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Repaying Debt

tvellalott
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10/31/2012 7:02:09 PM
Posted: 4 years ago
Gah. My past has finally caught up to me.
You see dear DDO'ers, I was once a fool (implying I'm not a fool now, lol).
I had a good job but the things I wanted, I wanted FAST, at that very moment.

So, like most young fools, I got a credit card.
Woo!
Then, I needed a fridge and the first credit card was a bit overused...
"No repayments for 18 months you say? Gee, sounds perfect!"
POW! Another credit card.
Then some stuff happened. Lost that good job. Had a bit of an existential crisis. Came back, worked my way back up to reasonable pay at a new job and here I am...

That was many moons ago, basically a whole different life for me.
And of course my credit rating is fvcked now as a result.
I have always intended to pay these debts but it was simply out of the realm of possibility. Anywho, as a result of lodging my first tax return in several years, the debt collectors found me.

They're actually quite good about this whole thing and I have lots of options available to me.

The point of this thread is that I'm not very good with math; I'm adept enough that I don't need a calculate for simple stuff but multiple debts at different interest rates with different repayment amounts... Yeah.

DDO, I need your help!

Here is the basic information...

Debt #1: $4476.98 at 20.71%p.a.
Debt #2: $2932.46 at 29.40%p.a.

From the 9th of the 11th, 2012 I will be repaying $50.00 a week, divided amongst the two debts. *1

From the 23rd of the 5th, 2013 my other loan, on which I pay $100 a week will be finished and I will be able to increase repayments on these debts up to as much as $120 a week. *2

Additionally, if I pay a lump sum of $1000 to the debt collectors, they will be able to freeze the interest as long as I still make the agreed upon repayments. This can be done at any time. *3

At present, there is no conceivable way for me to get $1000 and I don't have any savings which can be applied to this.

SO. If I pay as I'm paying now, it's going to take me something like 6 years to pay off this debt, with thousands of dollars interest included. That's not really acceptable.

I am going to apply for debt consolidation, but it is extremely doubtful considering my credit rating.

I want to repay these debts as quickly as possible, so what I want to know is:
1) What is the best ratio of repayment from now until May?
2) What is the best ratio of repayment from May onwards?
3) Is it worth prolonging increasing the repayments to save $1000 and freeze the interest?
4) If I could raise the thousand dollars outside of these repayments (say 3, 6, 9, 12 months from now) what kind of saving would be looking at?

Additionally, any information relating to this subject would be more than welcome.

Ta,
TV.
"Caitlyn Jenner is an incredibly brave and stunningly beautiful woman."

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tvellalott
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10/31/2012 7:26:10 PM
Posted: 4 years ago
At 10/31/2012 7:13:03 PM, darkkermit wrote:
http://www.ajdesigner.com...

Your welcome. And there's really know "best" because I don't know your subjective time value preference.

Best is least amount of time with fixed total repayments divided however necessary.
"Caitlyn Jenner is an incredibly brave and stunningly beautiful woman."

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phantom
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10/31/2012 7:35:30 PM
Posted: 4 years ago
Dave Ramsey has a lot of advice for repaying debt but I'm note sure how good he is. You could check out his website.
"Music is a zen-like ecstatic state where you become the new man of the future, the Nietzschean merger of Apollo and Dionysus." Ray Manzarek (The Doors)
jharry
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10/31/2012 7:37:33 PM
Posted: 4 years ago
How is your credit score? It is a personal question so I understand if you don't want to answer.

Do you get those 0% balance transfer offers from other cards?
In nomine Patris, et Filii, et Spiritus Sancti. Amen
jharry
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10/31/2012 7:41:50 PM
Posted: 4 years ago
At 10/31/2012 7:35:30 PM, phantom wrote:
Dave Ramsey has a lot of advice for repaying debt but I'm note sure how good he is. You could check out his website.

I used and still use some of his advice.

Use cash for your budget

Pay down the lowest loan first, make minimum payments on the other. Once the smallest is repayed divert all funds to paying off the next one. By paying off smallest first you get a huge confidence boost and helps you keep in it.

