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from the I-owe,-I-owe,-it's-off-to-work-I-go dept.
Another day, another record broken.
The debt held by US households has surpassed its pre-2008 record, several financial outlets note. A peculiar spotlight in the associated numbers falls on student loans, where delinquencies are multiple times higher than for other debt types: 10 percent is the norm.
That's some pretty troubling news for the economy [and wider society], notes Rana Foroohar at sister outlet the Financial Times. First off, there's the association between the rise in student debt, and a decrease in home ownership for young people. This connection is exacerbated by them millennials increasingly turning towards income-based repayment programmes, which spread out the debt over more years.
Secondly, the level of student debt delinquencies ain't changing: the 10 percent figure is a near-constant over the past 4-5 years. People who've ever had a delinquency -- even if they recover -- have a much lower rate of home ownership at age 30 as compared to their non-defaulted compatriots. Not having a home means not filling it with stuff, and filling with stuff is kinda what the economy is based on.
Then, thirdly, it's not only students that are hit by student debt: increasingly, their parents are taking on debt too, to help out. Fuel for that debt sandwich is something peculiar: the rate of inflation in college admission costs is three times higher than the consumer price index. Must be that college professors wages have increased a lot, then.
Given that boomers and their millennial offspring are the two largest voting blocks in the US, a snappy future president-elect might consider raising the issue a bit.
(Score: 4, Interesting) by DannyB on Thursday May 18 2017, @10:09PM (32 children)
Do not use credit cards as a way to borrow money. Only use them when you are prepared to write a check that day.
That said, use credit cards to buy everything. Fuel. Groceries. Utility bills (yes really!).
Pay off the cards every few days. You not only have great credit, but you earn rewards. Step one is to get credit cards that give you the rewards you want. In my case Southwest Airlines card, and a Disney card (both from the same large bank). We buy fuel and groceries on the Disney card because of the higher reward for those particular items. We buy other things on the Southwest Airlines card to accumulate points.
Then when you're planning one of your Disney World vacations, you buy Disney Gift Cards, at Target using your red Target card. This gets you 5% off, right off the bat. Yes, really. So buy, say $2500 worth of Disney Gift cards (thank God Target now has them in $100 denominations). But buy them, maybe $500 at a time. That 5% off of $2500 may not seem like a lot -- but it is FREE money. Don't buy the gift cards until a couple weeks before your trip. When you check into the resort, you pay with $100 gift cards. You budget your money so that you don't have sticker shock -- you know it is going to be expensive to eat in the park, and budget accordingly so you aren't surprised. Every day or so, you go back to the front desk and pay down your bill with more gift cards so that you don't have any bill when you check out. (The money you spend on the park using magic bands is charged to your credit card at the resort, so you pay it down every day with 5% off gift cards and have them reverse the credit card charge if they have already charged it to the credit card.)
With airline points, one to one and a half members of our party have a free round trip flight already.
With Disney Dollars earned on the Disney card, we have more money to spend in the park.
Go for a nice long trip. (14 days, 17 days, 19 days was the longest) Buy an annual pass. That sounds expensive but it is break even after, I think it was, 11 days. Take one trip in December, when you activate your annual passes. Then take your next trip the following October, where your annual passes for park admission are still good. Possibly take a short six day trip in April. The annual passes get you park admission for vacations in two years, within a single 12 month period.
On our "October" trip last year, we made it cross over into November so that (1) we could attend both a Halloween party, (2) a Christmas party, and (3) be at the park on election day in case of riots.
So what do I think of credit cards? I think they are fantastic! I don't have any debt on them and never will. One time we bought a used car (about $3000) on a credit card -- which really got us more airline points. Who pays for the hundreds of dollars of benefits I get? The poor slobs that have tens of thousands of dollars in credit card debt. I do feel sorry for them, but I can't fix their problem. We're a single income family, we watch our money, and we get nice vacations.
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(Score: 4, Insightful) by Lagg on Thursday May 18 2017, @10:34PM (5 children)
Debt terrifies me, and people who don't take it seriously frustrate me. So it confuses me greatly that people treat credit cards as a separate account rather than (forgive my terms) a delayed debit to your real account in the first place.
Also my eyes roll back into my head when I read people trying to explain how to do coupon savings and take advantage of gift card incentive and all that shit, because I never need to prepare a budget that they would assist with in the first place. I just don't do the things you're talking about.
