I recently noticed something on credit card applications "household income". Everytime I have applied, I always use my personal income. Does this mean that if I lived with someone making $1 mil, I can use $1 mil income? LOL. I don't want anymore credit though. I spent too much early on in college and I managed to finally pay it off. I bet credit card companies make most of their money off of college students trying to repay their debts in college.

Mike:
Credit card debt in this country is a serious problem I researched it a while back, and came up with a couple figures that blew me away.
Average revolving debt for the American household is about $8500.00, and personal debt is now apporaching ONE TRILLION dollars.
Take it from an older guy who spent alot of years paying off credit cards: Stay away from them. You need ONE. More credit cards, even if you maintain a good payment history, does NOT necessarily equal good credit.

We have one CC, a Citi Card. We use it for gas and grocieries only. It gets us 5 points per dollar for gas and grociery (1 point per $ on all other purchases), so we use it only for that and pay it off EVERY month. It works great. After less than a year, we got enough points for $300 in best buy gift cards, which we used to buy a new digital camera...for FREE!

As long as you only use it for needed purchases, you'll be able to pay it off. Once you start buying clothes and other things with it you run into trouble if you aren't careful.

I have three active credit cards. Each has no annual fees and a rewards program associated with them.

1) a credit card that has only ever been used in my physical presence.

2) used for online and over-the-phone purchases. Yes, I know and use one-off credit card #s you can fetch online, but this card was obatined before such fraud prevention was commonplace.)

3) only for work-related purchases, or anything where I might need to show receipts for compensation. If I lose the receipts, I can show the credit card bill without exposing any personal transactions.

"Active" is a key word. I have a surprising collection of debit cards that act as credit cards. I have other credit cards that I haven't used in years but I keep because cancelling those dings your credit score and they're no-fee.

I carry no balances on credit cards, except when protesting a bill. I'm spooked by credit cards. Too many people I care about have fucked over their lives not being able to control themselves. Credit card companies are out to fuck you out of your money, so use their products with care.

I'm a stats geek.
People who use credit and debit cards instead of cash, even if they pay their balances off, charge 18% more than they would spend if using cash.
The numbers don't lie. Put your credit cards away.

i bet their also 18% happier, too.

I'm a stats geek.
People who use credit and debit cards instead of cash, even if they pay their balances off, charge 18% more than they would spend if using cash.
The numbers don't lie. Put your credit cards away.
Dead people spend far less money, so why don't you all go kill yourselves? :)

Seriously, where'd you get such a statistic? Why doesn't it mean that such people, particularly those ones who dont' carry balances, actually have more disposable income?

Seriously, where'd you get such a statistic?


http://getting-green.blogspot.com/2007/02/do-we-really-spend-more-with-credit.html

Vindication, thy name is Hermy.

Moxie:
I have come to the realization that there is no such thing as "disposable income". That term is a ruse used to urge the working stiff to spend more money.
The credit card isn't a tool for anything anymore, other than to guarantee a hotel room, a flight reservation, or a rental car. What they do is give the average guy the ability to surrender to the "impulse buy", and, of course, the credit card makes someone else rich while the guy carrying it and buying that copy of Maxim that he doesn't need is generally NOT going to pay off the balance, and be in debt for his entire life.
I think the people who REALLY have "disposable income" got it by not disposing it in the first place. The rest of us are generally wasting money and our opportunity to get to that level of having that "dispoable income".

