Have you noticed your credit card interest rates...........

[Lannis]

yes, but if consumers didn't go into debt and purchase Dodge pickup trucks that mechanic wouldn't have customers and would have never taken a loan to buy Snap-On tools in the first place.  Worse yet, the car company would have fewer customers ...well you can see where that's going?

Yes, it does take producers but there would be no producers without customers buying services and products. 

Moral: credit can be useful tool to grow the economy and benefits both producers and customers.  And the economy won't function unless there is balance of both types of credit.

I agree with all that.

Lannis

[LaMojo]

I've had a AMX for the past 22 years.   It had been compromised twice with fraudulent billings, but AMX has been quick to shut the account and issue a new card.  Always pay the balance every month and no fees.   Problem is, not everyone takes AMX especially some restaurants (and some only take cash) because of higher cost to merchants for using their cards.  I've been curious about this: is loosing a sale better than making a sale with less profit because of the extra expense? Maybe the volume of use of that particular card is not enough to justify the expense of having multiple accounts - to the merchant.

[Orange Guzzi]

Not a bad idea, but when you say "hard cash" do you literally mean "hard cash" or do you mean the funny green paper stuff we trade back and forth?

Depending on the type of emergency, I think the smart guy will have dropped back to that soft sort of metal that's been good for 10,000 years, regardless of local conditions.

But maybe it won't get that bad.

Lannis

I mean the green folding kind and coins.  Not the ruby, gems and precious metals.  Have you ever tried to trade a diamond for a loaf of bread?  Seriously.  How do you make change?  The reason for the invention of money.  Sure the apocalyptic situation can arise sometime.  When that happens, there will be much bigger problems to deal with.  My money changer comment is my plan.  Trade cash early in the meltdown for the rubies, gems and precious metals and then as you expect, have the trading beads for later.  I keep cash on hand for the initial meltdown and the purchase starter trading beads. Which will be plentiful.  I am ready.

Debt is one part of economic, cash on hand is the other.  Someone listed in one of the post the various reported consumer/credit card debt.  What is worse is the actual amount of "cash" available to the average America household.  Less than $400.  Giving me the opportunity to buy up many trading beads early and at a deep discount.  Why buy now when the market will be flooded with precious stones and metal because the $400 in the average household is gone.  People cannot eat "money".  Economics 101 will still be in place if there is an apocalyptic event.  Supply and demand.

  Right now, the American economy is sliding into a "buyers market".  Just try to sell one of your toys or have a yard sale.  You will either sell your toys cheap or give them away. 

[Rough Edge racing]

Well, just to be a little picky, and maybe telling you something you already know ....

... but debts are not necessarily equal.   If I borrow $50,000 on 84 payments at 4% interest to buy a Dodge Ram 3500 Crew Cab Dually pickup truck with all the gadgets so I can drive it to the store and show it off to my boys and go hunting in it ... that isn't the same as borrowing $50,000 to help buy a used Peterbilt so that I can haul loads and produce income and pay the truck off and still have an asset that is worth something and is still making me money.

Or if I open a car repair garage and borrow $90,000 to buy a full set of Snap-On tools and cabinets, and I use those tools to make money, and $15 of my $90 shop rate is paying off those tools, then in 3 years I will have paid off those tools, made a living, and I still have the tools!   If I hadn't borrowed the money, I couldn't have made a living during that time.   But if I borrowed $90,000 for a Winnebago, and drive it around the country getting 6 MPG and paying $60 a night to park up, in a few years it's worth almost nothing; "enjoyment-wise" it might have been worth it, but I have no money at the end, unlike the Snap-On set.

Same for a house.   Borrowing money in order to be able to make MORE money is how the world works.   Borrowing money for junk you don't need and can't make the payments on is the bane of the financially dim .....

