- RT @moneycrush: Ooo, ING is offering a $100 bonus for opening a business savings account with code BSA324. Guess what I’ll be opening… #
- My kids have pinkeye and are willing to share, if anyone is interested. #
- RT @bitterwallet: If you haven’t yet, pop over to http://enemiesofreason.co.uk/ to see how @antonvowl dealt with lousy content thieves. #
- RT @zen_habits: Excellent: No One Knows What the F*** They’re Doing http://bit.ly/9fsZim #
- @bargainr RE:Hypocrites. No, they aren’t. They have paid for those services, even if unwillingly. in reply to bargainr #
- RT @PhilVillarreal: If vegetables tasted good, there would be no such thing as salad dressing. #
- RT @The_Weakonomist: w00t RT @BreakingNews: Obama announces $8 billion in loan guarantees to build first U.S. nuclear plant in three decades #
- @SuburbanDollar CutePDF. PDF export as a printer. in reply to SuburbanDollar #
- RT @bargainr: There are stocks that have paid out dividends consistently for 50+ years… they’re Dividend Champions http://bit.ly/cSYXrY #
- “Four M&M’s if I poop” Economics lessons from a toddler. http://su.pr/2akWF9 #
- @The_Weakonomist Is seaweed a meat, now? in reply to The_Weakonomist #
Repo Man
Here is a fun blast from the past. This was originally posted in February 2010.
A few years ago, we bought a new truck. We brought our old truck in as a trade, but the offer was bordering on insulting, so we kept it.
We posted the old truck on CarSoup, the classifieds, and anywhere else we could find to post it. Nothing. After a few weeks, we finally found a
buyer–a friend we had hired to help with a large remodel on our house. He didn’t have all of the money to buy it, but we knew him, we knew his family, and he was work for us. It should have been a low-risk loan. We’d give him the truck, he’d make monthly payments. Simple, right?
That was the plan. He made payments for about six months. When the starter died, we forgave that amount of the debt. When we was short, we’d let him skip a payment. Were were good lenders, at least from his perspective.
Then, “I’m a little short this month” stretched into two months, three, six. Then one day, he fell off the face of the planet. I found out later, he’d canceled his phone and left the state. We were the kind of lenders that get banks closed down by bad business decisions.
What could we do? Fortunately, we’d created a written loan agreement and entered ourselves as the loan holder during the title transfer. I eventually filed the repossession payment…a year after he disappeared. I figured, if by some chance the truck got impounded, we’d get it back.
A few months later, we were driving down the highway that just happened to pass within sight of his brother’s shop. I just happened to glance in that direction as we drove past. I’m sure I caught my wife by surprise with the sudden u-turn. I found our truck. The long-lost friend was back in the state, staying in his brother’s shop.
[ad name=”inlineleft”]The next day, I brought another friend to the shop. We knocked on the door. No answer. I left a note on the shop door and we took the truck, using the spare keys I kept when we sold it. I had just completed my first–and so far, only–repossession. I’m not a bank or a repo man, just a guy who got screwed.
Possession was mine. Wrongs were righted. The truck was tentatively sold immediately. If the buyer couldn’t pay, the truck was gone. He called, offering his apologies and hoping to get the truck back and start making payments again. I accepted his apologies and kept the truck. People are only allowed to rip me off once. Almost two years without a payment or even an excuse is too much for me to accept. So far, I am the only person I know to manage a legal repossession as a private party.
The repo process varies by state, but the basics don’t change much. The loan holder can file for repossession as soon as the loan agreement is broken. They can repossess with no notice and the borrower is on the hook for the difference between what’s owed and twhat’s recovered during resale. If you get to the point of repossession, you are out of options. You are generally left to pay the debt in full, or lose the vehicle. If you are accepting payments from a friend to buy a car, make sure you have a written agreement and are listed as the loan holder on the title. Keep some leverage to avoid getting screwed.
How far have you gone to recover money you are owed?
What Can Cause Damage to Your Credit?