I'm not judging you negatively of course, this is purely because I'm a lifeless loser. But saying it like you did is pretty much a solid example of why people just prefer to pretend their debt doesn't exist. When people who are familiar explain the concepts, they include a lot of assumed knowledge and usecases. Because your usecase is one that has been optimized by needing to do trip budgets. It's going to make people go "fuck it this is too complicated". I think that's also one component of the overall issue with the economy. Banks and credit sellers outright lie and mislead people into thinking they're getting benefits they're not. Purely because of ignorance brought on by unfamiliarity.
http://lagg.me [lagg.me] 🗿
(Score: 4, Interesting) by AthanasiusKircher on Friday May 19 2017, @02:42AM (2 children)
There's no reason to make credit cards sound as difficult as the parent does here. Yes, those who have specialized needs or who are willing to "play the games" with credit cards can maximize savings for themselves -- more power to them. But you're right that a lot of people who likely try to do that also end up messing up at some point -- and that can negate a lot of the benefits if they suddenly end up paying interest where they weren't expecting.
Anyhow, it's also possible to be a lot simpler with credit cards. Rather than something complex with ever-shifting terms, find one that gives the rewards you want consistently and just use it almost exclusively. For maximum flexibility, just get a cash-back card. It's easy to find cards now (if you have good credit) that will give at least 1.5% back on ALL purchases, no limit, no annual fee. Done. No worrying about changing terms or complicated schemes to redeem "points."
Most credit cards also offer an option for automatic payment of all balance due each month, so you never carry a balance. I check my statement each month, but I also receive an email warning when my payment is coming due, as well as a confirmation message that my payment has automatically been made for the entire balance. It takes no thought -- and I earn 1.5% "interest" just for allowing a credit card company to carry my "debt" on their books for a few weeks each month. That's better interest than most bank accounts have been offering for years.
You may be horrified by such a perspective, but if I don't participate, I lose out on the discount. If there's a large purchase where I might actually be able to "wheel-and-deal" to get a cash discount, I'll pay cash. If it's a small business that prefers cash, I'll pay cash. Otherwise, I'll take the 1.5% discount. Heck, go beyond groceries and gas and utilities -- some insurance companies will accept credit cards for your premiums. Some apartment complexes will accept credit cards for your rent. If they'll offer it without a fee, I'll take the discount.
The only main concern is privacy, and I get that concern. But to me, it's worth it even just to have a simple easy record of my financial transactions that I can view, download, autosort into categories, etc.
(Score: 0) by Anonymous Coward on Friday May 19 2017, @01:02PM (1 child)
The only main concern is privacy, and I get that concern. But to me, it's worth it even just to have a simple easy record of my financial transactions that I can view, download, autosort into categories, etc.
The convenience far outweighs those concerns for me as it's not like someone really can use my credit card statement to shame me for some embarrassing purchase (without the receipts it'd be hard to tell what I bought most of the time anyway) but the automatic tracking in my budget software means that by now if I pay cash there is a good chance that I'll forget about that transaction as it needs to be entered in manually so at the end of the month I'm wondering "huh, why am I $18.79 short?"
(Score: 2) by kaszz on Friday May 19 2017, @02:28PM
Or "huh, why am I in prison?" (for having similar buying habits as Muhammad).
(Score: 2) by DannyB on Friday May 19 2017, @01:31PM
There's really nothing complicated about it.
I have two cards. Whenever I (we actually) get fuel or groceries, we grab a certain card to pay it. Utilities (mobile phone, electricity, gas, water, etc) are on auto-pay on the other card.
People spend enormous amounts of time "couponing". We don't. We consider our time more valuable than that. It's a simple reflex to use a certain card for fuel or any store that happens to sell food items that would qualify as grocery.
Then there is the minor hoops to jump through to claim your rewards. On one card its easy to use airline points when you book tickets. On the other one, you have to visit a kiosk at Disney World to get your Disney dollars. For us this usually works out to somewhere between about $250 - $350 depending on what we spent that year on the cars, and whether it was the "short" gap between vacations or the "long" gap.
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(Score: 0) by Anonymous Coward on Friday May 19 2017, @06:46PM
Debt terrifies me, and people who don't take it seriously frustrate me. So it confuses me greatly that people treat credit cards as a separate account rather than (forgive my terms) a delayed debit to your real account in the first place.
I used to think like this, and to a large extent I still do. However, I think that is to my, and your, detriment.
The way to think about it is that debt is a vehicle to transfer money from your future self to your past self. For example, would you rather have $100 when you are 20 years old (in college with effectively no income), or would you rather have $200 when you are 50 years old (and earning an income of $100k a year)?