Dave would not advice using 0% transfer balances like I did but it helped me maintain the moral to keep going knowing I was putting everything to principle.
In nomine Patris, et Filii, et Spiritus Sancti. Amen
tvellalott
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10/31/2012 7:51:45 PM
Posted: 4 years ago
At 10/31/2012 7:37:33 PM, jharry wrote:
How is your credit score? It is a personal question so I understand if you don't want to answer.

Do you get those 0% balance transfer offers from other cards?

Credit score = credit rating.
I'm going to try and consolidate my debt but it's doubtful.
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imasidewalk
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10/31/2012 7:53:44 PM
Posted: 4 years ago
For my plan, first you need a time machine. Then, you go and slug your past self.
DEATH TO ALL BENCHES!

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jharry
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10/31/2012 8:01:28 PM
Posted: 4 years ago
At 10/31/2012 7:51:45 PM, tvellalott wrote:
At 10/31/2012 7:37:33 PM, jharry wrote:
How is your credit score? It is a personal question so I understand if you don't want to answer.

Do you get those 0% balance transfer offers from other cards?

Credit score = credit rating.
I'm going to try and consolidate my debt but it's doubtful.

Yeah, I'm talking about other credit cards offering 0% to transfer your balance to their card. Like I said, they are usually for a limited time so you have to stay on it a be watching and ready for another offer if you don't get it payed off in time.
In nomine Patris, et Filii, et Spiritus Sancti. Amen
darkkermit
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10/31/2012 10:01:14 PM
Posted: 4 years ago
At 10/31/2012 7:26:10 PM, tvellalott wrote:
At 10/31/2012 7:13:03 PM, darkkermit wrote:
http://www.ajdesigner.com...

Your welcome. And there's really know "best" because I don't know your subjective time value preference.

Best is least amount of time with fixed total repayments divided however necessary.

Well sh1t dog, why didn't you just say so. Jut pay it now and that will be the least amount of time.

Its kind of simple really. The least amount of time, the more you have to pay per month. The more time it takes you to pay it off, the less it will cost you per month.

Really there isn't a best answer. There's nothing to optimize. All you can really do is figure out how much you want to pay each month, see how long it will take you to pay it off or vice versa.
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tvellalott
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10/31/2012 10:57:32 PM
Posted: 4 years ago
At 10/31/2012 10:01:14 PM, darkkermit wrote:
At 10/31/2012 7:26:10 PM, tvellalott wrote:
At 10/31/2012 7:13:03 PM, darkkermit wrote:
http://www.ajdesigner.com...

Your welcome. And there's really know "best" because I don't know your subjective time value preference.

Best is least amount of time with fixed total repayments divided however necessary.

Well sh1t dog, why didn't you just say so. Jut pay it now and that will be the least amount of time.

Its kind of simple really. The least amount of time, the more you have to pay per month. The more time it takes you to pay it off, the less it will cost you
Really there isn't a best answer. There's nothing to optimize. All you can really do is figure out how much you want to pay each month, see how long it will take you to pay it off or vice versa.

It's wrong to say there's no way to optimise it.
Paying 30 off debt 1 and 20 from debt 2 leaves a higher balance than 25 off each after 6 months for example.

There are two different interest rates and two balances.

I can't 'just pay it now' as I extensively explained...

I can pay 50 dollars total until mid-May next year then 120 total.
There is an option to freeze the interest if I can save 1000.

Did you even read the OP? This is a serious question and the right answer can save me hundred or even thousands of dollars.
"Caitlyn Jenner is an incredibly brave and stunningly beautiful woman."

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tvellalott
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10/31/2012 11:02:22 PM
Posted: 4 years ago
I mean the link you posted to originally is for one loan with one interest rate...
Did you even check? Why even comment if you can't even be bothered understanding what im asking? (just reread the Op, it's pretty clear bro)
"Caitlyn Jenner is an incredibly brave and stunningly beautiful woman."

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jharry
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10/31/2012 11:41:00 PM
Posted: 4 years ago
25.00 a week for first six months. Interest paid

Debt 1 457.00

Debt 2 420.00

Combined interest 877

20.00 a week for six months on debt #1-462.00

30.00 a week for six months on debt #2-412.00

874.00 combined interest

As you can see the change is nearly nothing. No image not putting 120.00 towards payments to save a 1000.00 bucks. You almost pay that every six months.

