credit cards, cash advance and title loans!

[ccrobinson]

Answer: unwise in both counts.

Echoing webdog, what is it about borrowing and lending that make it inherently unwise?

 

[menageriekeeper]

Echoing webdog, what is it about borrowing and lending that make it inherently unwise?

On the borrowing side: a person is borrowing against tomorrow to which none of us are guarenteed.

On the lending side: Can you charge enough interest to protect your investment should the borrower not be able to repay the principal? How much can you charge before the interest rate becomes unfair? Can you withstand the temptation to charge unfair amounts of interest because of the income potential.

You may wonder why this is becoming my pet peave so let me tell you what happened today. As I was leaving Walmart (you know Walmart that supposedly doesn't allow soliciting) I was handed a card by this woman with pink striped hair. I looked down to see what she was handing me. The heading was something to the effect of "do you need money" and the gist was all I had to do was come down to ______Cash Services and they had several programs available. I made a point to hand it right back to her with a no thank you and was asked didn't I think I could use some money. I hope she was getting paid well cause she was certainly pushing the business. She didn't say anymore when I told her in front of some others leaving that I thought "services" like her business provided are a rip off and they should all be outlawed. She didn't want to talk about that and I gave her a chance to respond.

Webdog, the business you are in may serve a legitimate purpose. I'm sure you are honest in you business dealings and hope you have the backing in case of any losses. But your business and those that lend for mortgages and car loans aren't really what this thread is about. Those services, while risky to a certain extent, do serve a good purpose.

But payday loans? Title loans? Even credit cards have gotten to be such a racket with the exhorbitant interest rates and fees tacked on for everything they can think of.

You and I are smart enough to pay our bills on time and not carry a balance on our credit cards. But in our poverty stricken undereducated area (and our area is way better than some places in this state) people are already living hand to mouth. Then some business comes in and appears to be giving them a way out of the latest crisis, they are going to take it with no thought of the next crisis coming down the line. They simply don't have the sophistication to think that far ahead. Most of them are honest folk, just not real smart. They have a need and don't want to ask for "charity" so they sign on the dotted line and don't understand all that stuff in fine print. Now they are caught.

And that is the honest folk. Not everyone that goes into these places is honest. A friend of mine had a woman come to her church. She was friendly to this woman and had a few conversations with her both in and out of church. The woman was in a bad situation (of her own making) and had two little children and no job. Her "husband" was supposedly a "student". This woman went to more than one of these cash advance places and cashed checks using my friend (a local business owner) as a reference! I can't tell you how many times my friend got called from these places because the woman skipped out on them and the only contact info they had was my friends!

Not excusing what the woman did, but why on earth would anyone cash a check for someone who could prove they even had an income? They know there is no money in the account or these folks wouldn't be coming in in the first place!

This is no kind of business for a Christian to be involved in on either side of the equation. (IMO)

 

[ccrobinson]

Thank you, menageriekeeper, I appreciate your perspective.

I'm still not sure that there is something inherently wrong with borrowing and lending, but I do recognize that it can lead to some very bad things on both sides when good judgment isn't used.

 

[Phillipians121]

We have occasionally lent money privately to people. Most of the results have been very gratifying, but one way we have learned to deal with it in our hearts is to consider it a gift and then there is no disappointment if nothing comes back. It's not worth the friendships or pain to put someone else, or us, through the hassle of getting back money.

We do the exact same thing...never give expecting it back if it does come back thank God if not no hard feeling and reuined relationships. :thumbs:

Very good OP, since I find it amazing that many christians find nothing wrong with being in debt they cannot pay or filing for bankruptcy, which is really stealing.

It is ok to borrow if you are able to make your payments each month and if you know you can pay it off within a certain amount of time. We know if we put a big purchase on our card (as we only have one) that we can pay it off within six months or less.

I know people have hardships or are self employed...and in that case they should LIVE knowing this and adjusting to that lifestyle.

Good example we know a family with seven kids and the husband will not work in a real work enviorment for whatever reasons. So he has chosen to do a job fixing one computer part which can be all around the world at times. But it only happens once in a while and now that technology has advance that part is no longer needed. Anyway one year he made ALOT of money and instead of saving that money or putting some of it towards health insurance for the kids (they had NONE) they went to Africa all 9 of them and spent the money shooting over 15 animlas and bringing their heads and skins home (must have cost a fortune) pearl earings and necklesses etc. etc. well after six months later he hasn't worked since (it's been over a year) and one of their kids died from cancer...they didn't have health insurance to take the kid to the doctors thinking he had growing pains. And now they will lose their house that they have 2nds and 3rds on and a brand new BMW car payment (he bought his wife a bmw car since she always wanted one) went towards the house. Now they will lose it all.

I say that is very poor mangement and they didn't live within their means...which many Amercians find hard to do. And yes they are christians who think God will get them out of this and they tend to depend on others to help...God knows we did many times till we saw the pattern

 

[Lagardo]

Not excusing what the woman did, but why on earth would anyone cash a check for someone who could prove they even had an income? They know there is no money in the account or these folks wouldn't be coming in in the first place!

This is no kind of business for a Christian to be involved in on either side of the equation. (IMO)

I'm sure they get their money a vast majority of the time or they wouldn't be in business.

I've worked in Rent-to-own which is generally along the same lines as some of the businesses you are referring to so I've seen the other side of things. My first reaction to your story was to wonder why your friend vouched for the women to begin with. You say these folks no she doesn't have an income? They asked a reference, didn't they? Did he lie?

I can also say that these places do not want people to over-extend. I know, that sounds strange given all the money people pay them, but who is the first to lose if the person can't pay? Our store manager had the final decision regarding approving a rental agreement. He was a pretty cold guy, I admit, but even he had to think, "how much will I spend having to collect from these people?" Making money is the goal of any business and if these businesses over-extend their customers, they lose them.