Lannis

 ..I ran a very successful electrical contracting business using a well used Jeep Cherokee and tools bought used ....I never had stock and bought the materials needed for a particular job.. My monthly bill at the local electrical supply house was often 2500 bucks and paid in full before the end of the month....My competitors had new vans full of new tools and nice clothes with the company name on their shirts...But I could under bid them and still make 45 bucks an hour after expenses...I learned this when previously running for large contractors and bring in jobs on tight competitive budgets..
 Like many here my first house was not the best, because I bought what I could afford if I lost my job.....It's easy to spend money, it's a lot more difficult not to spend 

 Of course while trying to be cheap I can get into trouble..The cheap can become expensive

[Orange Guzzi]

yes, but if consumers didn't go into debt and purchase Dodge pickup trucks that mechanic wouldn't have customers and would have never taken a loan to buy Snap-On tools in the first place.  Worse yet, the car company would have fewer customers ...well you can see where that's going?

Yes, it does take producers but there would be no producers without customers buying services and products. 



Moral: credit can be useful tool to grow the economy and benefits both producers and customers.  And the economy won't function unless there is balance of both types of credit.

The borrowing of "cash flow/capitol expenses" is one concept, but borrowing to meet your "wants" is another.   

I have borrowed money to make money many times.   It works, its a risk.  I have avoided consumer debt. With today's extremely low borrowing interest rates, there are a lot of people making money off other peoples money. 

[Orange Guzzi]

I've had a AMX for the past 22 years.   It had been compromised twice with fraudulent billings, but AMX has been quick to shut the account and issue a new card.  Always pay the balance every month and no fees.   Problem is, not everyone takes AMX especially some restaurants (and some only take cash) because of higher cost to merchants for using their cards.  I've been curious about this: is loosing a sale better than making a sale with less profit because of the extra expense? Maybe the volume of use of that particular card is not enough to justify the expense of having multiple accounts - to the merchant.

Good question.  I will admit, I am in the processing business, have been for 20 years.  I have accounts that do not make me money as an individual account. I have accounts that make me good money.  I look at the average revenue stream per account.  The reason, customer relations.  A merchant may have more than one retail location or give my name to their friend that is opening a retail location. 

While many have talked about the liability of a CC, as the sales rep, I am the last man out.  I am personally responsible for the merchants account.  We are talking Million$ in transaction annually.  Have I had to pay up? Yes, but not much.  Do I make money, yes, but not as much as in the past.  I have more accounts now than ever, but make 1/8 as much profit per transaction.  Why keep doing it?  Because I am established with a very large base.  Someone wanting to get into the business would have to be willing to work many months without pay just to create a base and make a few hundred dollars a week in 6 months.  There is plenty of business, but very few sales people. 

I learned many years ago, I can sell my time to someone or I can sell something else.  I chose the something else.  I only get 168 hours per week to sell.  When I switched from selling my time to selling something else, my income went up 5 times.   

Yes, some merchant will give up a sales rather than pay the higher fee to process some cc's. 

[Cool Runnings]

We're in debt, to our eyeballs.

Current numbers are around

$340k balance on house (purchase price was much higher). And Fwiw we showed some restraint as we looked at and could have bought a much bigger and more expensive place(were approved for much more).

$140k on student loans (down from 200k at peak about 8 years ago, and dropping at about $1k/month) but at least interest rates are 0.6-1.8% on most of it (the small amount that is not is on a much more aggressive payback plan). Some friends of Jenn and I who differed their loans through residency/fellowship hit peaks the $350k range and some are just beginning to pay them back (meaning we're about 6 years ahead of them just in the amount of time we've been paying), so I feel we're doing OK.

We do have one car loan at < 2% and we do have some CC debt at 0% (which should paid off before the 0% runs out).

Truthfully we have spent a lot of money over the years on cars and motorcycles purchased new, and that includes interest. But no one is guaranteed tomorrow and that's been our biggest indulgence.

Still we were in borrow mode for a long time and now are in pay off and save mode as well as we can be.

New row houses in the area are selling for $275,000, single family over 400k. I can't imagine what it costs to live in the East or West coast areas.

[Kev m]

New row houses in the area are selling for $275,000, single family over 400k. I can't imagine what it costs to live in the East or West coast areas.

Literally just on our small lake houses range anywhere from $200k-$1.2M.

Considering we hoped to settle into a house to raise our kids while Jenn settled into her career I think we were very conservative and fall well into the lower half of that range.

Truthfully even here in this community there are plenty of smaller, reasonably-priced places to live. Of course taxes, which are ridiculously high in this state, change that profile a bit.