If you plan on paying this interest rate for the next 6-8 years then yes save the 1000.00 when you can. If it takes you two years to do it you will lose 3200.00 in potential interest but save 6200.00 for the last four years if you can stop the interest.

GET THE loans to a lower rate. Period.
In nomine Patris, et Filii, et Spiritus Sancti. Amen
jharry
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10/31/2012 11:44:48 PM
Posted: 4 years ago
Reversed

Debt #1 30.00-428.

Debt #2 20.00- 452.16

Total interest-880.16

Always at least pay more to higher interest rate anyway.
In nomine Patris, et Filii, et Spiritus Sancti. Amen
Khaos_Mage
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11/1/2012 3:43:40 AM
Posted: 4 years ago
At 10/31/2012 7:02:09 PM, tvellalott wrote:

Here is the basic information...

Debt #1: $4476.98 at 20.71%p.a.
Debt #2: $2932.46 at 29.40%p.a.
Look at it this way, you are paying the following amounts in interest per month:
1. $77.27
2. $71.83
As the principal goes down, so will the interest. Saving for the freeze costs interest in the mean time, but saves it down the road.

From the 9th of the 11th, 2012 I will be repaying $50.00 a week, divided amongst the two debts. *1
I don't understand what this means.

From the 23rd of the 5th, 2013 my other loan, on which I pay $100 a week will be finished and I will be able to increase repayments on these debts up to as much as $120 a week. *2
Don't understand. It might be an Aussie thing for dates, but I don't understand.

Additionally, if I pay a lump sum of $1000 to the debt collectors, they will be able to freeze the interest as long as I still make the agreed upon repayments. This can be done at any time. *3
This will be best, assuming you can scrap the cash. However, I would pay as much as possible in the mean time and not worry about saving for the cash. Let's assume you can save $100/month, saving the cash will stop interest from accruing, however in these ten months, you accrued:
1. $772.66 in interest, assuming payments only covered interest and fully paid it, which at $50/month, is not likely.
2. $718.34 in interest, assuming the same

By instead of saving the money, paying the $100 towards the principle would save:
1. $77.66 in accrued interest, plus, your monthly interest starts at $61.73
This means, that if you could pay off this debt at this rate, you would pay about an extra $1200 or so (no calculation to done to offer real number), but be finished paying in less than four years (as opposed to clost to five years paying at the same rate)
2. $110.25 in accrued interest, plus your monthly interest starts at $49.78
This means that if you could pay off this debt at this rate, you would pay about an extra $200, but be done in about 2.5 years, as opposed to 3 years.

My recommendation is to pay as much as you can on the lower debt first, and not freeze the interest, just pay it done fast. If you can come up with $1,000, use it on the larger bill to freeze interest.

As far as the ratio, I would pay down the smaller bill, because it will be easier to pay off, plus, the interest will accrue faster at the higher rate, unless your payments are enough to keep it at bay. So, if payments >= monthly interest and there is money left over to pay out, use it on the smaller one. Otherwise, try to pay as much as possible in interest on both loans, paying as little on the bigger one as possible.

NOTE: My numbers compound per month, where credit cards often compound daily. So, the figures may be slightly different. A much bigger factor is I am not computing how much interest is paid by paying down the amount (i.e. first payment is $100, the next is $97, I did not apply this amount to principal, which would reduce payments faster with less interest).
My work here is, finally, done.
R0b1Billion
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11/1/2012 10:49:19 AM
Posted: 4 years ago
You will be back in debt soon. You all will be in debt soon. That's how this fvcking country works. Without debt, our monetary system collapses. If every person in America took every dollar in existence and paid off our debts to the banks, there would not be a single dollar left in circulation. Our nation is built upon profits and sorrows, with the profits being for corporations and the sorrows being for the people.
Beliefs in a nutshell:
- The Ends never justify the Means.
- Objectivity is secondary to subjectivity.
- The War on Drugs is the worst policy in the U.S.
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- Computers will never become sentient.
tulle
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11/1/2012 12:04:56 PM
Posted: 4 years ago
At 11/1/2012 10:49:19 AM, R0b1Billion wrote:
You will be back in debt soon. You all will be in debt soon. That's how this fvcking country works. Without debt, our monetary system collapses. If every person in America took every dollar in existence and paid off our debts to the banks, there would not be a single dollar left in circulation. Our nation is built upon profits and sorrows, with the profits being for corporations and the sorrows being for the people.