Like any other money transfer, this can be a good idea or this can be a bad idea: Giving somebody $200k to get a house is probably a good idea, whereas giving somebody $200k because they claim to be a Nigerian Prince is probably a bad idea. Borrowing $500 to buy a nice suit for your first job interview is probably a good idea, whereas borrowing $500 to buy that "plane ticket to Florida for Spring Break because, like, EVERYBODY is going to be there" is probably a bad idea.
Debt itself isn't bad: it's a powerful tool, and it's really easy to shoot yourself in the foot, but so is root access on your computer.
(Score: 4, Funny) by Snow on Thursday May 18 2017, @10:35PM (2 children)
Your post stresses me out.
11 days in disneyland/world? That's crazy. Then to do it again 11 months later... I can't imagine.
(Score: 2) by DannyB on Friday May 19 2017, @01:26PM
You don't seem to understand.
The first week is to have fun in Disney World. (Disneyland is simply too small.)
The second week is to recover from the first week.
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(Score: 2) by DannyB on Friday May 19 2017, @03:24PM
It takes quite a while to do all the things Disney World has to offer. A couple years ago, I think in 2015, we took a "behind the scenes" tour. It's a 5 hour tour and includes lunch. You get to see things behind the show. Learn a lot of interesting things. You get to see the underground complex. It turns out it is not underground. They didn't build a complex under the park. They built the complex first, and built the park on top of it. Wow, that's thinking ahead. Once you are "off the promenade" everything looks like a fairly industrial complex. Workers. Machinery. Buildings that store parade floats. Once in the underground complex, you see ordinary things like a forklift with a pallet of officemax paper, etc. As soon as you go through a door and magically emerge into the park, everything looks magical again.
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(Score: 3, Funny) by DeathMonkey on Thursday May 18 2017, @11:45PM
Wow, I didn't know Bob Iger reads SN!
(Score: 2) by kaszz on Friday May 19 2017, @03:57AM (11 children)
Does the time you need to spend to keep this scheme running equals a worthwhile hourly pay? Does the diverted attention steal that away from something that could have benefited you even more?
(Score: 2) by DannyB on Friday May 19 2017, @01:34PM (3 children)
See where I wrote another reply above that says how simple this is. We don't spend any significant time doing this. Utilities are all on auto-pay on the airline card. When buying food / fuel, we use a certain card by reflex. Anything else, we use the other card.
Then there is the going online to pay the cards at the end of each week. We don't want that money sitting in checking account looking like it is "unspent". (We could have a separate account, or do more bookkeeping, etc to keep the money in our hands until the last possible moment, but again, we're trying to not spend time on this.)
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(Score: 2) by kaszz on Friday May 19 2017, @01:50PM (2 children)
Btw.. is it possible to pay money to another credit card such that you can re-circulate plenty of money and be a "good spender" but in reality not using a dime? ;)
Setup0)
Card0 pays to Card1
Withdraw as cash.
Setup1)
Card0 pays Card1 pays Card2 pays Card0 etc..
(Score: 2) by DannyB on Friday May 19 2017, @01:58PM (1 child)
No. It is not possible. Sadly.
There is only one exception that I knew of, and I think it was closed off. One time, we bought a big stack of Disney Gift Cards on Target card, for 5% off face value. Then we went online to target.com to pay off the Target card, and were able to use another CC to pay it. Now that got us rewards on that other CC.
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(Score: 2) by kaszz on Friday May 19 2017, @02:37PM
Start a shell company?
That has a credit card linked to it..
(Score: 2) by DannyB on Friday May 19 2017, @02:15PM (6 children)
Now that you mentioned the time I spend (or lack of it actually), it reminded me. There is another CC we have that we don't even give a thought to. (At least I don't) My wife pays the bill regularly, but that is all done online and is a minor chore that she does. (I did mention we are single income.)
Amazon credit card. The only reason we got this one is because Amazon gives you 3% in Amazon credit for all Amazon purchases. So we got that card. It is set up as the only payment method on Amazon. We buy enough stuff on Amazon to be worth it. We 3% back -- for doing nothing! Just spending according to our normal pattern. Right now we've got over $100 in Amazon rewards on this card that we could use any time. But we've built that up over the last year or longer.
Again, this is an example of earning money without doing any work -- other than paying the Amazon card bill like the other credit card bills -- online.
