Journal chill's Journal: Welcome to the United States -- Free Men Not Welcome 19
First things fist. Happy Independence Day to me. On March 15th I achieved debt independence. That is, I don't owe anything to anyone. No car loan, no credit card balances, no medical bills, no old bills, no mortgage, no nothing. And because I greatly overpaid on income and social security taxes last year, thus getting me a large refund this year, I estimate my Tax Freedom Day was right around the same date.
The big caveat is that I rent my house, so I don't have a mortgage. My cars I've always paid cash for, and I haven't had a credit card in over a decade.
Thus, this weekend was a cold slap in the face for me and the reason for my journal entry title.
It started on Friday, when I stopped in my bank (Bank of America) to ask what it would take to get a home mortgage. I'm not really interested in waiting the next 10+ years it would take me to save the money to pay it all up front. Not when I can make more on investments than the average mortgage rate is now. Using the bank's money would actually make me money, assuming my investments keep up their return averages.
Here is where I got an education. Since my only credit on record (I pulled my credit report and looked) is a paid-off student loan of only $3,000 and a 10+ year old credit card account that hasn't drifted off my credit report yet, the bank isn't even remotely interested in giving me a mortgage. I was told by the mortgage specialist there that I need three existing lines of credit, open and actively used for more than a year, to qualify for a mortgage. The higher the limits the better, but never use more than 33% of the limit and *NEVER* pay them off.
Excuse me?
The bank, she said, is interested in you *PAYING* the loans, but *NOT PAYING THEM OFF*. Your ability to pay is secondary to their ability -- and your willingness -- to make money off of you. You can pay off a student loan, but if you pay off an auto loan you should have another to take its place. And closed credit cards, with zero balances are a *NEGATIVE*.
Okay...
Well, since I need to establish credit, how about I buy a new car or get a credit card? Great idea. No, the bank will not give me an auto loan nor an unsecured credit card.
Did I mention I was planning on putting $10,000 down and had a trade worth $5,000 on a $25,000 car? And that I had the cash in the bank -- THEIR BANK -- to buy the car outright? Didn't matter. How about that my tax return from last year shows $150,000+? They didn't care.
No auto loan and no credit card from BoA. Oh, I could get a *SECURED* credit card -- they give those to everyone with $500 to stick in an account. I could start with that. But since I had no history of credit, they wouldn't give me any credit. They suggested I try a department store for a credit card and the car dealer for an auto loan.
Just as I was leaving I asked about the various credit card offers my kids (20ish x 3) keep getting in the mail and thru their college. Oh, those are DIFFERENT. They're in college and under 30 years old. Odds are they'll "utilize the cards fully". The first hit is free and hook 'em young. If anyone hasn't yet seen it, I strongly recommend the movie Maxed Out. Trailer is on YouTube.
So, off to Kohl's, Walmart and a Jeep dealer I go to further my education.
The short story on both Walmart(!) and Kohl's is neither would give me a credit card and both gave the same reason: "lack of revolving credit history". Walmart, for goodness sake!
The auto dealer was an eye opener. I was looking at a new Jeep Sahara Unlimited, 4-door, 4x4, $34,000. Again, $5,000 in trade and this time $8,000 in cash for a down payment. They'd give me the loan! Woohoo!
Before anyone gets excited, let me explain the relationship between you, an auto dealer and a finance company. You are getting raped. The finance company is doing it. The auto dealer is holding you down.
They offered me payments of $520 per month for 72 months. I did the quick math and figured out on a $21,000 loan they were going to collect $37,400 total over 6 years. That worked out to a nice, round 21.5% APR! Lube? Why certainly!