It seems as though I have the entire forum to myself, so I'm gonna give some priceless information to my young friend Mike Myers:
Mike, there are alot of angles to give, and receive advice. Alot of people are miserable, and give you advice that will help you end up just like them. Alot of guys are successful, and will give you advice that, if you do things just like they did, well, you can end up just like them to.
Then there are those of us who are honest.
I like to give advice on what NOT to do, because I DID it, and it turned into a fucking disaster.
I like to give advice on what TO do, because generally I DID NOT do it, and it turned into a fucking disaster.
You want to be successful? Here is how you do it:
1) Get an education. If you don't specialize (engineering, medicine, law, etc), then stay in to get a graduate degree. There is a new paradigm in this country, and that is that there IS no paradigm. The slug who got a job at Ford and married some hag and spat out four kids and retired from Ford at 65 is about to become extinct. If anyone tells you you don;t need a degree, kick him in the junk. You get a degree, you are in the top 25% of Americans, because 75% of us over 25 do NOT have one. You know those guys who say, "Well, I don't have no degree, but I's gots alot of common sense"? Well, all that "common sense" told them they didn't need an education?
Second: Don't even THINK about getting married and having kids before you are 35.
Oh, I can hear 'em screaming now. You know, there was a time when people thought they had to get married and have kids young. WHY? Because the poor bastards were usually dead by 60. Now, you're gonna live to be 80 or better. You think you've found your "soul mate" at 20? Good luck. You think, out of the 6 billion people in the world you've found "the ONE" without leaving your own neighborhood? AND, with six BILLIONS of people in the world, this fucking planet sure won't miss the three or four you DON'T have.
Americans treat love and marriage like a disease, like it's something they gotta do. Well, son, it is a DECISIOn, and now more than ever, its a business decision. A family is a business. This ain't "Magic Marriage Fairy Land" anymore, where you marry someone and hope it works out for the best.
Here's what you'll miss out on if you wait till you are 35 to get married:
Half the people who didn;t will now be getting a divorce, and many for the second time.
Alot of the men will be bitching about paying child support.
Alot of the women will have children by more than one dude, and all of them will be "assholes".
Most of them poor fucks will be broke.
Alot of them will have kids with people they didn;t bother to marry.
Of the roughly half who won;t be getting a divorce, how many of them will actually be "happily married"?
You live your life for yourself for as long as you can. You want to have a family when you're too damn young to know your ass from a hole in the ground? You think the "struggle" is romantic? Bullshit. WHy do so many people get divorced? An honest guy will tell you that MOST of them shouldn't have gotten married in the first place.
Third: Save every fucking penny you can until you are 35. Work two or three jobs if you have to. Is it more fun to chase pussy, waste a fortune on booze, nurse hangovers, and do all that stupid shit while young? Or might it be more fun to have that "disposable income" thing Moxie talked about, because you didn't DISPOSE of it while young?
Besides, you're going to need, at your age, a couple million to retire.
Fourth: Stay away from car loans, credit cards, and the other decadent pursuits like booze, gambling, drugs, love of gadgets and toys, hookers, whatever.
I know it sounds easy. But few do it. Thirty Five comes at you and is gone in the blink of an eye. If you can make it to thirty five and do all that, you'll thank me a million times a day.
Hell, most of us are lucky to make it to thirty without shooting ourselves in the foot almost every day of our lives.
Mike, most of the slobs you meet in your life think they have a brilliant old saying that goes like this: "The rich get richer and the poor get poorer"
But the truth is this: The rich get richer because the rest of us are busy getting out of their way.
Now go, go like the wind. Be a Maverick, do something different.

Vindication, thy name is Hermy.
<laughs> Assuming both you and Hermy are citing the same sources, I'm not sure I've been pwn3d herel. The relevant part of what Hermy pointed at seems to be:

In order to answer that question, we have to look at the behavior of people who use credit cards, versus those who don’t. Dunn and Bradstreet did a study which made this comparison, and the results that they found were quite surprising. Statistically they found that on average you will spend 12-18% more when making a purchase with a credit card as opposed to cash. They also discovered that the average McDonalds transaction increased from $4.50 to $7.00. When they looked at vending machines, the average transaction size nearly doubled.
What caught my eye is that it should be spelled Dun and Bradstreet -- one 'n'. Of course, noting a common typo is a pedant pissy little thing all by itself. But, knowing proper attribution helps in searching. And thus far, I can't find evidence of this survey other than a bunch of people in blogs rattling off the same statistics above, with the same typo, in various places:

http://www.fatwallet.com/t/52/710595/
http://soundmoneytips.com/article/20333
http://www.associatedcontent.com/article/142336/do_we_really_spend_more_with_credit.html
http://www.iwillteachyoutoberich.com/blog/finally-my-credit-card-rewards-pay-off
etc.

I've looked at dnb.com, Google, Google News, Google News Archives (on the theory that such a thing would make mainstream news somewhere), done various other searches, and gotten nada. Perhaps my Google-fu isn't being sufficiently clever enough, here, but I can't find any first-hand meat to this.

