djAdvocate
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Post by djAdvocate on Apr 26, 2015 19:17:59 GMT -5
So it seems like the real issue is if people know their loan terms and are prepared. It's sad, but given the general financial knowledge of the average person, I'd say many don't have a clue. I think we are way above average in this group. If you are happily just paying the minimum each month, clueless you are only paying interest, and suddenly get hit with a balloon payment or even just a huge increase you are probably in trouble. The same person who doesn't know the terms of their loan probably also doesn't have the savings or other options to cover an unexpected bill like that. i think a lot of people expect good things to happen to them: the rainbow and unicorn crowd. they think their house will appreciate 10% a year forever (without imagining the absurdity of that in the long term), and that their incomes will keep pace with inflation, and that lenders will continue to be loose with credit. none of that shit happens. it is all cyclic. financially saavy people take advantage of that, and come out ahead, and financially naiive people get taken advantage of.
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djAdvocate
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Post by djAdvocate on Apr 26, 2015 19:19:10 GMT -5
We received many letters and calls from the bank that has our line warning us that our line was coming due and making offers to get a new one. At least a year of warnings so it shouldn't come as a surprise. But even with a year's notice, if you have a high balance and no money, you could be in bad shape. We waited until the last minute because of our low rate. We new a new line would be at a higher rate. Earlier I said we close on a refinance this week. We are actually getting a new line with a different bank and paying off the old one at closing. We received postcards in the mail from many different banks offering basically the same terms and chose to go with our hometown bank. The banks know these lines are coming due and are advertising pretty heavily. i hadn't mentioned this possibility. thanks for bringing it up!
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djAdvocate
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Post by djAdvocate on Apr 26, 2015 19:22:04 GMT -5
Doesn't help that a lot of scumbag companies are out there sending offers in the mail with giant dollar signs on them.
There should be a mandatory finance course taught in every high school that delves heavily into all of this. Call it real world finance, or how not to get screwed by people out to screw you. It should touch on every aspect of financial planning from your first job,car,apartment to retirement.
So how long do we keep on protecting people from themselves? i think that is a false way of framing the debate. there are people out there LOOKING for victims. they seek them out, and when they find them, they do everything they can to reassure them that the snake oil they are selling is the good stuff. if people are a little trusting and gullible, that is fault enough. but that does NOT pardon the snake oil salesman, NOR SHOULD IT. if i sell a product that i am guaranteeing, and i fail to act on that guarantee, i can get taken to court for that. the fact that financial institutions get away with this crap is not acceptable to me, and i would EXPECT the government to intervene to prevent it, and to help victims.
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djAdvocate
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Post by djAdvocate on Apr 26, 2015 20:32:35 GMT -5
Doesn't help that a lot of scumbag companies are out there sending offers in the mail with giant dollar signs on them.
There should be a mandatory finance course taught in every high school that delves heavily into all of this. Call it real world finance, or how not to get screwed by people out to screw you. It should touch on every aspect of financial planning from your first job,car,apartment to retirement.
Because I was a lazy kid and could, I skipped the typical senior year college prep math and took a "fluff" class called "Financial Math" instead. It gave the basics of finance, interest (accrual and payment) consumer banking and lending, taxes and filing, saving strategies and even rudimentary retirement planning. It was probably one of the most valuable courses I took in high school. Go figure! that class should probably NOT be an elective. you know what else shouldn't? a class in civics that taught that there are actually two conceptions of democracy. one is the one that all of us are currently being taught: that our involvement is a way that meaningful change takes place, and regularly achieves that end. the other is that our conception of democracy is actually designed to disempower us, and let the real players run the table. i am making sure that every young person i know is aware of the latter, including my son, since our education system is apparently part of that game.
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EVT1
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Post by EVT1 on Apr 26, 2015 20:52:06 GMT -5
Can you imagine the number of people that would be against mandating a class like that? Empowered and financial literate consumers are not popular in some circles. Entire business models rely on the opposite.
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djAdvocate
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Post by djAdvocate on Apr 26, 2015 20:59:03 GMT -5
Can you imagine the number of people that would be against mandating a class like that? Empowered and financial literate consumers are not popular in some circles. Entire business models rely on the opposite. bingo. the only thing worse than an informed electorate would be an informed consumer.
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Opti
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Post by Opti on Apr 26, 2015 21:46:24 GMT -5
We received many letters and calls from the bank that has our line warning us that our line was coming due and making offers to get a new one. At least a year of warnings so it shouldn't come as a surprise. But even with a year's notice, if you have a high balance and no money, you could be in bad shape. We waited until the last minute because of our low rate. We new a new line would be at a higher rate. Earlier I said we close on a refinance this week. We are actually getting a new line with a different bank and paying off the old one at closing. We received postcards in the mail from many different banks offering basically the same terms and chose to go with our hometown bank. The banks know these lines are coming due and are advertising pretty heavily. i hadn't mentioned this possibility. thanks for bringing it up! Interesting endofera. My guess is the banks are advertising heavily because they want to be protected but they are also addicted to the income flow so they basically want people to reroll their HELOCs and hopefully mitigate their banks losses.
This is America folks. Its about protecting businesses not people.
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Opti
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Post by Opti on Apr 26, 2015 21:53:54 GMT -5
Can you imagine the number of people that would be against mandating a class like that? Empowered and financial literate consumers are not popular in some circles. Entire business models rely on the opposite. bingo. the only thing worse than an informed electorate would be an informed consumer. Extremely true. I think many folks preaching pro-responsibility and pro-business don't get many business models rely on being able to fleece or at least fool consumers.
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Opti
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Post by Opti on Apr 26, 2015 22:08:29 GMT -5
So how long do we keep on protecting people from themselves? i think that is a false way of framing the debate. there are people out there LOOKING for victims. they seek them out, and when they find them, they do everything they can to reassure them that the snake oil they are selling is the good stuff. if people are a little trusting and gullible, that is fault enough. but that does NOT pardon the snake oil salesman, NOR SHOULD IT. if i sell a product that i am guaranteeing, and i fail to act on that guarantee, i can get taken to court for that. the fact that financial institutions get away with this crap is not acceptable to me, and i would EXPECT the government to intervene to prevent it, and to help victims. I agree the debate needs to be reframed. I think most bigger banks get a significant portion of their income looking for victims. Sometimes they try to be a respectful parasite and only suck off enough to keep the victim coughing up money to them and sometimes they get too greedy and lose the victim entirely.
I learned a lot about how banks really work when things went very south for me. I learned not only will banks not necessarily work with you on for example CC bills, they will actively mail bomb you with offers designed to make your hole deeper. It makes no logical sense unless you realize their game is the most they can get now from customer. Its not YM rules. Its closer to P&M rules. And I agree we the people need to keep getting government to even the balance as best we can. If we don't, the greed of banks and financial companies will again tank most of us including banks.
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