While they were "working the numbers", I witnessed another "customer" getting her due. This young lady was 19 years old and her parents had brought her in to get a new car. She picked out a bright red Dodge Caliber, sticker priced at about $17,000. What caught my ear was the dealer lending her one of their computers so she could go online and reschedule her CELLPHONE PAYMENT so it wouldn't conflict with the car payment. And to get a copy of her bill. For some reason the auto dealer wanted it. Those were her only two bills, since she lived at home. She had $1,000 to put down and made just a tad over minimum wage working part-time at a local fast-food restaurant. Quick math told me she was only getting charged 12% APR and she was squealing with joy at her low payment (again, 72 months). Will a car like that even last 6 years? If she doesn't get her hours, can she make a payment? (No.) No one seemed to care.
I declined the gracious offer from the dealer, explaining that I didn't fail math in school and 21.5% APR wasn't an offer, it was indentured servitude with an option for regular prison rape. I'll get a couple secured credit cards, pay on them for the next 6 months and let the bank convert them to unsecured, normal cards and try again.
Given a 1-year history of participating in the credit system, the bank will give me an auto loan at 5.9% -- which beats 21.5% all day long.
I'm also investigating Credit Unions. They have a fundamentally different charter than a bank, so I might have more luck there.
This entire exercise is to make sure in 3-5 years I can obtain a mortgage at non-usury rates if I need one.
Welcome to the United States. Only the rich and their debt slaves are welcome. Free men (and women) are not welcome.
Credit Unions (Score:1)
Just now you figure this out? (Score:1)
I'm very surprised. Your debt is the very heart of their power. Everything else revolves around that. If you all want to have a serious effect on your economy, just zero out all of your debts, and you will see them panic and scatter like roaches, but not before they burn down the system first. The medical/pharma industry is the same. The real money is in treatment, not the cure.
Oh well, i guess nobody's gonna believe it until they tell you outright you're gonna get screwed...
Re: (Score:2)
Well, I'd say that I'm not just figuring this out, I'm just grokking the way the system works.
I was raised that debt was bad and to be avoided. It was only used when necessary and paid off promptly. The reliance on debt or the inability to pay was shameful.
Looking back, the answers I got from bankers and finance people were probably condescending and along the lines of "how cute (aka naive)".
Being out of the system for so long, the fact that it was so brazen and the participants so willing shocked me. Th
Re: (Score:1)
Right now the stench is truly incredible, and I'm being told that it's roses.. They don't need to operate in the dark anymore. The trance is complete.
You will obey the TV..
You want to obey the TV
You will insist that others obey the TV
You will ostracize and sanction those who do not obey the TV
We are seeing the horrors that the writers feared..
U.S. -- Entitlement Mentality Pervasive Here (Score:1)
There's a name for what you're experiencing. It's called freedom. It can be a bitch sometimes, but it's the most moral way, overall.
There is no "credit system" here in America here to serve you, like a govt. program. (Well, except the student loan domain, which was illegally and without even any justification offered socialized by the socialist major party of our country and current time.)
There is no, "well it's America so I should be able to get credit". You should only be able to get credit if you can fin
Re: (Score:2)
Well, I'm not thinking I am *entitled* to a loan. I was just stunned at the predatory nature and both the level of ignorance and outright eagerness of the participants.
I knew it existed, but haven't been face-to-face with it in some time.
Honestly, I can live without the credit. I was hoping to be able to build a house sooner, using the system. I'll pursue the credit union avenue while taking the old fashioned pay-it-up-front method if necessary. It'll just take me a little longer.
Re: (Score:1)
Are you stunned by your own so-called "predatory nature"? Or don't you want something around the highest salary the market will bear? Just because the terms offered on a voluntary contract are not to your liking, does not make it "predatory".
And what's a "non-usury rate"? Just one you're willing to pay?
Re: (Score:2)
While I want the highest salary the market will bear, I have taken lower when I know the company involved would be adversely affected over the long term. Considering more than just "next quarter" or "now" is important.
The predatory nature I was commenting on was the financial attempt to convince me to sign off on a deal that wasn't just bad in itself, but could consign me to indentured servitude for decades to come.