FWIW, I could easily believe that people with credit spend more. But again, that could simply be because people with credit may rightly think they have more to spend (independently of whether they wrongly thinking they have much more they can spend :) ). There could be other differences between the "cash only" and "credit only" pools. Most people spend a mix of both, especially if you count checks, automatic bank withdrawals, etc. on the cash side, so the extremes at either end may not accurately reflect normal consumers. What about sample size, the methodology, yadda yadda yadda?

The "fast food" data actually interests me the most, since that's a 21st century phenominon. Credit was a puny percentage of fast food sales until they realized that plastic made things faster.

What about the fact that the stat I gave is just plain correct, and the only thing you need to support it is "common sense", which tells me I'll be a little more stingy when I see the cash in my wallet disappearing, but not so much if I whip out the old plastic, and then tell myself "It's OK! I pay off my balance every month! I'm cooler than Dirty Harry!"

I'll share my personal philosophy/experience on these matters, even if it is not financially sound and certainly of questionable reasoning.

To me, your 20's are all about "you". If you see something you want, buy it. If there is some place you want to travel to, go. Something you want to do, do it. Boss pisses you off, tell him to fuck off and quit. Want a green mohawk, go for it. In this stage of your life, you are accountable to no one but yourself, and this is your time to be hedonistic/self centered.

Are there repercussions of this behavior? You bet there is, but you deal with that in your early 30's.

From 30-33ish you get your shit together. Clean up your life and your debts, find your future partner, find a career that might suit you, etc. Start learning what it is like to do things for someone else rather than just for yourself. Maybe you get married, pick a community that you'd like to live in, buy a house, set up your 401K and prepare for the big change that is...33+

This stage is about "them". You have stopped living life just for you. Most everything you do is for your family. If you choose to have kids, now is the time. Your enjoyment comes from those experiences. It's quite an adjustment, but really satisfying. If you get bored or depressed, you have a decade + worth of wild memories to think back on.

That's as far as I can go, since anything further would be hypothetical.

So from 30-33 you turn into a worker bee, a drone, who's only purpose is to
Find mate
Get job
Buy house
Procreate
Retire
Die
All that boring shit set off by the fact that you got a green mohawk when you were 24.

Works for me.

Living your whole life as a totally responsible and practical person leads to a life of "what if's" and lost experiences, IMO. Lots of resentment and wanderlust. I really think that the divorce rate these days has a lot to do with this, as does the propensity for 45 year old males to want a red sports car.

You have to go out there and make those mistakes and then figure out how to fix them.

That's my belief, at least.

The greatest Myth of Life:
You have to go out there and make mistakes and fix them.

Moxie:
I have come to the realization that there is no such thing as "disposable income". That term is a ruse used to urge the working stiff to spend more money.
Credit isn't income. Home equity and retirement savings aren't income (at least with enough liquidity to matter). Most people don't know what income is, and deception's at every corner over what people "need", so "disposable income" becomes a complex concept.

As for your other bits of advice...

- To me, the best way to approach education is to ask yourself "what would you be doing if you're -not- getting a degree", and how's that gonna help you 5-10 years down the road?". Plan, don't just exist.

- Note that female fertilty starts going down at age 35. The reason some people sense a rush in that department involves that pesky biological clock. Of course, there's lots of people who are just plain stupid and don't have a clue at all about what being responsible for another's life really means.

- Invest, don't just "save". Think of what you want to spend money on as an exercise in investment. Investing in your own comfort is ok -- we're humans, not robots -- but treat as an investment, evaluate personal rate of return.

The greatest Myth of Life:
You have to go out there and make mistakes and fix them.

The guys that live every day of their 20's completely by the book are the same guys that end up walking into a school with an AK47 and unloading.

That's an exaggeration, of course, but when people try to live a "perfect" life, they crack because it's not possible, people are not perfect. Go ask your local priest when he gets out on parol in 40 years for grabbing little Bobby's nuts.

I think you make a good point but the problem is that it is hard to change all of your habits.

