Archive for August 2010
Don’t pay off your house. Instead wait until you are desperate and then lose your house. After all this is what got millions of people in trouble in the near past. Jesus where do these idiots come from? I wonder how many people are sitting on the curb wondering what it would be like not to have a house payment?
Hey, it feels awesome!
Dear Debt Adviser,
My question is whether or not to pay off my house. It would wipe out my CDs. I have an emergency fund of $2,000. Is this a good idea? I live fine on my Social Security income.
My take is that if your Social Security income allows you to live comfortably while making your mortgage payment, my answer to your question is, no, don’t pay off your house. You don’t say why you want to, but I would recommend keeping your savings in certificates of deposit, or CDs, intact rather than using them to pay off your mortgage early. I have found that life has a way of sending us the unexpected — some good and some bad — as we get older. Using all your CDs would leave you vulnerable if your $2,000 emergency fund were all you had to fall back on. The money you have saved may help you better manage any unanticipated expenses or opportunities that might be headed your way.
I like it when I find people agreeing with me. Of course, I just like the idea of getting something for nothing. But i think this would work better than trying to lend broke dicks money and getting them in trouble.
But what do I know.
Just as a thought experiment: what if the Federal Reserve and the U.S. Treasury ditched the failed policy of Quantitative Easing (QE) and instead printed cash and “helicopter dropped” it into households’ accounts?
Many people think QE is a “helicopter drop” of cash; it is not. It is simply a way of expanding credit and encouraging more borrowing.
What if the Federal Reserve and U.S. Treasury stopped trying to stimulate the economy by encouraging more borrowing with “quantitative easing” and instead “dropped money from helicopters” into households’ accounts?
The core of quantitative easing is this: by expanding bank credit and lowering interest rates, a central bank (in the U.S., the Federal Reserve) stimulates more borrowing and thus more spending by businesses and households.
The problem with this policy is that none of the funds goes directly into consumers’ accounts. If consumers are tapped out or wary of taking on more debt, then bank credit can be expanded to the moon and households will not borrow more money.
So while the Fed, Treasury and the FDIC have shoveled about $4 trillion dollars into the nation’s banking sector in various bailouts and guarantees, these actions have not actually distributed any cash to consumers or businesses. The Fed’s operations in the recent crisis have been loans to banks and other financial institutions and purchases of financial assets, not helicopter drops of cash into households’ accounts.
The government will give you tax breaks. Of course you need to sell something to earn income so you will get a tax break. So…..
When your income hits “0” your on your own.
Here’s my plan: send me a big check and I’ll spend every dime. Business will get all of it. I promise. LOL
Too soon to be in recovery but happy talk makes politicians look good. And get reelected. Broke dicks need time to pay down debts and reestablish credit. Still remains to be seen if we climb out of this mess and reignite the boom.
But that’s been the history so far. Expect the printing presses to crank up another round and start the merry go around again. Until the next crash makes this one look like a popcorn fart, lol.
Bernanke’s recent Jackson Hole speech didn’t contain one reference to the key force driving the American economy right now: private sector deleveraging. The reason the US economy is not recovering from this crisis is because all sectors of American society took on too much debt during the false boom of the last two decades, and they are now busily getting themselves out of debt any way they can.
Debt reduction is now the real story of the American economy, just as real story behind the apparent free lunch of the last two decades was rising debt. The secret that has completely eluded Bernanke is that aggregate demand is the sum of GDP plus the change in debt. So when debt is rising demand exceeds what it could be on the basis of earned incomes alone, and when debt is falling the opposite happens.
Ok. let’s throw the bums out and replace them with the bums we threw out before.
What a waste. Might better find another thing to do with your time than vote for “change.”
A fun interview, partly because Cantor is caught off-guard at being pressed during what he thought would be a friendly chat and partly because it perfectly captures the anxiety felt by grassroots conservatives about the Beltway GOP reverting to their old ways. (Note the exchange at the very end.) Here’s the bit in his recent interview with Politico that she’s talking about:
He seems to take a more modest — or at least realistic — approach to explaining what Republicans could do with a House majority.
Cantor said it’s unlikely that health care overhaul legislation will be repealed with Obama in the White House. But it’s more realistic to simply refuse to appropriate money to fund health care reform.
“If you deny agencies monies they need to promulgate [regulations] and do all of that, you certainly can slow a lot of things down and make the case to the public,” he told the group.
Ingraham’s response: Why not push a repeal bill immediately? Even if Obama vetoes it, that’s good politics for the GOP since a majority of the public supports repeal.
In order to borrow you need big Fico scores. The Fico mathematical scheme used to determine your credit worthiness is dominated by credit card usage. Responsible and timely use predicts future behavior for lenders. You also need a mixture, such as mortgage, car loan, personal loans, to top your score off.
But the most important is credit cards. And the longer you use them and pay them off the higher your scores. however, the total amount of usage has to be less than 20 % or so to get and keep those higher scores which lenders use to grant more and higher loans. For instance:
You borrow 10000 on a car, 120000 on a house, Lets say 5000 on 2 or 3 cards and make every payment on time for over 5 years then you end up bumping 800 FICO. Notice no mention of income. Credit card companies usually take your word for it.
But this only one way. For me, I simply had one card with a 1300 limit, borrowed 1000 cash, and refinanced an old car paying them all off in 3 years. There doesn’t seem to be any rhyme or reason to explain why borrowing less than 10 grand, paying it back on time for less than 3 years during a credit crash would generate such a positive result but this is how it works.
Now my oldest card which I use for my Verizon internet service and pay off every month has an interest rate at 29%. (This was Wamu bought by Chase). My rewards card from my credit union charges 15% I use this for everyday expenses and pay it off every month and get 1% back. My third card and last for ever, is from Simmons and charges 7.2%. (Guess which card I will use for emergencies?)
Now that I’ve established great credit, I really no longer need credit cards. Now I can use personal loans secured at 5%, unsecured at 9%, by putting the cash into my checking account and using a debit card everywhere visa is excepted.
Why pay these guys anymore than you have to?
However this disaster-in-the-making plays out, it’s obvious that 14.7 percent interest rates are not going to stimulate retail purchases, even though that has always been the ostensible point of credit cards. The inflationists will probably say that loan-shark rates on plastic represent just one more cost that is going up. But because no one – even Las Vegas casinos — can actually afford to borrow at such rates for more than short stretches of time, we would argue the opposite – that credit cards designed to stimulate spending are fast becoming a deflationary pressure point, burdening shoppers with real rates of interest that are more than triple what the average hedge fund is returning these days. Under the circumstances, Joe Sixpack will be biting off more than he can chew if he opts to make only minimum payments for perhaps three or four months.
Probably think so because his father was a Muslim. And his passport in Indonesia said he was a Muslim. He lived with Muslims.
Oh yea, the media hiding his poor attendance at church might be a clue.
The number of Americans who believe — wrongly — that President Obama is a Muslim has increased significantly since his inauguration and now accounts for nearly 20 percent of the nation’s population.