Who uses credit cards?

[timosman]

A lower FICO score may mean higher interest rates if you can get a loan or may even mean not being able to get a loan in the first place.

This is the biggest lie I have ever heard. There is so much money in the system looking for a place to park, the biggest problem is finding a sucker to write the loan to.

 

[Jamesiv1]

FICO score is of no importance for both the lowest and the highest income earners. It is a tool to measure conformity and compliance of the middle class.

naah, I disagree. I don't care how high your income is, if you suck at making your payments, have let some debt go to collections and have declared bankruptcy a time or two - I'm not going to loan you money. No way no how. That goes for low-income folks, too.

If by "conformity and compliance" you mean simply that you're just like the majority of Americans and think being in debt is normal and having a high FICO score is something to be proud of then yes, I agree with you.

Consider what an awesome job of marketing banks and credit cards have done the past few decades. We stand in line around the block to beg the banker for a mortgage and feel such joy we we are APPROVED!!, and we think an American Express Platinum card is a mark of success lol

 

[Zippyjuan]

Not always true. There are markets so out of whack the rents do not cover mortgage payments. Typically on the upper end of the scale. I would suggest not buying anything in the next 2 years as the market is clearly up for a correction.

If a landlord cannot get enough in rent to cover his mortgage payments and other costs, he goes broke and has to sell the property.

If you can find a home you like and can afford, any time is a good time to buy. For one, interest rates are so incredibly low right now. If rates do start to rise, the costs of buying even the exact home at the exact same price is higher. Also buying now vs waiting two or more years, you are two years closer to having it paid off and you have two more years of equity built up in the home. My home is now paid for and my disposable (after tax) income increased by 30% because I no longer have to pay that money which was going to the mortgage. Keep renting and you don't get that increase. Your boss is not likely to give you a 30% after tax increase in salary. Plus I have an asset worth about $300k I can resell if I want/ need to. Rent and you don't get an asset you can later resell for the money you are giving away anyways.

I don't intend to sell but am using the now significantly lower cost of living as a significant portion of my retirement plan. Lower expenses means you can live the same lifestyle with less money (or a better lifestyle on the same money).

 

[timosman]

naah, I disagree. I don't care how high your income is, if you suck at making your payments, have let some debt go to collections and have declared bankruptcy a time or two - I'm not going to loan you money. No way no how. That goes for low-income folks, too.

If by "conformity and compliance" you mean simply that you're just like the majority of Americans and think being in debt is normal and having a high FICO score is something to be proud of then yes, I agree with you.

Consider what an awesome job of marketing banks and credit cards have done the past few decades. We stand in line around the block to beg the banker for a mortgage and feel such joy we we are APPROVED!!, and we think an American Express Platinum card is a mark of success lol

Low income term used here is for people who will not get loans under any conditions. FICO score is not important in that case.
High income people have enough money on hand they do not need loans. I noticed recently paying upfront for cars is being frowned upon as the dealerships do not get kickbacks from loan originators.

 

[timosman]

If a landlord cannot get enough in rent to cover his mortgage payments and other costs, he goes broke and has to sell the property.

Not true. We are in a bubble and part of the game is asset appreciation. This is how being under on rent payments is justifiable. BTW, in some markets $300k does not buy you a shack.

 

[Jamesiv1]

High income people have enough money on hand they do not need loans.

Not really. There are plenty of high-income deadbeats. Just because you make a lot of money doesn't mean you manage it well. Being broke is not the same as being poor.

I noticed recently paying upfront for cars is being frowned upon as the dealerships do not get kickbacks from loan originators.

That is absolutely true. Dealerships make little or no money on the sale price of a car. The money-making departments of a dealership are the shop and the finance office. If you walk into a car dealership with several thousand dollars in cash and know exactly what you want to buy (so you take very little of their time), you will certainly get a lot of frowns from the managers but you will get an awesome deal.

 

[Zippyjuan]

Not true. We are in a bubble and part of the game is asset appreciation. This is how being under on rent payments is justifiable. BTW, in some markets $300k does not buy you a shack.

Rent payments are based on what the landlord paid for the property when he purchased it. Yes, it is possible for housing prices to rise higher than that and overall rents be lower than mortgage payments if you buy a home today but the owner is not taking a loss and renting it out for less than it costs him. Those higher mortgage payments will eventually lead to higher rents. Getting a fixed rate loan and buying a home means those payments won't go up. You also get a tax deduction on your mortgage interest.

 

[timosman]

Not really. There are plenty of high-income deadbeats. Just because you make a lot of money doesn't mean you manage it well.

We are probably talking about different income levels when we refer to them as "high".

 

[helmuth_hubener]

Rent payments are based on what the landlord paid for the property when he purchased it.

Actually, no. The offered rent price is based on what the landlord wants to charge and thinks he can get, and the actual rent is ultimately determined by what the renter is willing to pay.

