Credit Cards and defaulting - what can they do?

[Eomer]

Still though in 2008 it was 3.8% and it has been above 3% since 2005 with the exception of 2007 where it was 2.8.

Yeah, because the economy was booming, energy costs were sky rocketing, and so were commodities. Inflation is typically 2-4% on average in developed countries.

Trying to apply that logic to a single person or family though that only has 1 or maybe 2 properties doesn't really work.

Yes and no. In the short to medium term yes, but in the long term even an individual property is a pretty safe investment. My dad has slowly bought commercial properties over the past 30 years, and figures that with the lease income and increase in value they return on average 8-12% a year consistently. He has a deep suspicion of the stock market and especially investment advisors because he's been burned in the past, so the vast majority of his investment money is tied up in half a dozen or so commercial properties, and he's done pretty well for himself.

That said, it's not something I'm personally interested in doing. The hassle of finding leasors, chasing down deadbeats, utilities, fixing problems with the buildings, and so on are a big turn off for me.

[Zeste]

I'm updating this thread a bit.

Presently, I am down to around 28k debt between a business loan (20k) and a single credit card (8k). I have paid off everything else but this. I've spent the time since I started this thread selling all my needless "toys" and luxury purchases, selling things that I plain just don't need, cancelled my TV months ago, reduced my phone minutes, turned down the house AC... everything to save money.

I listened to the people in this thread, and I just resolved to pay it off and keep my credit and hope to get it to "great" again, in the hopes that when my father's inheritance comes due in 2 years, I will have good enough credit to start using that money to make more money through developing land and investing.

Also, the business loan, it doesn't appear on my personal credit. So really, right now all my credit rating shows is a couple of late payments (from not getting paychecks on time), and one 8k balance on a VISA.

So anyways, I sorta did what people suggested and just started paying stuff down, every time I get extra cash, I just immediately pay it to something.


Also, just to be clear:
- I never intended to voluntarily not pay my debt. I had a month where I had to hold my paychecks and not cash them and fell behind, which is when I started this thread.

- My dad died a year ago and left us his shit, which will be a large sum of assets that become available in 2011. I didn't want to use that to pay off debts, which is why I am paying them down now.

[Arbitrary]

That's great.

The hardest part is on the way. Once you are back in the black, or functionally back in the black, the temptation is going to be to start going the same things that got you into trouble in the first place. You'll even start to convince yourself that you can handle a little credit card debt because you are wiser from your past experiences.

Don't fucking do it. It won't take you any time at all to end up with a bunch of shit you don't need bought with money that you don't have and you'll be right back where you started. If you want something, really really want something, than save up for it and buy it outright. You need to relearn the difference between what you need, what you want, and what you think you want. That last one will fuck your shit up.

[Aetos]

My firm uses 3.9% as a historic average for inflation.

[Zeste]

Originally Posted by Arbitrary

You'll even start to convince yourself that you can handle a little credit card debt because you are wiser from your past experiences.

Don't fucking do it.

I am really trying to apply this and make it a habit. Also, I know it hurt my credit score, but I did close all my credit card accounts. I would have to apply and reopen all new cards to get more.

[TheCutlery]

Originally Posted by Arbitrary

That's great.

The hardest part is on the way. Once you are back in the black, or functionally back in the black, the temptation is going to be to start going the same things that got you into trouble in the first place. You'll even start to convince yourself that you can handle a little credit card debt because you are wiser from your past experiences.

Don't fucking do it. It won't take you any time at all to end up with a bunch of shit you don't need bought with money that you don't have and you'll be right back where you started. If you want something, really really want something, than save up for it and buy it outright. You need to relearn the difference between what you need, what you want, and what you think you want. That last one will fuck your shit up.

Eh, it kinda depends how much you obsess over your financials. I racked up 12k in debt putting my wife thru school and hated every fucking minute of it. Every week all I thought about was how much I was knocking off the debt this week. Getting that shit paid off lifted a gigantic weight off me, and then everything was fine again. I still use my credit cards regularly to buy shit I don't need...I just pay them back down to 0 before I buy anything else, that's the deal I made with myself. Sure, there's times when the car needs $1000 worth of repairs too, but that's not a huge deal, just pay that off along with it.

I think once you're deep enough in the hole to realize you're thoroughly fucked, you'll be a lot better about getting that deep again voluntarily. If you really have no accountability for your actions and don't give 2 shits about how much debt you rack up, and do something like file bankruptcy or something to get out of it, then yeah, I'd buy that you're gonna fall back into the hole pretty quickly.