[Triple Jim]

I've had a AMX for the past 22 years.   It had been compromised twice with fraudulent billings, but AMX has been quick to shut the account and issue a new card.  Always pay the balance every month and no fees.   Problem is, not everyone takes AMX especially some restaurants (and some only take cash) because of higher cost to merchants for using their cards.  I've been curious about this: is loosing a sale better than making a sale with less profit because of the extra expense? Maybe the volume of use of that particular card is not enough to justify the expense of having multiple accounts - to the merchant.

The American Express thing is status.  They have traditionally made up for not getting interest on balances by charging high annual fees to card holders, and high merchant fees, and promoting the idea that people with their highest annual fee cards have higher status in life than those with regular cards like Visa and Mastercard.

[Orange Guzzi]

..I ran a very successful electrical contracting business using a well used Jeep Cherokee and tools bought used ....I never had stock and bought the materials needed for a particular job.. My monthly bill at the local electrical supply house was often 2500 bucks and paid in full before the end of the month....My competitors had new vans full of new tools and nice clothes with the company name on their shirts...But I could under bid them and still make 45 bucks an hour after expenses...I learned this when previously running for large contractors and bring in jobs on tight competitive budgets..
 Like many here my first house was not the best, because I bought what I could afford if I lost my job.....It's easy to spend money, it's a lot more difficult not to spend 

 Of course while trying to be cheap I can get into trouble..The cheap can become expensive

The difference in your business model and the guy with the nice "trucks" and "employees",  if he takes a day off or is sick, his employees are still making money for the him/her.  You are carrying 100% of the liability with the 168 hours a week God gave you.  He/She spread the liability out thru all the employees.  Your $2,500 may have been 1/10 of New truck guy.  If you make 50% margin on materials, New Truck guy is making 10 times as much. 

Many people have got mad at the boss because he was wealthy, charging customer $75 an hour and paying the labor $20.  The problem, the employee thought they could do the same job and make $65 an hour.  Not realizing they would also have to be a salesman, a buyer, an office manager, a shop manager, and a laborer.  Leaving them 15 hours a week to do the job. 

There is something to be said about being self employed though.  Been doing for 20 years and love it. 

[Cool Runnings]

The difference in your business model and the guy with the nice "trucks" and "employees",  if he takes a day off or is sick, his employees are still making money for the him/her.  You are carrying 100% of the liability with the 168 hours a week God gave you.  He/She spread the liability out thru all the employees.  Your $2,500 may have been 1/10 of New truck guy.  If you make 50% margin on materials, New Truck guy is making 10 times as much. 

Many people have got mad at the boss because he was wealthy, charging customer $75 an hour and paying the labor $20.  The problem, the employee thought they could do the same job and make $65 an hour.  Not realizing they would also have to be a salesman, a buyer, an office manager, a shop manager, and a laborer.  Leaving them 15 hours a week to do the job. 

There is something to be said about being self employed though.  Been doing for 20 years and love it.

Nephew make $1,000 + a day doing spray foam insulation and HATES it! 

[LowRyter]

I agree with all that.

Lannis

Dammit Landis.  I was set up for a big fight with you and.... and....crap!

OK, I got your name wrong.  Take that!

[Lannis]

Dammit Landis.  I was set up for a big fight with you and.... and....crap!

OK, I got your name wrong.  Take that!

I know.   Part of the curse of the Internet.   I don't know how many times someone says "Stop The Presses!  Oh My God!  I Agree With Lannis" ... and it's someone that I agree with 95% of the time ...

The typical problem with communication is that people don't respond to what you actually WRITE.   They see one or two "keywords" in the post, instantly set up their pre-fabbed favorite Straw Man (white supremacist, communist, fascist, puritan, capitalist swine, storm trooper, whatever) and then respond to HIM, because they have such a good answer for THAT s.o.b.!   Meanwhile, I'm poring over their response in befuddlement, trying to figure out who they're talking to ...

And don't worry about the name.   It's such an unusual one that I've been responding to Lantis, Landis, Lannie, Lonnie, Atlantis, Lanis, Lanice ad infinitum ever since kindergarten .... !