 

[Zippyjuan]

Yes, there are other factors in determining rents. But rents will not be below the landlord's costs or he will not rent it out.

 

[timosman]

Yes, there are other factors in determining rents. But rents will not be below the landlord's costs or he will not rent it out.

You just admitted this not being always true. Do you remember what you wrote in post #27 ?

 

[angelatc]

Rent payments are based on what the landlord paid for the property when he purchased it.

Nonsense. Rent is based on supply and demand.

 

[Jamesiv1]

Yes, there are other factors in determining rents. But rents will not be below the landlord's costs or he will not rent it out.

Eh?? Of course he will. I would rather get some rent than none. If the market is down, competition is up, and my cost per apartment is $800/month - I will happily take $600/month than nothing at all.

And I'll think about selling that money-pit ASAP.

 

[timosman]

Yes, there are other factors in determining rents. But rents will not be below the landlord's costs or he will not rent it out.

I think it is time to revoke your financial expert card. Statements like these can impress you fellow coworkers from the checkout line, but can not withstand a closer scrutiny of a minimally conscious individual (not in a state of coma).

 

[Zippyjuan]

Eh?? Of course he will. I would rather get some rent than none. If the market is down, competition is up, and my cost per apartment is $800/month - I will happily take $600/month than nothing at all.

And I'll think about selling that money-pit ASAP.

Exactly. You cannot afford to keep losing money. Short term, perhaps.

 

[Occam's Banana]

Yes, there are other factors in determining rents. But rents will not be below the landlord's costs or he will not rent it out.

The only thing determing the price of rent is what renters are willing to pay. The landlord's costs have nothing to do with it.

If there are no renters who are (at least) willing to pay the landlord's break-even rent price, then he will have to (1) take a loss (which he may be able to do for a while, but cannot do indefinitely), (2) sell the property, or (3) use it for some other purpose.

 

[Anti Federalist]

Thank you for letting me know that. I have resisted a debit card and never activate them and cut them up. I don't understand why banks insist on getting a debit card to even open some accounts

Because the banks get a piece of every transaction you make with it.

 

[MelissaWV]

Avoid credit cards at all cost. Instead, do what our grandparents did - save up to buy stuff.

I'm taking the Dave Ramsey "Financial Peace" class and it's awesome. It will totally change the way you look at credit and debt.

A few things I've learned:

1. your FICO score (credit rating) has absolutely nothing to do with your financial well-being. It is your "I love debt!" score. It reveals how much you are inclined to take on debt, and how dependably you make your payments (so those issuing the loan can make money). If you inherit a million dollars tomorrow, it won't affect your FICO score a bit.
2. You don't need a credit card to rent a car or book a hotel room. Debit cards work fine.
3. The best and quickest way to build wealth is with income, not investments. The only way you can do that is to avoid debt like the plague.
4. New cars lose 20% or more of their value the minute you drive off the lot, and up to 70% of their value in the first 4 years. On a $28,000 car that's like throwing a $100 dollar bill out the window every week.
5. The word for interest on a loan in Islam is "riba" and it is forbidden in Islamic banking - for good reason. The Catholic church also forbade usury (another word for exorbitant interest) up until a couple hundred years ago until guess what - the Vatican got some new bankers.

My advice is: Be Debt-Free and read up on how compound interest impacts savings. You sound young... if you start putting money away while still young and leave it there, you will retire a millionaire.

No. Reserving a hotel with a debit card for any amount of time can be prohibitive beyond belief, especially internationally. They can and will put a huge hold on your bank account --- something that would not happen to the same degree with a credit card. Keep in mind that the hold is calculated assuming you're a crazy person and are going to do just about anything and everything you can. In short, it's going to be way more than you'd really spend, and that hold can be on there for a week. If you have double or triple what you actually budget for your room in your account, plus money for everything else you planned to do on your trip, by all means, but not everyone does.

 

[heavenlyboy34]

I have a CC in my safe. Only keep it around in case of emergency. I prefer debit, cash, or check.

 

[Zippyjuan]

The only thing determing the price of rent is what renters are willing to pay. The landlord's costs have nothing to do with it.

If there are no renters who are (at least) willing to pay the landlord's break-even rent price, then he will have to (1) take a loss (which he may be able to do for a while, but cannot do indefinitely), (2) sell the property, or (3) use it for some other purpose.

Your reply supports what I said- thanks. A landlord cannot continue to rent out a place at less than his costs of the unit. Thus his costs DO effect the rent asked.

If there are no renters who are (at least) willing to pay the landlord's break-even rent price, then he will have to (1) take a loss (which he may be able to do for a while, but cannot do indefinitely), (2) sell the property, or (3) use it for some other purpose.

If he can't get his costs back, he takes it off the rental market.