I didn't need to take the deal, recognized it for what it was and declined. I've worked my
Re: (Score:1)
Well okay, it sounds like you have quite a balanced view of these things behind these rather loaded terms.
Not to end on a downer or anything, and to finish up my little mini-crusade here against oft unchallenged assumptions, like I said I wish you the best in your pursuit of home ownership, but note that you might not be one of the ones lucky enough to own a home. Home ownership is not a right, and prolly shouldn't be an expectation, any more than having a job should be. Not everyone can live the way many o
Re: (Score:1)
A credit economy is for those who don't need credit. It's just a grazing scheme. Play the game, exploit it to the max, be the shark, not the minnow, you'll do great, just always have enough to clear the books when needed, usually every election cycle.*
More important than a trustworthy lawyer is a trustworthy accountant to swim in the bureaucratic snake pit.
*There I just saved you from one of those stupid $500 seminars.. and I'm only asking for a bean taco..
Credit Unions (Score:2)
American debt-system (Score:2)
The american "credit-rating" system is pure bullshit.
It does not really attempt to measure credit-worthiness, but instead, it measures how much profit they're likely to make on you. Keeping and maintaining (but not paying off!) high-interest debt for decades is thus a *good* thing, and not a bad one. And being reluctant to taking on debt at all, and rapidly paying it off whenever you do - is a *bad* thing.
I think the credit-card thing is the reason for lots of it. You don't see it here, at all. When applyin
At least you're not a ghost... (Score:2)
I bought a car on credit in 1984, and fifteen years later my then-wife and I went to buy a good used car. They went to check our credit, and we were told we were "ghosts". Not in the system anywhere.
So we went to one of those poor people legal loanshark companies and borrowed a hundred dollars at a usurious interest rate. A year later we started getting credit card offers. We used the card for gasoline only, a year after that we had no trouble going farther into debt on another vehicle.
If you declare bankru
Credit sucks (Score:2)
Is there a private message system here on /.? I have a suggestion, but it's something I don't want google indexing, and my name attached to it. Just send me an email at bbutle01 at gmail. It may help with the revolving line issue.
There are only benefits in having a credit card (Score:1)
Even if you don't need credit you should still use a credit card. There are only benefits and no negatives. You get points which are embedded in the price of everything already. If you pay cash you give up on those. This could be 2% of everything you buy (if you go into barter and not cash rewards)
My personal experience at a car dealer (Audi, San Francisco) was excellent -- 2% APR on a car loan (24 months), with 70% down.
I didn't need credit, but when offered 2% I decided it made perfect sense to take i
Re: (Score:2)
None that I can really think of. I'm in the process of getting one, just to play by the rules and build the necessary credit history in case I need a mortgage.
And the 2% is the difference between "good" credit and "no credit history". I'd rather use OPM myself, at a 2% rate. Nice.
Re: (Score:2)
Each and every purchase on the card becomes traceable to you individually.
Personally, I don't like that. I don't like anyone other than me knowing where I drink, what - if anything - my schedule is, and what I'm doing more than the absolute minimum. If I want to drive on back roads down to see my family, I don't want someone to be able to reconstruct my movements from my fuel and food purchases. And I'm not even planning on axe-m
Play the game (Score:2)
When I was in college I got one of those credit cards from people giving out free stuff at tables.
It wasn't because I wanted the free stuff, it's because I knew what you have found out: If you don't get establish your credit history early, it's going to be a bitch later.
I got an unsecured card with a limit of $200. I used it a little to order things online (a novelty back then), and kept it for a few years, until I could get some cards with credit limits in the thousands. I used them. Sometimes a little
Re: (Score:2)
Yeah, I've set up basic cards for the kids. Low dollar amounts at the moment, and keeping them paid on time and down to $0 but still using them at least once a month.
They'll get one each generic (MasterCard, Visa, etc.) and specific (gas station, department store, etc.) for a total of 2 accounts via revolving charge.
Car loans will wait until the can put 75% or so down, and have 12-months of payments. Maybe by the end of the year.