Lannis

[Orange Guzzi]

Nephew make $1,000 + a day doing spray foam insulation and HATES it! 

Yeah, I have a brother that owns a plumbing company and 10 employees.  He makes a $1,000 a day while fishing in Florida.

Your nephew doesn't make anything while fishing.  But, again, that is o.k. if it works for him and he is happy.  I like being my own boss sometimes.  Other times I hate my boss because he make me work when I don't want too. 

[LowRyter]

I know.   Part of the curse of the Internet.   I don't know how many times someone says "Stop The Presses!  Oh My God!  I Agree With Lannis" ... and it's someone that I agree with 95% of the time ...

The typical problem with communication is that people don't respond to what you actually WRITE.   They see one or two "keywords" in the post, instantly set up their pre-fabbed favorite Straw Man (white supremacist, communist, fascist, puritan, capitalist swine, storm trooper, whatever) and then respond to HIM, because they have such a good answer for THAT s.o.b.!   Meanwhile, I'm poring over their response in befuddlement, trying to figure out who they're talking to ...

And don't worry about the name.   It's such an unusual one that I've been responding to Lantis, Landis, Lannie, Lonnie, Atlantis, Lanis, Lanice ad infinitum ever since kindergarten .... !

Lannis

I agree.

Dammit.

[Orange Guzzi]

I know.   Part of the curse of the Internet.   I don't know how many times someone says "Stop The Presses!  Oh My God!  I Agree With Lannis" ... and it's someone that I agree with 95% of the time ...

The typical problem with communication is that people don't respond to what you actually WRITE.   They see one or two "keywords" in the post, instantly set up their pre-fabbed favorite Straw Man (white supremacist, communist, fascist, puritan, capitalist swine, storm trooper, whatever) and then respond to HIM, because they have such a good answer for THAT s.o.b.!   Meanwhile, I'm poring over their response in befuddlement, trying to figure out who they're talking to ...

And don't worry about the name.   It's such an unusual one that I've been responding to Lantis, Landis, Lannie, Lonnie, Atlantis, Lanis, Lanice ad infinitum ever since kindergarten .... !

Lannis

Ludicrous
You wrote communist, no political post or you will be banned from posting. 

[Triple Jim]

Atlantis is a nice name.

[Rough Edge racing]

The difference in your business model and the guy with the nice "trucks" and "employees",  if he takes a day off or is sick, his employees are still making money for the him/her.  You are carrying 100% of the liability with the 168 hours a week God gave you.  He/She spread the liability out thru all the employees.  Your $2,500 may have been 1/10 of New truck guy.  If you make 50% margin on materials, New Truck guy is making 10 times as much. 

Many people have got mad at the boss because he was wealthy, charging customer $75 an hour and paying the labor $20.  The problem, the employee thought they could do the same job and make $65 an hour.  Not realizing they would also have to be a salesman, a buyer, an office manager, a shop manager, and a laborer.  Leaving them 15 hours a week to do the job. 

There is something to be said about being self employed though.  Been doing for 20 years and love it.

 No, the difference I did not work  168 a week...On the average it was about 35 hours....times the 45 bucks an hour clear money before taxes is 1500 bucks a week gross... after taxes and health insurance it was around 1000 clear a week. dump 200 a week into  some sort of retirement and 800 clear a week was great money for me..it was actually a bit more than what a union construction electrician made at the time...
  I spent less than an hour a week doing paper work...
 The other factor is I did specialized work, medical offices, gas stations, food industry, machine shops, auto salvage yards etc...All my work was references from customers..You can almost name your price in this situation...And I did turn down work if the customer appeared shady....

[Aaron D.]

Amex has chaged their merchant model, generally lower costs to the processor and settling with the bank cards.

[LowRyter]

No, the difference I did not work  168 a week...On the average it was about 35 hours....times the 45 bucks an hour clear money before taxes is 1500 bucks a week gross... after taxes and health insurance it was around 1000 clear a week. dump 200 a week into  some sort of retirement and 800 clear a week was great money for me..it was actually a bit more than what a union construction electrician made at the time...
  I spent less than an hour a week doing paper work...
 The other factor is I did specialized work, medical offices, gas stations, food industry, machine shops, auto salvage yards etc...All my work was references from customers..You can almost name your price in this situation...And I did turn down work if the customer appeared shady....