Moxie:
Agree on all your points.
Glenn:
Nobody is asking for perfection, you are right, it is unattainable, as is any resemblance of it.
But what is a "mistake"? Alot of the mistakes young people make chase them for a lifetime: Screwing up credit, not going to college, marrying the wrong person, having a kid too young, not picking a career path, not saving or investing money while young. These are calamities, not mistakes.
Looking back on things, I think these calamities are pretty avoidable, but most people seem to think alot of them are inevitable.
The stuff I talked about in my patented "Zip Goshboots Four Paths to Success" are generalities that virtually no one will follow, but the few that do or would will separate themselves from the pack. I don't believe it is the same thing as saying "Live perfectly". It is saying, "Live wisely".
When you live wisely, the mistake goes from having a kid when you are 19 with some barfly to buying the wrong color car.

I certainly agree that being "reckless" is not a good idea. I prefer to think of it more as "free spirited and selfish".

College is part of being selfish IMO (in a smart way). You are setting yourself up for more financial means for the future, and getting laid and drunk at the same time.

Minimize the permanent harm, but enjoy life's fun things while you are young and while you can.

I'm a stats geek.
People who use credit and debit cards instead of cash, even if they pay their balances off, charge 18% more than they would spend if using cash.
The numbers don't lie. Put your credit cards away.

not sure where that figure is from, but I suppose it could be true. Not for me though. Like I said we only spend it on gas and grocieries (and we already buy Meijer brand to save money, so there isn't much to skimp on left).

I don't think the debit card makes me spend more. I'm pretty cheap with it. We've made up a budget and talked about taking out a certain amount of cash for the month and only using that as spending money. But, I might be more inclined to spend that money figuring I had set it aside for that purpose. What if I get near the end of the month and have 100 bucks left? I might go to the casino or something figuring I set the money aside for splurges anyway. Where as with my debit card, I only buy things I need for the most part. I imagine for most people your point would be true though.

What about the fact that the stat I gave is just plain correct, and the only thing you need to support it is "common sense", which tells me I'll be a little more stingy when I see the cash in my wallet disappearing, but not so much if I whip out the old plastic, and then tell myself "It's OK! I pay off my balance every month! I'm cooler than Dirty Harry!"
I'm on Mxy's side on this one (and not just because I'm pretty sure the dude can wreck my credit score in under an hour).

I don't carry cash around. I've tried carrying "some" cash around for emergencies or whatever but I end up spending it. I pay for everything with a debit or credit card. The wife and I save a set amount every week and that is automatically transfered from the checking to the savings the mourning after the paychecks hit the account so any over-spending means an adjustment to the budget rather than not saving. This means that anytime we over spend we feel it in other purchases. So far its worked really well in keeping us in check on what to buy.

Note doubt Mxy has 3 major credit cards because that's the ideal # to keep (even if you don't keep a limit on any of them) for your credit score.

BTW, I'm a believer that you can over save just like you can over spend. The wife and I went through a really rough year in which we payed off a ton of bills and saved a really good amount. It wasn't that money was tight, we had been just saving everything we could, anything that wasn't spent on bills and absolute needs. So any time I'd go to make a purchase I'd think, "Do I have to get this? That's another $40 in the bank." However, that rigidity in the budget was reflected in our relationship and we started getting really angry at each other for no reason or little stupid stuff and we were arguing more and more. Since then, we budget our savings just like our spending. Once in a while when we have more money then we planned for we'll save a little extra, but more often than not we spend it, especially on something frivolous that will make one of us feel good.

BTW, my wife and I are reading a book called "Smart Couples Finish Rich" and it's damn good so far. Only 3 chapters in, but a lot of eye opening stuff so far, and we're pretty smart with our money to start with. I reccomend it for any couples out there, regardless of age.

Chapter 1: Leave Michigan for Denver

^good call.

chapter 2: how to sell your house in a shitty housing market with cheap ass momma's boys who'd rather live at home and offer me 30 grand under market value rather than pay 15 grand under market value and tuck himself in at night.

I only wish I was kidding. This dumbass has seen my house 3 times in two weeks.

There was a report on CNN this morning that houses were selling in the Detroit market for less than the cost of a car.

They showed a house that sold at auction for $7,000.

And it didn't look that bad.

I'm waiting for Phizer to go, and the "Big Three" to finally call it quits, then I'm buying a lakefront cottage on my beloved Lake Huron.
Hey dudes, anecdotal evidence is fine to read, and makes a fair point. But they fly in the face of the general research that I'm referencing.
And, I've been listening to (but mostly ignoring) this kind of stuff for 25 years. It's not there for you to believe or refute, but merely to compare your individual habits to.
If you are ahead of the curve, then that's great, because you have a jump on the majority of people.
Otherwise, you may end up like me.