You blame the system but the solution to reduce individual debt is to spend less and that's an individual decision. I don't see why that concept is so hard for people to understand. Want to save money? Spend less.
yang.
darkkermit
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11/1/2012 12:12:23 PM
Posted: 4 years ago
At 11/1/2012 12:04:56 PM, tulle wrote:
At 11/1/2012 10:49:19 AM, R0b1Billion wrote:
You will be back in debt soon. You all will be in debt soon. That's how this fvcking country works. Without debt, our monetary system collapses. If every person in America took every dollar in existence and paid off our debts to the banks, there would not be a single dollar left in circulation. Our nation is built upon profits and sorrows, with the profits being for corporations and the sorrows being for the people.

You blame the system but the solution to reduce individual debt is to spend less and that's an individual decision. I don't see why that concept is so hard for people to understand. Want to save money? Spend less.

He's referencing the zeitgeist movie in which money is created through debt. This is actually true, but so what. Debt isn't an inherent evil.
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R0b1Billion
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11/1/2012 2:28:12 PM
Posted: 4 years ago
At 11/1/2012 12:12:23 PM, darkkermit wrote:
At 11/1/2012 12:04:56 PM, tulle wrote:
At 11/1/2012 10:49:19 AM, R0b1Billion wrote:
You will be back in debt soon. You all will be in debt soon. That's how this fvcking country works. Without debt, our monetary system collapses. If every person in America took every dollar in existence and paid off our debts to the banks, there would not be a single dollar left in circulation. Our nation is built upon profits and sorrows, with the profits being for corporations and the sorrows being for the people.

You blame the system but the solution to reduce individual debt is to spend less and that's an individual decision. I don't see why that concept is so hard for people to understand. Want to save money? Spend less.

He's referencing the zeitgeist movie in which money is created through debt. This is actually true, but so what. Debt isn't an inherent evil.

Obama and Romney have spent a great deal of time lamenting the national debt; is that exempt from your definition of debt? Every American owes China and company $41,000. As far as unfunded promises and liabilities is concerned, each one of us is in the hole for $200,000. One could also make the argument that we are creating an environmental debt...
Beliefs in a nutshell:
- The Ends never justify the Means.
- Objectivity is secondary to subjectivity.
- The War on Drugs is the worst policy in the U.S.
- Most people worship technology as a religion.
- Computers will never become sentient.
baggins
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11/1/2012 2:40:05 PM
Posted: 4 years ago
@ tvellalot

A few things you need to check urgently. Most credit cards companies charge compound interest. Is your interest simple or compound? If it is compound, you need to know the period after which it is compounded and the interest rate over corresponding period. If the compounding period is not 1 year, please confirm that the interest rate you quoted (20.71 and 29.40 %) are Average Payment Rate (APR). Moreover does $1000 freezes interest on both loans?

Intuitively I suspect that saving $1000 ASAP and freezing interest rates would be the best option. However it would be better to do calculation and get exact time period (and amount) you will need in each case.

I hope you are aware that any advice that you get here is guaranteed to be totally unprofessional.
The Holy Quran 29:19-20

See they not how Allah originates creation, then repeats it: truly that is easy for Allah.

Say: "Travel through the earth and see how Allah did originate creation; so will Allah produce a later creation: for Allah has power over all things.
baggins
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11/1/2012 2:45:02 PM
Posted: 4 years ago
At 10/31/2012 7:02:09 PM, tvellalott wrote:
...The point of this thread is that I'm not very good with math; I'm adept enough that I don't need a calculate for simple stuff but multiple debts at different interest rates with different repayment amounts...

