payments. The interest in my example above was 29.99%

^.....they have 30% interest credit cards now???!??!! WTF!!!
who in their right mind would sign up for that???

I like how it's the blind leading the blind here.

Credit card interest - For the most part, interest is calculated using a DAILY factor. It is compounded MONTHLY. That means that interest is accrued on a daily basis. You know that fine print at the bottom of each statement? It tells you EXACTLY how it's calculated.

Saving up to make a lump sum payment - credit score aside, that's stupid because interest will compound. Even if you are just making interest payments, you will be better off doing so. If you are too dumb to realize that, then do a little math (hint, you learned this in grade 4).

How to address your debt issue - without looking at your finances and knowing that you have 2/3 of the balance in cash, the smartest thing to do would be (assuming you have a $3k balance and $2k in cash) is:

1) Get a LOC through your bank (the assumption here is that you are way too stupid to get one of those intro offers and your credit rating is crap).
2) Use all your cash to pay off your credit card.
3) Pay off your credit card with your LOC.
4) Use your credit card to make purchases as much as possible (and convert your CC to a cash back card if possible).
5) Pay off your credit card in FULL with your LOC.
6) Anytime cash comes in.. pay down your LOC.

Rant - What is up with this generation being so goddamn lazy? It's this crazy sense of entitlement that people SHOULD answer all questions and provide advice instead of you know, doing research yourself. No parents? No problem. That's what google is for. Fucking lazy kids.

Quote:

Originally Posted by nipples (Post 6217910)

^.....they have 30% interest credit cards now???!??!! WTF!!!
who in their right mind would sign up for that???

Low monthly payment cards from the likes of the Brick, Sears and so forth charge what is effectively a 30% interest rate. They just disguise it as 'buy it today for 24 payments of $100'

Quote:

Originally Posted by nipples (Post 6217910)

^.....they have 30% interest credit cards now???!??!! WTF!!!
who in their right mind would sign up for that???

people who never carry a balance and are interested in the card's rewards might buy into that.

First of all, answer the following questions

1. Do you work?
2. CC's interest is calculated compounded annually 18.5% a year,but is recalculated with interest and principal , so its a rolling effect
3. Minimum payments are basically interest or less

4.

Quote:

Originally Posted by nipples (Post 6189006)

if yo uwant to play with the numbers yourself use this formula:

A = S * (1+ i/n)^Y*n)
A=amount you will owe
S=starting balance ..like whatever your balance is now
i= interest rate (eg 19.5% = 0.195)
n=12 = number of times compounded...i believe it's per month for purchases and per week? day? for cash advances
Y=number of years

so that
A = 2000 * ( 1 + 0.195/12)^ 7x12 for 7years
A= 2000 * (1.01625) ^84 = 2000 * 3.87 = about $7745.

and you need to act quick, because the credit card company wont wait for you...they're more than happy to tack on more interest.

Thanks for this equation - I've been trying to set up a personal budget that would allow me to start paying down my student loan but I couldn't get the interest calculation over the amortization period quite right. After plugging the numbers in, I realize I would have paid it off twice by the time it is finally paid in full :banghead:

Quote:

Originally Posted by BNR32_Coupe (Post 6189661)

I think anyone with financial problems just has a discipline issue. Everybody should be able to survive debt-free, whether you're a McDonalds worker in Surrey making $8/hr, or in senior management making $180k/year. Either ends of the spectrum has their shares of people with financial issues. Going broke is really just a combination of wanting more than you're worth and a lack of discipline.

Declaring bankruptcy should be a last resort. Remember that both the senior manager and the mcdonalds worker, like you, both need to make sacrifices in order to sustain their financial standing. The senior manager would have to stop taking trips to europe and asia every 6 months, and the mcdonalds worker has to stop whatever wasteful spending minimum wage people do. I think the #1 problem most people aged 20 - 40 face is eating out every day. Food is something we all need, but eating out everyday is wasteful spending. Keep that stuff as a "sometimes" thing, not an everyday necessity. A $7.50 meal at McDonalds takes away the hunger for a few hours but for the same price for food at superstore, you can eat 3 good meals.

Are you one of those night-life clubber types? Why spend $100 on drinks to buy some conversation time from a hunnie when you can talk to them for free? Nobody knows this, but talking to girls is free, all you is some confidence.

Since we're on RS you're probably into modding cars. Stop doing that. If you have a car that's worth $5k, and you're $3k in debt, sell your car to pay off the debt and get one that's worth $2k. If you're hesitant about doing this because you bought the car for almost 3x what you're selling it for now, don't complain because this happens to every person that sells their car. Cars are a consumable item, they're not like housing property or investments. Get the $2k beater civic, at least you're debt free now and won't have to declare bankruptcy with 0 credit for 7yrs.

Remember these things: If it don't make money, it don't make sense. Don't play the game if you can't afford it. Stop spending. Get another job, whether it's legit or not. Focus on paying the debt off rather than surviving everday, don't be lazy. Spending time on the couch or computer is wasteful spending - you're better off working during that free time.

Very good post! :thumbsup:

Quote:

Originally Posted by BNR32_Coupe (Post 6189661)

wow great post. Everyone these days is all into "showing off". I have alot of friends who have to eat out all the time, buy a coffee everyday and go clubbing every weekend and waste their money. Like I've said to all my friends its not about how much much money you make, its about what you do with the money. Obviosuly making more money gives u more options.

money is really easy to burn.
what i do is make a budget which suits my needs, so i can save a target amount each month, then whatever surplus i have (usually a fair bit) i spend freely... gotta stay sane somehow. as long as im meeting my goals i dont really care about how irresponsibly im spending my money that is outside of those goals.