guess I'm a #1
like many of you I had a few credit cards WAY to early on in life.
as of now...sure we have a mortgage payment and a car payment but..NO credit cards what so ever! Phew! thank god for that!
some folx say "it's for an emergancy" and I just say...no it ain't. If some emergancy comes up that i can't afford, my good credit (due to on time mortgage and car payments) will allow me to get any money that I might need.

Muse2NOPharaoh said:

You rock.

Heiress said:

OH MY GOODNESS; I COMPLETELY FORGOT ABOUT THE WONDERFUL COFFEES (and teas)!

And yes, you are right about the abundance of farmer's markets...they 're every few blocks all across Hamburg. The wonderful thing is that if you want to buy in a grocery store you can, but at the farmer's market you can buy everything loose, picking up whatever ingredients you need by the handful if you want,so you end up not wasting food or extra $$$.

I also understand about being spoiled here and feeling too unadjusted to live in the US again: last year, I visited my sister living in Atlanta in an upscale "starter home" neighborhood,and I was simply GAGGING when I went to the store and saw that they wanted to charge $10 for a wedge of BRIE ...and my brother in law (who is by all accounts a very healthy and "thrifty" individual) was shelling out $15 for TWO organic salmon steaks!!! Now that was something that DEFINITELY almost gave me a coronary!!!!

....now if I couldjust learn how to live near the seaside on the cheap... .....

Ottensen said:

That's why everybody comes to Montpellier.

Anyway, my mother used to have organic fruit shipped in by airmail from California, when she lived in a small isolated Nebraska town with no organic food stores nearby... Can you imagine?

Heiress said:

I lived in Paris years ago, and I got a free room to stay in, then stretched out a few hundred dollars to live on for about 5 months.

we pretty much do ...

i dont like to "owe" ...i usually over pay on bills to pay off quicker

only thing i really have is carpayment ...which i add 200 $ extra onto each month

and a small credit card bill that i triple pay on each month

Mach said:

If I could make an extra $200 car payment a month, then I'd be driving a nicer car!

heartbeatocean said:

Well... you'll always have Paris.

Heiress said:

That's true. But despite the incredibly high cost of living, I like living in California too. It's a healthy culture, hardly anyone smokes, organic food and produce available year-round, lots of flowers, incredible botanic variety, incredible landscapes, fabulous hiking trails. And though it's expensive, and I don't make much money, I work in a field where I get LOTS of free tickets to movies, symphony, plays, operas, concerts. So despite my low income, I also feel I live well on very little.

heartbeatocean said:

And that's a good feeling.

Today is my day off...so as soon as my lazy ass gets in gear...I am going shopping...

First stop Lingerie department at Nordstrom
Second stop MAC cosmetic counter at Nordstrom
Third stop womens shoe department at Nordstrom


I love working for one of my favorite stores to shop in.

Heiress said:

Yes. I feel pretty smug and clever.

Tom said:

In 1996, when I was in college, MBNA America gave me a MasterCard with a $1,000 limit. Okay, that's reasonable.

However, over the past ten years, they've continually raised the limit for no apparent reason other than the fact that I've always paid my bill on time. I've also noticed that paying off a large balance usually results in a credit limit increase.

Today, ten years later, my credit limit on that account is $30,000. And they gave me the last raise when I was between jobs; i.e., unemployed!

IMHO that is absolutely irresponsible lending on their part (Who extends $30,000 in credit to a person with no income?), and I wasn't too sympathetic when they went to Congress and whined for years that they needed protection from "bankruptcy abuse," which they finally got last year. I'm also told, but have not verified, that MBNA continued to make record profits every year, despite the alleged abuse of the bankruptcy system.

matt said:

Here is a good one...today in my junk mail I got an offer from capital saying I was pre-approved for a Visa from them...nevermind the fact that my Visa card I have which is almost paid off....THANK GOD...is issued by capital one. You would think they would check this shit out before they spam snail me.

TMBGITW said:

Heh... I have two Visa cards issued by the same bank (U.S. Bank). First they sent me the offer for the second card by mail, and then when I was in the branch across the street from my office, the teller told me that I was pre-approved for a Visa through them, even though his computer screen probably indicated that I already had one.