I was under impression that you are from CS background. Consider writing a script to do the calculation.
The Holy Quran 29:19-20

See they not how Allah originates creation, then repeats it: truly that is easy for Allah.

Say: "Travel through the earth and see how Allah did originate creation; so will Allah produce a later creation: for Allah has power over all things.
darkkermit
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11/1/2012 3:08:05 PM
Posted: 4 years ago
At 11/1/2012 2:28:12 PM, R0b1Billion wrote:
At 11/1/2012 12:12:23 PM, darkkermit wrote:
At 11/1/2012 12:04:56 PM, tulle wrote:
At 11/1/2012 10:49:19 AM, R0b1Billion wrote:
You will be back in debt soon. You all will be in debt soon. That's how this fvcking country works. Without debt, our monetary system collapses. If every person in America took every dollar in existence and paid off our debts to the banks, there would not be a single dollar left in circulation. Our nation is built upon profits and sorrows, with the profits being for corporations and the sorrows being for the people.

You blame the system but the solution to reduce individual debt is to spend less and that's an individual decision. I don't see why that concept is so hard for people to understand. Want to save money? Spend less.

He's referencing the zeitgeist movie in which money is created through debt. This is actually true, but so what. Debt isn't an inherent evil.

Obama and Romney have spent a great deal of time lamenting the national debt; is that exempt from your definition of debt? Every American owes China and company $41,000. As far as unfunded promises and liabilities is concerned, each one of us is in the hole for $200,000. One could also make the argument that we are creating an environmental debt...

I don't know what your talking about in being in the whole for $200,000 for each person. I don't owe any debt. Is this referring to the US debt? Household debt? Corproation debt? You do realize that the US government doesn't even have to payoff its debt. All it has to do is pay the interest. The US government has never had a period of 0% debt, which was during Andrew Jackson era, and it probably never will have a time period of zero debt. As long as people have a demand for treasury bills, and the US government doesn't default, then all is well.
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tvellalott
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11/1/2012 10:04:06 PM
Posted: 4 years ago
Consistently I'm finding that paying the debt with the smaller amount and highest interest as fast as possible is my best option.

@ROB: I have no doubt that shortly after paying this debt off (looking at around 3 years) I will be back in debt (probably much larger) within a small amount of time. Debt and loans are not a bad thing. I will never otherwise be able to buy property or start my own business. The problem with this debt is that I literally have nothing to show for the money spent. I wasted it. That I promise you, won't ever happen again.
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R0b1Billion
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11/1/2012 10:43:59 PM
Posted: 4 years ago
You do realize that the US government doesn't even have to payoff its debt. All it has to do is pay the interest.
Beliefs in a nutshell:
- The Ends never justify the Means.
- Objectivity is secondary to subjectivity.
- The War on Drugs is the worst policy in the U.S.
- Most people worship technology as a religion.
- Computers will never become sentient.
R0b1Billion
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11/1/2012 10:47:40 PM
Posted: 4 years ago
I don't know what your talking about in being in the whole for $200,000 for each person. I don't owe any debt. Is this referring to the US debt? Household debt? Corproation debt?

http://www.wimp.com...

start at 1 minute.
Beliefs in a nutshell:
- The Ends never justify the Means.
- Objectivity is secondary to subjectivity.
- The War on Drugs is the worst policy in the U.S.
- Most people worship technology as a religion.
- Computers will never become sentient.
R0b1Billion
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11/1/2012 11:00:37 PM
Posted: 4 years ago
At 11/1/2012 10:04:06 PM, tvellalott wrote:
Consistently I'm finding that paying the debt with the smaller amount and highest interest as fast as possible is my best option.

@ROB: I have no doubt that shortly after paying this debt off (looking at around 3 years) I will be back in debt (probably much larger) within a small amount of time. Debt and loans are not a bad thing. I will never otherwise be able to buy property or start my own business. The problem with this debt is that I literally have nothing to show for the money spent. I wasted it. That I promise you, won't ever happen again.

It's a shame people are forced into debt nowadays. It wasn't always like this... "In the 1950s, homeowners had more than 70% equity in their homes, financing only a small portion with mortgages. By 2006 that fell to 55%, and now sits at around 36% after the housing bust." http://www.dailyfinance.com...