Credit scores move up and down as new financial data is collected by the credit bureaus. Many factors can cause a credit score to rise or fall, but most people don’t have a clue what they are. Understanding what affects credit can help keep your number in a good score range, where it should be. But, even a bad score can recover more quickly than most people realize, even after a bankruptcy or default. Here are some factors that can help you understand why credit moves up or down:
Late Payments
About 30% of your score is made up from your payment history. This is comprised from things like credit card bills, auto loan payments, personal loans, and mortgages. At this time, bills like utilities or rent are not factored into your score, unless they are sent to a collection agency. If you are late to pay your credit card bill, it will show up on your credit file. One late payment will probably not have much of an effect, but a history of this over time can drop your score. It is very important to keep bill payment current as a courtesy to creditors and the benefit of your own financial history.
Credit Inquiries
One of the most misunderstood factors that can cause a credit score to drop are “credit inquiries”. An inquiry takes place anytime your credit is checked. This makes up 10% of your total score. What most people don’t know is that there are two different types of credit inquiries, “hard inquiries” and “soft inquires”. Only hard inquiries affect credit and happen when you apply for a new credit card, loan, or mortgage. Soft inquiries on the other hand happen when someone like an employer, landlord, or yourself check your credit report. These are not factored into your credit score at all. Hard inquiries are a necessary part of applying for a loan or credit, so an occasional inquiry will not cause damage. It can only cause problems if there are many hard inquiries in a short period of time. This can be a signal to creditors that you are in financial trouble and are desperately seeking cash.
Credit to Debt Ratio
Your total amount of available credit compared to the amount of credit you use each month, makes up your credit-to-debt ratio. FICO suggests that you use no more than 30% of your available credit before paying off your balance each month. For example if you have $10,000 of available credit spread across 3 different credit cards, the optimal amount to charge would be $3000 or less each month. Maxing out your credit cards can cause your score to drop even if you pay them off completely each month.
Age of Your Credit History
The length of time you have had an open credit account is a major factor of your credit score. It can help to open a credit card when you are younger by getting a co-signer. If you are the parent of a teenager, it may be helpful to open a credit card in their name, but only allow them to use it for emergencies. Having an open credit card in good standing for a long period of time can help build this history. The length of time that you have had credit makes up about 15% of your score.
Different Types of Credit
The last major factor that makes up about 10% of your score comes from the different types of credit that you use. These credit types include revolving, installment, and mortgage. The ability of an individual to successfully handle all of these credit types can show that they are financially well-rounded. This makes up about 10% of the total credit score.
About:
Ross is an investor and website owner.
Fighting Fair
This was a guest post on another site early last year.
Everyone, at times, has disagreements. How boring would life be if everyone agreed all of the time? How you handle those disagreements may mean disaster.
This is particularly true when you are arguing with your spouse. You spend most non-working moments with this one person, this wonderful, loving, infuriating person. Your emotions will naturally run high while discussing the things you care most about with the person you care most about. Arguments are not only natural, but inevitable.
How do you have an argument with someone you love without lasting resentment?
You have to argue fairly. There are a few principles to remember during an argument.
- When your partner is talking, your job is to listen with all of your energy. You are not interrupting. Your are not planning your rebuttal while waiting for your turn to talk. Your are listening, nothing else. If you don’t listen, you can’t understand. If you don’t understand, you can’t find a resolution.
- Remember that your partner cares. If she didn’t care, she wouldn’t feel so strongly about the argument. This isn’t a war, just an argument. She still wants to spend the rest of her life with you. Keeping this in mind will change the entire tone of the argument into a positive interaction. You will still disagree, but you will be looking for a solution together, instead of finding a “win” at any cost.
- Search for the best intent. Remember #2? There is an incredibly good chance that, if there are two ways to interpret something your partner has said–a good way and a bad way–your partner probably meant the good way. Even if you are wrong, it is far better to err on the side of resolution than the side of antagonism.
- When your partner has finished speaking, it’s still not your turn to argue. Your job now is to repeat your understanding of the issue, without worrying about problem-solving. Before you can refute the argument–or even establish your disagreement–you have to know that you understand her position and she has to know that you do. Without understanding, there can be no path to resolution that doesn’t cause resentment. If you have too much resentment, you won’t have a marriage.