When they issued Visa #2, they certainly knew they were giving the card to the same person who holds Visa #1. After all, they use Social Security numbers to identify people, and as soon as they opened the second Visa account, it just automatically showed up with my other accounts when I accessed Internet Banking.

Edit: Ditch the Capital One card once you've paid it off. I'm told that Capital One doesn't report your credit limit to the credit bureaus; instead, they just provide the balance. Supposedly the systems that calculate your credit score interpret this as indicating that you're maxed out, which is not good.
[Edited 3/17/06 16:32pm]

matt said:

That is so irresponsable of banks...

Lammastide said:

American Express charge cards (which must be paid in full when the bill comes, unlike a credit card) do place a limit on your spending... they just don't tell you what it is. I really don't see the appeal of this "no preset limit" thing. Wouldn't you rather know in advance whether a charge is going to be approved, rather than taking your chances?

Visa now has something similar going with their "Visa Signature" card, which is apparently the new level above Platinum. I've got one of these through U.S. Bank. Unlike "classic" Amex cards, it's a credit card, and you can pay the balance off over time. The interest rate is horrible though; I always pay the bill in full, so I've never paid them interest, and the only reason I have the card is that it earns me frequent flyer miles.

OTOH, it has "no preset limit," like the original Amex cards. But they warn cardholders that this doesn't mean unlimited spending. Also, I have a "revolve limit" of $10,000. In theory, they might approve a charge for $14,000, but the next bill is going to be over $4,000 in order to get the balance back under $10K.

Finally, I've noticed that on my credit reports, U.S. Bank reports the limit as $15K. I don't know if this is my "real" credit limit or an arbitrary number that they've chosen.

matt said:

That has been my plan all along.

TMBGITW said:

I have a million credit cards (which I no longer use), but have found it very difficult to actually close a credit card account. They totally give you the run-around and try to prevent you from doing it. Anyone else have this problem? It's really annoying.

matt said:

...I know someone who had enjoyed excellent credit via overextension of his resources. When it all came tumbling down...he took a credit card with a $15,000 credit limit...charged a Nissan Sentra on it...then filed for bankruptcy.

heartbeatocean said:

I've gotten on the phone and said that I wanted to close my account, but it's really been a negotiation tactic to get better terms. As you suggest, they really don't want lose a customer, and so they'll usually make a counteroffer of a better interest rate, special balance transfer deal, etc.

Now, when I truly have wanted to close an account, I've done it via mail. Just send them a letter (via Certified Mail, Return Receipt Requested, if you want to be sure that they got it), and ask them to close the account. Also, request that they indicate on your credit reports that it was "closed at the consumer's request." (I think they're supposed to do this anyway, but sometimes they forget.) Without these magic words, credit scoring systems may think that the bank was the one who closed the account, and that isn't good for your score.

With all that said... you may want to reconsider closing those accounts, even though you're not using them. I'll post more about this later today.

PurpleJedi said:

Just so I understand the timeline here... he bought the car after his finances had fallen apart and knew he was going to file for bankruptcy? Did he get to keep the car?

Usually auto loans are secured debts, and so the debtor has a choice of giving up the car or agreeing to keep making payments on it. But if he paid for it with plastic, it's an unsecured debt. Unsecured creditors typically get nothing in a consumer Chapter 7 (liquidation) bankruptcy case, so it sounds as if your friend basically got a free car.

BTW, before anyone gets any bright ideas... if you incur a debt with the intent to discharge it in bankruptcy, it's considered fraudulent and, at least in theory, is not dischargeable in bankruptcy. But some folks manage to get away with it.

Incidentally, I had a client who went through Chapter 7 and was able to keep an expensive luxury car. His lease on it expired right around the time he filed, and despite the fact that his credit must have been shot (he discharged several hundred thousand dollars of debt), somebody was willing to give him a loan to let him buy the car. Perhaps he needed a cosigner, but if so, I don't know about it. (I didn't actually handle the bankruptcy filing myself -- I referred that out to a bankruptcy attorney whom I knew was really good.)

matt said:

As promised....