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(Score: 2) by kaszz on Friday May 19 2017, @02:39PM (5 children)
I would say you spend less (ie 3%) but doesn't get any net income from it. The real way to "save" anything is to not buy ;)
(Score: 2) by DannyB on Friday May 19 2017, @03:15PM (4 children)
Even if we spend less, we still would get 3% or 0% on that lesser amount depending on whether or not we used an Amazon card to pay for it. We're not spending any differently on Amazon today than before we got that card. Like the subject line says, we are using the CC as a tool. We would end up having to pay Amazon on some credit card. Or debit card. Why not use a card that gives us 3%, which is higher than our other reward options for paying Amazon purchases.
We already are careful about what we spend. We don't make impulse buys. I might think about it for days or weeks before I spend on something out of the ordinary like a Roku.
Sometimes a sale can cause us to suddenly buy, if it is something we are already considering. Last fall we were talking about getting a new TV for weeks. We had the money. We had a reason to buy. Obviously, at this point we had held off on buying. When there was a sale, we looked at the options, talked about it some more. And made a decision to buy. Very deliberate choice. Naturally we bought it on the CC that would give us the best reward, and paid that CC bill within a few days. Then come late October, that helped us on our vacation. :-)
That reminds me of an old Ferengi proverb.
You should pay attention to the important things in life.
Because sooner or later, they will go on sale.
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(Score: 2) by kaszz on Friday May 19 2017, @04:31PM (3 children)
Did the TV work well with the computer? in these times of incompatible protocols, HDCP (DRM), spy-r'-us etc.
I guess the remote control thing hasn't been resolved yet.
(Score: 2) by DannyB on Friday May 19 2017, @06:13PM (2 children)
The TV was for the living room. It has a smart TV built in, sadly, which I do not use or ever want to use.
I use a Roku 3 on that TV as well as a DVD player (not Blue Ray) and a Chrome Cast.
The Roku will easily play video from a server on the local network. But not the audio on most. I can understand Roku not wanting to license that audio codec. The irony is that the Roku will play mp3 audio just fine. Even before the mp3 patent expired.
I'm going to re-rip some of our DVDs but with audio being mp3 this time. Other video files can be easily processed with ffmpeg so that the video codec is "copy" and the audio is re-encoded to mp3.
I'm not sure what remote control thing you are referring to. The TV has a remote. It a lot of configuration, menus, etc. Configuration of the WiFi (no way!), etc. But I only use four buttons of that remote's many buttons: Power, Input, Vol+, Vol-.
No cable. I have tried an antenna, but don't really care for it, and nothing over the air is worth watching on network TV, other than PBS. But PBS is a nice app on the Roku.
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(Score: 2) by kaszz on Friday May 19 2017, @07:20PM (1 child)
Maybe you can start a small project to reflash the smart TV into BSD or Linux?
For the audio isn't there like raw PCM or a FLAC option?
My remote control idea was to be able to control the TV from a computer such that one playing one source the TV can be told to switch to that etc. And doing it using Ethernet or so instead of placing a IR emitter wired to some microcontroller near the TV-set.
I'll agree on shit-on-tv.. ;-)
Good as computer output unit. Worthless as a receiver of big corp trash.
(Score: 2) by DannyB on Friday May 19 2017, @07:36PM
So many project ideas. So little time. I don't know anything about BSD. Other than some dabbling with Raspberry Pi and Arduino, I generally prefer to work at much higher levels of abstraction these days. Back in the 80's I would have been more interested in a project at this low a level. These days I think of C or C++ as very low level -- close to the machine. Not that there's anything wrong with that.
I'm talking about the audio being AAC in DVD's I ripped in the past. I wish I had used mp3 as the audio format in the ripped video file that sits on my server.
The remote I mostly use is the Roku remote. Or the DVD remote. Recently I started watching Babylon 5 on DVD again. Just about done with season 2. But I've got Netflix, Hulu (no commercials), HBO, Starz, Amazon Prime, PBS (free), and Sling. Not sure if I like the Sling content, may not keep it.
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(Score: 2) by DrkShadow on Friday May 19 2017, @04:07AM (2 children)
You may be late to the game: that "Buy gift cards at Target and get 5% off the cash-value" trick was short-lived. You can't do it any more. They might let you use a credit card to buy the card at face-value, screwing them out of Visa's fees, though.
I was looking for a way to do something like this for a friend just a bit ago. I found this trick, and found out it's expired. In the end I wrote them a check for the amount I was going to give them... and then threw the "refillable gift card" fee on top as a laugh. Help my friends, not large corporations.
(Score: 2) by DannyB on Friday May 19 2017, @01:48PM
The last time we bought Disney Cards at Target, we got 5% off the face value. Right at the checkout line.
