Your feelings on paying back debt

@Chumly,

Chumly wrote:

Your moral absolutism rears its ugly head in the face of finances; however the dollar has no conscience, nor does the dollar have morality! The dollar only has relative value (albeit some will argue it has intrinsic value too).

'Ol Wiki sayeth:

Quote:
In finance, intrinsic value refers to the value of a security which is intrinsic to or contained in the security itself. It is also frequently called fundamental value. It is ordinarily calculated by summing the future income generated by the asset, and discounting it to the present value.

Quote:
Relative value is the attractiveness measured in terms of risk, liquidity, and return of one instrument relative to another, or for a given instrument, of one maturity relative to another

1 Reply

@ebrown p,

ebrown p wrote:

Well, in my opinion 19% interest is obscene.

Even considering the accounts they have to write off as uncollectable?

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@Chumly,

Chumly wrote:

Chumly wrote:

Your moral absolutism rears its ugly head in the face of finances; however the dollar has no conscience, nor does the dollar have morality! The dollar only has relative value (albeit some will argue it has intrinsic value too).

'Ol Wiki sayeth:

Quote:
In finance, intrinsic value refers to the value of a security which is intrinsic to or contained in the security itself. It is also frequently called fundamental value. It is ordinarily calculated by summing the future income generated by the asset, and discounting it to the present value.

Quote:
Relative value is the attractiveness measured in terms of risk, liquidity, and return of one instrument relative to another, or for a given instrument, of one maturity relative to another

um....huh?

No, really chumly, didn't mean to be flip.

I really don't understand what you are getting at.

1 Reply

@roger,

Sure-- the term "obscene" is a subjective moral judgment. I don't have a problem stating my opinion.

In my opinion, the behavior of American credit card companies is obscene. This doesn't take away from my belief that people should be allowed to play by the rules we have set up-- although I would like to see the rules changed. Bankruptcy protection makes the usurious practices that are common a little more palatable.

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@chai2,

Money has no conscience or morals, its value is relative and (arguably intrinsic).

1 Reply

@Chumly,

Chumly wrote:

Money has no conscience or morals, its value is relative and (arguably intrinsic).

But the people who spend, and owe it, do.

1 Reply

I think their are things to consider.

Is the lender practicing usury?

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@Amigo,

I don't think I consider a 20% annual percentage rate to be usury. Especially since it's 100% voluntary. You pay in full, you don't get charged interest, if you don't use the card, you don't get charged interest. I don't find that rate to be a problem at all.

And the recent CARD act fixed the major problem that I saw with credit card companies, in that they could raise the rate on your existing balance. Now they can only raise the rate on your future purchases.

If someone is paying 20% APR they likely don't have good credit. That same person will be paying a 14-17% rate for a used car loan or a 7-8% rate (with a significant down payment) on a home mortgage. For the car and mortgage, the bank can TAKE these things from you. That is a significant deterrent to not paying your bill. It also allows the bank to recoup a significant amount of what they lent.

If you want to be really shocked.....a pay day lender typically charges rates APRs in the 100's of % (sometimes 1000's of a %).

1 Reply

@roger,

roger wrote:

ebrown p wrote:

Well, in my opinion 19% interest is obscene.

Even considering the accounts they have to write off as uncollectable?

heheheh

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I don't think that having the credit card people point their finger at the payday loan people and saying we're not so bad look at them is gonna help this mess.

just saying...

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@Rockhead,

That is not exactly what I did. There are several paragraphs where I elaborated my position. You focused on one line like a laser.

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@maporsche,

sorry.

that's the line that bothered me.

we can pursue it if you like...

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@chai2,

As discussed moral relativity rears its ugly head!

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@Chumly,

good morning to you as well, chum...

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@Rockhead,

Surely it is, as I get to putter today!

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@maporsche,

There. I think you've covered every important point in regard to credit card interest.

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Below is a hypothetical but the scenario happens all to often.
A company employing 35 people recently went into recievership. The company is a PTY LTD company. Employees are owed wages holiday pay and superannuation to the tune of $50,000. The company has several bank loans (amount unknown).
Creditors, (good supplied for manufacturing, advertising etc) are owed 50K.
1. The banks get all their money.
2. Creditors get 10 cents in the dollar
3. Employees get nothing. (Not even their last months pay.)

The owner (who officially was titled the managing director) has a home worth in excess of 1 mill. Officially the house is owned by a family trust.
He drives a mercedes. Ownership of the car was transferred to his wife about 12 months ago.

Draw your own conclusions about whether this is fair.

1 Reply

@djjd62,

I am the voice of experience - I've been through bankrucpcy - due to a business. Like you stated, this was not due to lack of hard work - hubby worked there 7 days a week pretty much from open to close without drawing a pay check. We even tried to negotiate with the lender (not to pay less of what was owed, but to work out a different payment plan) - they were unwilling to negotiate.

Bankrupcy was a last choice. If we did not, we would no longer have a home to live in and who knows what else. Also, you do not come out unscathed - this impacts almost every aspect of your life and is incredibly embarassing and humilating especially as we had always been financially responsible including paying off credit cards monthly - no car loans, student loans all paid off, etc. We made sure we paid all our personal bills and employees.

Our credit rating was spotless prior to this. Now it is on our record and can be supplied to our employers and whoever hires us in the future.

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@ebrown p,

You are completely correct - they also take away your tax refund - basically you are left with a home (if you own one) and nothing else. And then they can still deny your claim.

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@dadpad,

Legally, an employer has to pay the employees so I do not imagine this is accurate - again from personal experience - even in bankrupcy - taxes first then employee pays

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Your feelings on paying back debt

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