Scott Bilker's DebtSmart.com has some interesting thoughts about getting out of credit card debt. One of them seems rather counterintuitive at first: when you're trying to get out of credit card debt, you want to have as many cards as possible, even ones that you've paid off. Why? Here are some of his reasons:

1) When you've got accounts with multiple banks, you can effectively play them against one another in order to get the best terms; e.g., interest rate. It's a competitive industry.

2) In the long run, the best special offers are going to come from banks where you already have an account. And not surprisingly, these offers tend to arrive from a bank shortly after you pay off their card and/or transfer the balance to another bank. See #1 above.

3) Closing an account after you pay if off can hurt your credit score. Why? Doing so increases your debt-to-available-credit ratio, which is a bad thing.

Bilker also contradicts other conventional wisdom about credit cards, such as, "Having too much available credit hurts your score," and, "Applying for credit too often hurts your score." While strictly speaking, these may be true, the damage seems minimal. Bilker has 80+ (!) credit cards, applies for more several times per year, and has a FICO credit score of 804, which is excellent. (FICO scores range from 300 to 850.)

IMHO Bilker's advice is good if you have enough self-discipline not to max out all the credit cards you're getting.

matt said:

I don't know the details (I worked with him 6 years ago) but I know that he had a nasty divorce, he incurred mega-mucho debt in legal wranglings with his ex, then somehow he decided that he was going to file for bankruptcy and used his credit card to buy the car beforehand....which he did keep.

Sounds sneaky and all...but I equate it with Donald Trump, who mismanages his casinos and declared bankruptcy every few years...so that the creditors against his businesses get screwed, and he still lives in his gold-plated penthouse on Fifth Ave.

PurpleJedi said:

Lucky him... I'm surprised the credit card company didn't file an adversary action to contest the discharge of the money he owed them... unless he let some time pass and engaged in some tricks like moving the balance around, etc.



Well, one reason to form a corporation or an LLC for your business is that if it fails, you can bankrupt the business and escape without any harm to your personal credit. (Of course, that's assuming you didn't give a personal guarantee on any debts.) I've litigated various cases against housing contractors, and they seem to have a pattern of doing that. They incorporate, file under Chapter 7 and liquidate the business when things go bad, and then just form a new corporation and continue their operations.

RaspberryWoman said:

You might want to use it every once in a while for a small purchase and pay the bill in full when it arrives, just so the bank doesn't close your CC account on you for lack of activity. That'll hurt your your FICO score.

I'm closer to #1 than to #2 -- so much closer that I want to get to the place where I buy for things such as cars with cash.

I heartily recommend "The Millionaire Next Door" for people who want to learn which spending habits to adopt.

Living beneath your means entails such things as resisting the urge to shop for luxury items, buying used cars that will last a lonnnng time, not buying crazy-expensive clothing, using debt for appreciative/investment (housing, education) things and the one I'm still trying to get good at: coupons.

matt said:

Thanks for clearing this up for me, Matt. I've always been unclear about how closing credit card accounts affects one's credit. I have less than $3000 on credit cards now (my students loans are another #@$%&*! matter!) and am paying it off slowly. I only have 5-6 cards and I do use them to transfer balances and negotiate lower rates. There are a couple credit cards which never would give me lower rates and I didn't use for ten years or so. They eventually closed the accounts themselves, I found out recently, when I tried to close them.

Now my, ahem, dad is deliberately running up an extremely high credit card debt in his senior years. I think he has this idea that he may as well enjoy life while he can and then die before he has to pay his debt off. What happens when people die with huge credit card debts?

ThreadBare said:

I also think tracking your finances carefully is extremely effective. I pre-pay my monthly bills from my paycheck, then set a monthly budget including some extra for fun and enjoyment. Then I track it throughout the month to make sure I'm on target. I really need this discipline because my finances are so tight and I'm trying to build new habits to get out of debt. I also run monthly reports from my Quicken program to prove that I am indeed spending less than I earn.

heartbeatocean said:

Quicken, you say? Hmm, I might need to explore that. I'm trying to save up for some stuff.