I think our most Christian response is to teach people wise borrowing and spending practices. You can't imagine how many "good Christian folks" would lie and cheat their way around me to keep me from repo-ing their TV.

 

[menageriekeeper]

No, no, no, my friend did not vouch for this woman (I can't call her a lady). We don't know what she told them only that she gave my friend as reference. My friend owns a shop and is fairly well known in town, but companies didn't bother to check it out until the woman didn't pay!

I absolutely do know how many "good Christian" folk would lie to you to keep the TV! Those same folk are the ones who pass bad checks and order custom work (I'm a dressmaker) and then try to find fault because they suddenly don't want to pay for what they designed! I changed my whole manner of doing business because of folk like that. Now my customers have to have as many references as I give them before I'll consider working for them. In other words, they don't get to me unless one of my regular customers recommends me to them and even then I call my regular and ask who they are and did they really recommend me! And I still won't work for them if something strikes me funny about their attitude. I go with little voice that tells me something isn't right. I've failed to pay attention to that little voice before and it has always led to problems.

I'm not spending hours working on a garment to have a customer tell me, "Oh well, I don't like the way this turned out so you can just pay me for the fabric and sell it to someone else." Nope, it don't work that way! But I've had it happen and no I did not pay the customer for the materials. I have taken the finished garment in exchange for the labor. I do heirloom quality work and if the only problem the customer can find with the garment is the design that they picked out, then it is their loss.

Ah, the joys of working for oneself! :tonofbricks:

 

[Raindrop]

Helen, your post (#3) is excellent. It covered many aspects of the topic in a simple, helpful manner. It is very, very important that we manage money well.

Yesterday I signed up for a credit card at a local store to save 10%. They are hoping I'll shop there more often, use my card, and occasionally pay them some interest on my purchases. I'll probably just tear the card up. You have to be very careful, because even honest business people try to draw you in and get you doing business with them in ways that benefit their bottom line.

 

[corndogggy]

Yesterday I signed up for a credit card at a local store to save 10%.

Just keep in mind that acts like this actually hurt you and cost you more in the long run even if you do just tear it up, because the mere fact that you applied affected your credit score. If you use credit in the future, you could find yourself not getting as good of interest rates due to credit score hits like this.

You have to be very careful, because even honest business people try to draw you in and get you doing business with them in ways that benefit their bottom line.

Should this be a big surprise? It's called "capitalism"... EVERYTHING works that way, get used to it. Everything in business is done to get you to do something that affects their bottom line. This is why that quote I mentioned earlier is so true:

"Business is the art of taking money from one man's wallet and putting it into yours, without resorting to violence".

All advertising, negotiations, store layout, special offers, sales, investments in high customer service... EVERYTHING is done to get you to take money out of your wallet and put it into theirs. By tempting you with that 10%, they're trying to get you to take even more money out of your wallet and put it into theirs by giving the illusion that they're helping you. It's not stealing, it's capitalism.

Wal-Mart and every other big store study how customers walk around a store, and what products they're most likely to buy if they're near certain other items, and things like that. Why do you think that milk is at the very end of the store? They want you to walk by a blue million other things first. What do you think those discount cards are for at like Kroger's? They mark up the items so that they're too expensive normally, but you get a "discount" if you use their card. Why? They're running that data through computers to analyze the buying patterns of different demographics. Why do you think that Wal-Mart focuses on the "rollback" items? Because they don't want you to pay attention to everything else that costs too much, such as the green peppers that cost 3 times what I can buy them across the road for, or the bread that costs 4 times as much for poorer quality.

All of this is done so that they can take more of your money, and it's so sophisticated that it's an art form. This is why the older I get, the more I see that this statement is true. Open your eyes and you'll see it. Everybody wants your money, and they'll pull out every trick possible to get it.

 

[corndogggy]

That might have been the "wise" and successful businessman's motto, but it is a false. What your friend said was basically being a thief... stealing.

Read my previous post.

 

[Karen]

Just keep in mind that acts like this actually hurt you and cost you more in the long run even if you do just tear it up, because the mere fact that you applied affected your credit score. If you use credit in the future, you could find yourself not getting as good of interest rates due to credit score hits like this.
............

That is not quite true. Part of your credit score is how much of your available credit is used. They say you should use less than 1/3 of it to look good.
For example, if you have a $1000 credit card, keep the usage $300 or less.
If you had two credit cards with $1000 limit on each one, that would be $2000. If you had a combined balance of $600, that would be in guidelines. However, if you cancel one card, and then have that $600 just on the one card with $1000 limit, your credit score would go down because you would then be at 60% utilization of available credit. Even with making regular payments on time.

Taking out another card and then tearing it up and not using it is actually a method some use to boost their credit score because of the above scenario. However, doing it repeatedly would backfire because part of the credit score is also based on various other factors.

 

[corndogggy]

Taking out another card and then tearing it up and not using it is actually a method some use to boost their credit score because of the above scenario. However, doing it repeatedly would backfire because part of the credit score is also based on various other factors.

I just think that there's really only a minority of the population that doing such a thing would help with. As for as it backfiring, yes, that's true, especially with "potential debt". With the logic you gave, the more unused credit you've got, the higher score you've got, which is not true at all. When you've got either several small unused credit cards, or even one or a few large unused credit cards, creditors must take this into consideration, because if they loan you a certain amount and expect you to repay it, then you turn around and take those credit cards that you've already got and max them out, your ability to make your monthly payment could be severely negatively affected, and therefore you will be viewed as being a riskier investment than somebody who has a smaller amount of potential debt.

So typically, unless you're just starting out and need some credit to your name, adding more credit in a scenario like this just hurts you in the long run.