Could you imagine someone going to a check->into->cash back in the 50s? It's pathetic that institutions like that even exist. For companies like that to be able to make a profit, we have to be in some pretty bad shape...
Beliefs in a nutshell:
- The Ends never justify the Means.
- Objectivity is secondary to subjectivity.
- The War on Drugs is the worst policy in the U.S.
- Most people worship technology as a religion.
- Computers will never become sentient.
baggins
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11/1/2012 11:14:03 PM
Posted: 4 years ago
At 11/1/2012 10:04:06 PM, tvellalott wrote:
Consistently I'm finding that paying the debt with the smaller amount and highest interest as fast as possible is my best option.

@ROB: I have no doubt that shortly after paying this debt off (looking at around 3 years) I will be back in debt (probably much larger) within a small amount of time. Debt and loans are not a bad thing. I will never otherwise be able to buy property or start my own business. The problem with this debt is that I literally have nothing to show for the money spent. I wasted it. That I promise you, won't ever happen again.

Islamic banking offers a better solution. Unfortunately it is not legal in many countries. So most people purchasing a house and almost everyone starting a business is forced in to a system of usury.
The Holy Quran 29:19-20

See they not how Allah originates creation, then repeats it: truly that is easy for Allah.

Say: "Travel through the earth and see how Allah did originate creation; so will Allah produce a later creation: for Allah has power over all things.
baggins
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11/1/2012 11:18:21 PM
Posted: 4 years ago
Credit card loans are outright fraud. Sure it is borrowers fault since she was not careful. Just like it is your fault if you were not careful and someone robs you.
The Holy Quran 29:19-20

See they not how Allah originates creation, then repeats it: truly that is easy for Allah.

Say: "Travel through the earth and see how Allah did originate creation; so will Allah produce a later creation: for Allah has power over all things.
darkkermit
Posts: 11,204
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11/1/2012 11:18:53 PM
Posted: 4 years ago
At 11/1/2012 10:47:40 PM, R0b1Billion wrote:
I don't know what your talking about in being in the whole for $200,000 for each person. I don't owe any debt. Is this referring to the US debt? Household debt? Corproation debt?

http://www.wimp.com...

start at 1 minute.

Right off the bat its lying, since there are treausry bills held in social security funds, so there isn't $0 of unfunded liabilities.

In terms of unfunded liabilities, what does he mean by that? I know he's referencing social security, medicaid and medicare, but if your going to base liabilities for every person alive in the US who will be in the program, then that's a bad way to measure liabilities, since I won't be in the program for another 43 years. $200,000 for 43 years isn't bad at all, especially if you count inflation. If he's referencing every person that could theoretically enter the program, then that's infinity. If he's doing a net-present value assement, then the question would be what would he be using as his interest rate.

I actually agree that Medicaid, medicare, and social security need to be reformed. There are some members in Congress, like Paul Ryan that are trying to keep these programs solvent, yet are having a hard time getting approval of their budget.
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darkkermit
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11/1/2012 11:20:23 PM
Posted: 4 years ago
At 11/1/2012 11:00:37 PM, R0b1Billion wrote:
At 11/1/2012 10:04:06 PM, tvellalott wrote:
Consistently I'm finding that paying the debt with the smaller amount and highest interest as fast as possible is my best option.

@ROB: I have no doubt that shortly after paying this debt off (looking at around 3 years) I will be back in debt (probably much larger) within a small amount of time. Debt and loans are not a bad thing. I will never otherwise be able to buy property or start my own business. The problem with this debt is that I literally have nothing to show for the money spent. I wasted it. That I promise you, won't ever happen again.

It's a shame people are forced into debt nowadays. It wasn't always like this... "In the 1950s, homeowners had more than 70% equity in their homes, financing only a small portion with mortgages. By 2006 that fell to 55%, and now sits at around 36% after the housing bust." http://www.dailyfinance.com...

Could you imagine someone going to a check->into->cash back in the 50s? It's pathetic that institutions like that even exist. For companies like that to be able to make a profit, we have to be in some pretty bad shape...

People aren't forced to go see these institutions you know....
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