168 hr/wk = 24 hrs x 7 days

i.e., 24/7

[Demar]

...... Sure the apocalyptic situation can arise sometime.  When that happens, there will be much bigger problems to deal with. ....
 

The two most important items to have when the apocalyptic situation happens..... bullets and toilet paper...... those will get you whatever else you need. 

[Demar]

New row houses in the area are selling for $275,000, single family over 400k. I can't imagine what it costs to live in the East or West coast areas.

SF Bay Area is friggin' high......

"July's median price rose year-over-year by 4.3 percent to a whopping $1.2 million in San Mateo County and by 5.9 percent to $980,000 in Santa Clara County. Across the bay, it climbed by 3 percent to $731,000 in Alameda County and by 8 percent to $540,000 in Contra Costa County." "Late last year, she sold her 774-square-foot condo in Campbell for $382,000. "

http://www.mercurynews.com/business/ci_30262947

[Nic in Western NYS]

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

Hamlet Act 1, scene 3, 75�77

Shakespeare did have this advice come from Polonius, however, sort of a dim older fellow lecturing at his son. 

Here's what Wiki has to say about Polonius:
Polonius is a character in William Shakespeare's Hamlet. He is chief counselor of the king, and the father of Laertes and Ophelia. Generally regarded as wrong in every judgment he makes over the course of the play, Polonius is described by William Hazlitt as a "sincere" father, but also "a busy-body, [who] is accordingly officious, garrulous, and impertinent." In Act II Hamlet refers to Polonius as a "tedious old fool" and taunts him as a latter day "Jeptha".

Polonius connives with Claudius to spy on Hamlet. Hamlet unknowingly kills Polonius, provoking Ophelia's fit of madness, ultimately resulting in her early death and the climax of the play: a duel between Laertes and Hamlet.

[Cool Runnings]

SF Bay Area is friggin' high......

"July's median price rose year-over-year by 4.3 percent to a whopping $1.2 million in San Mateo County and by 5.9 percent to $980,000 in Santa Clara County. Across the bay, it climbed by 3 percent to $731,000 in Alameda County and by 8 percent to $540,000 in Contra Costa County." "Late last year, she sold her 774-square-foot condo in Campbell for $382,000. "

http://www.mercurynews.com/business/ci_30262947

That's where Californians get all the motorcycle/ toy money, use equity from their homes. 

[LowRyter]

The two most important items to have when the apocalyptic situation happens..... bullets and toilet paper...... those will get you whatever else you need. 

I can imagine that TP might be worth more than bullets.

for all you survivalists here, how do plan to spend that gold?  And no matter how many guns you have, how do expect to keep it?

[Arizona Wayne]

I can imagine that TP might be worth more than bullets.

for all you survivalists here, how do plan to spend that gold?  And no matter how many guns you have, how do expect to keep it?

There's a Gold lady just down the road.  Just counting on her to steer me to keep on keeping on...............   Have some silver too fwiw. 

[Scud]

Shakespeare did have this advice come from Polonius, however, sort of a dim older fellow lecturing at his son. 

Here's what Wiki has to say about Polonius:
Polonius is a character in William Shakespeare's Hamlet. He is chief counselor of the king, and the father of Laertes and Ophelia. Generally regarded as wrong in every judgment he makes over the course of the play, Polonius is described by William Hazlitt as a "sincere" father, but also "a busy-body, [who] is accordingly officious, garrulous, and impertinent." In Act II Hamlet refers to Polonius as a "tedious old fool" and taunts him as a latter day "Jeptha".

Polonius connives with Claudius to spy on Hamlet. Hamlet unknowingly kills Polonius, provoking Ophelia's fit of madness, ultimately resulting in her early death and the climax of the play: a duel between Laertes and Hamlet.

Yes - we must consider the source. Thanks for pointing that out. :-)

If I were to advice the young man, I'd say: Use debt sparingly and as leverage for things you can control or influence (eg your own business or home). Avoid debt for toys and entertainment.