I'm all for finding what you want. Getting away from parent(s), living on your own terms, seeing the world, gaining some perspective etc. is important. I've lived in my car for months at a time. It's hard to form your own opinions about where you want to go in life in a world as wacky as high school with someone else paying the big bills. It's up to you to figure out how to enjoy life, and there's no one handbook.

But, remember there's a life out there racing along while you're finding what you want. Your range of motion in the choices you can make shrinks, just by sitting around doing nothing. Resting and reflecting to get inspired is one thing, but acting like you have all the time in the world gets you in trouble as surely as if you stick your dick in the wrong box.

There was a report on CNN this morning that houses were selling in the Detroit market for less than the cost of a car.

They showed a house that sold at auction for $7,000.

And it didn't look that bad.
I just watched the State of the County address (Oakland) yesterday and it's amazing how bad it has become. Oakland had 700 forclosed homes in 1997. last year it was up to 4,000+ here. Obviously Detroit is much worse. Those homes flood the market with cheap options for buyers, driving down home prices. Assessed value goes down but taxes do not, so it get's harder and harder for home owners. Not to mention when those big plants close, cities lose a lot of money in income taxes they previously got. Millions and millions, forcing cuts at the government level. And that's in the 2nd richest county in the country. Imagine the rest of the state getting hit with budget cuts from above.

Someone at work just showed me this website that is pretty interesting. basically you canlend your money to other people like you are a bank, or borrow from other people:

http://www.prosper.com/

Here's more on that story I was talking about, disregard the web source, it's a Reuters story.

http://www.foxnews.com/printer_friendly_story/0,3566,259907,00.html


As Foreclosures Rise, Houses in Detroit Cheaper Than Cars

Tuesday , March 20, 2007

DETROIT — With bidding stalled on some of the least desirable residences in Detroit's collapsing housing market, even the fast-talking auctioneer was feeling the stress.

"Folks, the ground underneath the house goes with it. You do know that, right?" he offered.

After selling house after house in the Motor City for less than the $29,000 it costs to buy the average new car, the auctioneer tried a new line: "The lumber in the house is worth more than that!"

As Detroit reels from job losses in the U.S. auto industry, the depressed city has emerged as a boomtown in one area: foreclosed property.

It also stands as a case study in the economic pain from a housing bust as analysts consider whether a developing crisis in mortgages to high-risk borrowers will trigger a slowdown in the broader U.S. economy.

The rising cost of mortgage financing for Detroit borrowers with weak credit has added to the downdraft from a slumping local economy to send home values plunging faster than many investors anticipated a few months ago.

At a weekend sale of about 300 Detroit-area houses by Texas-based auction firm Hudson & Marshall, the mood was marked more by fear than greed.

"These people are investors and they know the difficulty of finding financing. They know the difficulty of finding good tenants. They're cautious," said realtor Stanley Wegrzynowicz, who attended the auction.

HOW LOW IS LOW?
The city, which has lost more than half its population in the past 30 years and struggled with rising crime, failing schools and other social problems, largely missed out on the housing boom that swept much of the country in recent years.

Prices have gained less than 2 percent per year in the five years since 2001, when the auto industry entered a renewed slump.

Steve Izairi, 32, who re-financed his own house in suburban Dearborn and sold his restaurant to begin buying rental properties in Detroit two years, was concerned that houses he thought were bargains at $70,000 two years ago were now selling for just $35,000.

At least 16 Detroit houses up for sale on Sunday sold for $30,000 or less.

A boarded-up bungalow on the city's west side brought $1,300. A four-bedroom house near the original Motown recording studio sold for $7,000.

"You can't buy a used car for that," said Izairi. "It's a gamble, and you have to wonder how low it's going to get."

Detroit, where unemployment runs near 14 percent and a third of the population lives in poverty, leads the nation in new foreclosure filings, according to tracking service RealtyTrac.

With large swaths of the city now abandoned, banks are reclaiming and reselling Detroit homes from buyers who can no longer afford payments at seven times the national rate.

Michigan was the only state to see home prices fall in 2006. The national average price rose almost 6 percent but prices slipped 0.4 percent here, according to a federal study.