After all of this, it will finally be your turn to make your point. Hopefully, your partner will be following the same rules so you can solve your problems together, without learning to hate each other.
Arguments in your marriage aren’t–or shouldn’t be–intended to draw blood. Fights happen. If your goal is to win at any cost, you will both lose, possibly everything.
Why I Hate Payday Loans
I hate payday loans and payday lenders.
The way a way a payday loan works is that you go into a payday lender and you sign a check for the amount you want to borrow, plus their fee. They give you money that you don’t have to pay back until payday. It’s generally a two-week loan.
Now, this two week loan comes with a fee, so if you want to borrow $100, they’ll charge you a $25 fee, plus a percent of the total loan, so for that $100 loan, you’ll have to pay back $128.28.
That’s only 28% of actual interest; that’s not terrible. However, if you prorate that to figure the APR, which is what everyone means when they say “I’ve got a 7% interest rate”, it comes out to 737%. That’s nuts.
They are a very bad financial plan.
Those loans may save you from an overdraft fee, but they’ll cost almost as much as an overdraft fee, and the way they are rigged–with high fees, due on payday–you’re more likely to need another one soon. They are structured to keep you from ever getting out from under the payday loan cycle.
For those reasons, I consider payday loan companies to be slimy. Look at any of their sites. Almost none are upfront about the total cost of the loan.
So I don’t take their ads. When an advertiser contacts me, my rate sheet says very clealy that I will not take payday loan ads. The reason for that is–in my mind–when I accept an advertiser, I am–in some form–endorsing that company, or at least, I am agreeing that they are a legitimate business and I am helping them conduct that business.
In all of the time I’ve been taking ads, I’ve made exactly one exception to that rule. On the front page of that advertiser’s website, they had the prorated APR in bright, bold red letters. It was still a really bad deal, but with that level of disclosure, I felt comfortable that nobody would click through and sign up without knowing what they were getting into. That was a payday lender with integrity, as oxymoronic as that sounds.
Sammy’s Story, Part 2
For those of you not following along, please read the previous installment of Sammy’s Story. The short version is that we’re thinking about helping someone launch a small business and put “at risk” teenagers and young adults to work.
Sammy called me a couple of days ago. He wanted to discuss working for some of the tools and toys he saw at my mother-in-law’s house and he said he had something to show us. When I picked him up, he had a leather portfolio-style notebook and looked excited.
When we got to the house, he opened up his notebook and handed me two pieces of paper. He said that the idea of being able to launch his business had him so excited that he couldn’t not do anything. He had handed me a landscaping plan and materials list for fixing my mother-in-law’s yard.
We talked about the landscape plan, the business plan, and my wife’s old skateboard, then he had to go. Last night was one of the nights he met “his” kids at a community center.
On the way to the community center, we stopped by his apartment, because he wanted to show me pictures of his kids, and his grandkids, and his foster mother. He told me about his mother dying when he was 13 and his father dropping him with an aunt before disappearing. He was nearly in tears when he asked how some strange white guy could see more in him than his own family did.
He told me about how the money he made working with me had put food on the table of the 14 year old he brought with–a 14 year old who is eager to work more. It paid the weekly rent for one of the other workers and contributed to the rehab of Sammy’s ex. The little bit we’ve done has already touched the lives of dozens of people.
We talked about the way he hates rap. Not because of it’s musical value, but because it’s building a culture that considers women to be nothing but “bitches and hoes” while convincing kids that the only way they can improve their situation is to land a recording contract. Those are the kids he wants to teach to take care of themselves and build their own lives.
Finally, he asked me for my honest opinion about his landscaping plan.
I said, “Sammy, that clinched the deal. I was leaning towards helping you, but now it’s definite. I know you’re serious, so we’re going to make this happen.”
He’s got no idea how to handle taxes, payroll, or insurance, and he has no tools, but we’re going to jump in with both feet.