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(Score: 2) by DannyB on Friday May 19 2017, @02:03PM
Target, like other banks, keeps insanely increasing my credit limit to absolutely absurd amounts. I think this in the hope that I'll get into debt and end up paying outrageous interest for years and years.
I'm not sure what you're talking about "gift card fees". Disney Cards are simple. Buy them at Target for 5% off face value (because Target red card gives you 5% off at the check out line). Then at Disney World, those cards are usable like money. Including paying your resort stay, annual passes, etc. As long as it works, we'll take advantage of it.
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(Score: 2) by rleigh on Friday May 19 2017, @06:19AM (3 children)
I pay for everything with (a) cash or (b) my bank debit card. I don't have a credit card, and I don't get into debt at any point. It means my finances are very simple: I live entirely within my means, and only buy what I can afford and have saved for.
By the way, there's no such thing as "free money". That "benefit" has to be paid for by someone, and usually that comes from increasing the markup of every item by 5% (for example). So we all pay for that, irrespective of whether we use credit cards or not. So using credit cards is basically quite selfish--you've placed an additional financial burden upon all of us just to suit you. Personally I'd prefer to pay the true asking price out of my own pocket, without that extra being creamed off the top.
(Score: 0) by Anonymous Coward on Friday May 19 2017, @12:18PM (1 child)
I hate debt, and pay off every CC bill every cycle without fail. However, I do use a CC for nearly all purchases. There are at least two very good reasons to use a credit card.
First, your debit card is a direct line to your checking. If you use that everywhere, and it gets compromised, your money is gone when you find out and difficult to get back. The funds have left your account. You basically are the one that gets to fight to try and claw them back, and it's a huge time and headache. Plus inevitable issues with overdraft fees. CC companies have pretty ironclad protection in this circumstance - report the card stolen or compromised, they issue you a new card, and claw back THEIR funds.
Second, all prices for things which can be paid by CC are 1-5% higher than they should be for cash alone. By law they can't give you this discount even if you wanted to pay cash, so ironically the only way to get closer to real pricing is to use a CC that has a discount/points. Choose one which lets you redeem for cash or stuff you actually use, and now you are getting a broad small discount. Remember, you're paying for this either way - using a CC is the only way to get some of this back.
(Score: 2) by DannyB on Friday May 19 2017, @01:37PM
Yep. We went through that a few years ago. Took 10 days to get our money back in checking account. That was before we figured out how to use credit cards without debt.
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(Score: 2) by DannyB on Friday May 19 2017, @01:42PM
Like you:
* I don't get into debt
* My finances are simple
* I live within my means
* I only buy what I can afford and have saved for (yes really)
* And that includes saving for vacations -- but we get hundreds of dollars of leverage just by using CC to pay for things
See the part where I wrote: we don't use the credit card for anything we're not prepared to write a check for today.
I understand the game completely. That fact that it is unfair is not my fault. I'm just adapting to how the game works. The merchant pays credit card processing fees. But their agreement with the bank is that they can't charge credit card users more. So people paying cash or check, like you, are subsidizing my vacations. I wish it were not so. But that's how it is. Also, people paying outrageous interest rates on CC debt are subsidizing my vacations.
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(Score: 1, Insightful) by Anonymous Coward on Friday May 19 2017, @06:53AM
Just don't forget that your financial data is one of their products. So put your entire financial life into the web, true dystopia will never arrive right? Oh wait, insurance already wants to peruse your purchasing history for risk assessment. Black market data will never result in nefarious schemes, oh look you are out of the country time to go raid your house!
Yes, if you're on top of it you can game the system, get little rewards for excessive use of credit cards and build up your credit. Make the system work FOR you. Just don't ever have anything to hide, chances are someone could piece it together. Hell, someone could build a false blackmail portfolio against you, ruin your marriage even if you are innocent!
(Score: 0) by Anonymous Coward on Friday May 19 2017, @10:13AM (1 child)
That said, use credit cards to buy everything. Fuel. Groceries. Utility bills (yes really!).
That's a terrible idea for people who value their privacy. Why would I ever want these companies to know about all my purchasing decisions?
(Score: 2) by DannyB on Friday May 19 2017, @01:46PM
Just like using Google, GMail, etc. I'm trading that info for a lot of value received. They also are keenly aware of out of the ordinary purchases which helps prevent fraud. Even if I used a debit card, like most people, the bank would know what my purchases are. Even writing checks gives the bank information. So I could go to using cash for everything, but that seems like the opposite end of the spectrum.
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