The state's jobless rate of 7.1 percent in January was also the second highest in the nation, behind only Mississippi.

HOW MUCH CAN YOU BUY FOR $1 MILLION?
Mayor Kwame Kilpatrick was greeted with applause when he announced last week that two condominiums in the city's revitalizing downtown sold for over $1 million each.

But investors, including some from out of state, proved far more cautious at Sunday's auction.

In the most spirited bidding of the day, a sprawling, four-bedroom mansion from Detroit's boom days with an ornate stone entrance fetched just $135,000.

Dave Webb, principal at Hudson & Marshall, said Michigan had become a "heavy volume" market for his auction firm in recent years, although bigger-money deals were waiting in California, a market he said was ready for the first such auctions of repossessed property in years.

"These people that are buying have got to look at holding on for five to seven years," he said. "The key is holding power."

Even with the steep discounts on Detroit-area properties, some buyers handed over their deposits with a wince.

"I'm not sure it's congratulations," said Kirk Neal, a 55-year-old auto body shop worker who bought a ranch in the suburb of Oak Park for $34,000. "My wife is going to kill me."

Realtor Ron Walraven had a three-bedroom house in the suburb of Bloomfield Hills that had listed for $525,000 sell for just $130,000 at the auction.

"Once we've seen the last person leave Michigan, then I think we'll be able to say we've seen the bottom," he said.

I'd like to buy that $130,000.00 house but have it taxed at that value!
Just think, you move to Michigan, buy a cheap ass house, and then your property tax bill is $10,000.00. BOOMBAYAH!
I have a 2100 square foot house that I pay $2600.00 per year in porperty taxes for.

There was a report on CNN this morning that houses were selling in the Detroit market for less than the cost of a car.

They showed a house that sold at auction for $7,000.

And it didn't look that bad.

Believe me. I would not live in some of those neighborhoods if you paid me.

I'd like to buy that $130,000.00 house but have it taxed at that value!
Just think, you move to Michigan, buy a cheap ass house, and then your property tax bill is $10,000.00. BOOMBAYAH!
I have a 2100 square foot house that I pay $2600.00 per year in porperty taxes for.

Where do you live? In Michigan there is some clause that if you owned your house before a certain year, your property taxes are pretty low. I think that house might have had some big problems. I can't see a $500k home going that cheap even during a depression.

i wonder what david hall from rock financial has to say about this?

i wonder what david hall from rock financial has to say about this?

Go Pistons?

Would you like a free set of thundersticks?

not to turn this into fix detroit thread. but detroit would do well to tear down about 2/3 of the city. build LOTS of parks. low maintainance. good place to drink a 40 or hide a dead body. detroit is dieing like a fat man who's own obesity is crushing himself.

ps: very liberal white people from outside the city actually do talk about rural-izing detroit (so to speak). i believe there was a big paper done by some u-m students a few years back involving windmills and the like. maybe apple cider in the fall. good times all the time.

. maybe apple cider in the fall. good times all the time.

Vast fields and amber waves of moonijuana.

MikeMeyers:
I live in the sprawling metropolis of Omaha, Nberaska.

not to turn this into fix detroit thread. but detroit would do well to tear down about 2/3 of the city. build LOTS of parks. low maintainance. good place to drink a 40 or hide a dead body. detroit is dieing like a fat man who's own obesity is crushing himself.

ps: very liberal white people from outside the city actually do talk about rural-izing detroit (so to speak). i believe there was a big paper done by some u-m students a few years back involving windmills and the like. maybe apple cider in the fall. good times all the time.

Problem is that they don't even have the money to tear down all that shit.

I've heard that its like $10k to tear down a normal sized house. Think of all the buildings that cost way more. You would need over $100 mil easily. If I was a billionaire, I would give them the money to do it. I think that is the only logical way Detroit can go forward.

How about a "grass roots" effort? Y'know, citizens banding together to maybe help beautify their own city?
Crews of people who KNOW the gubmint ain't gonna do anything for them, so they go out in crews and knock down vacant buildings, fix up others, and get something the FUCK done!
Or, there's the old "Devil's Night" thing.

Unfortunately I don't think its legal to do that and then you need somewhere to dump the debris.

Devil's Night used to be legal. Just one more thing Dennis Archer fucked up.