Why do you need a bank?

Buenas Tardes,

reading all those financial threads with people complaining about savings, stocks, dow's bla's and etc's - I really can't understand you people.

So, this thread is not a solution for the crisis - but a solution for yourself. Something I did many years ago, and it works. Markets? Global Crisis? That doesn't affect me (well, at least now).

Please, please quit living on credit! This is all you can learn from this disaster. I can't understand how you guy's (in the US) have (a poll I've seen in Newsweek) 16 credit cards per household. 16? Are you completely nuts?
Statistically seen almost everything most Americans (and now Europeans) posses is on credit - how can that be?

How can you buy a 1000$ worth TV on credit and pay it off 5 years? Most of the people even do their holiday on credit. Why?

I have a simple rule - that works. If I don't have the money in my pocket - I don't spend it! An I don't care if my neighbor has a better phone, a better car or a better suite - If i can't afford it - I can't! - I have to wait, make some savings and then buy it.

Do you know how well do you feel, when everything you own is yours? Otherwise all your life belongs to the bank that gives you the loan. So you depend on them - you depend on the financial crisis. Why are you their slave? Stop it, while you can.

Life without credit isn't easy - but it's pure - you feel a little more free. I can do what i want, because everything I have belongs to me and my family.

And if you work harder, you can have all you have now - without a credit. Without monthly fees, penalties, debt's and so on.

So why are you a slave to your bank? Why is your while life depending on other people? Why are you their tool? Why are you wasting time in watching sitcoms you have watched 10 times before, watching news when you can't do anything about it, buy a new TV that gets old even before you switch it on. Use that time to learn new things, bringing you maybe a second job - start painting, or web design or whatever but do something useful.

Its not the world that has to change - its YOU - only you. And everything will be better. Life is not about making as much money as you can, living a jet set life on three different continents - no, that's what they manipulate you to be your goal. It isn't, right? Look at you purpose as a human - building a family, having kids this is a priority. Is a new TV more meaningful then buying your kid new shoes? Do you really have to drive a 2005 Mercedes on credit, when you can have a "normal" car for the fifth of the amount - by paying it cash?

Look at yourself and start questioning your life. Change your priorities - look at the future and realize that your whole life is a waste of time, if you don't change it.

That's what I want to say. Of course there will be people that will say that such a living is impossible, that it can't work. I can prove it with my own life.
It works. If you have priorities, aren't lazy and use your time different then now - you can do it.

Greetings and Good Luck!

George



[edit on 15/10/08 by absente]

And you sir are correct. I think this was a wake up call to ALL Americans including myself who took part in this scheme. What people dont realize is our government was telling us that this was the patriotic thing to do. You want to be an American then spend all sorts of money you dont have to keep the economy going. I think this whole ordeal changed a lot of people I know it did me. Star for you sir.

The only thing I don't own currently is my house and my car (which will soon be mine). I live debt free other than that. The problem is that I don't know many people that can save money to buy a house with cash. As pricey as houses are these days its a really hard thing to do. So for the average person that means getting credit. Herein lies the problem, you can't get credit without credit. I had to get a credit card, not 5 or 10, just 1, so that I could build my credit and not rely on my parents all my life. I am not sure how old you are, but it was alot easier for my parents, they were able to buy their first house with cash because it only cost them what a brand new car would cost me today.

[edit on 15-10-2008 by ExistenceUnknown]

Originally posted by ExistenceUnknown
The only thing I don't own currently is my house and my car (which will soon be mine). I live debt free other than that. The problem is that I don't know many people that can save money to buy a house with cash. As pricey as houses are these days its a really hard thing to do. So for the average person that means getting credit. Herein lies the problem, you can't get credit without credit. I had to get a credit card, not 5 or 10, just 1, so that I could build my credit and not rely on my parents all my life. I am not sure how old you are, but it was alot easier for my parents, they were able to buy their first house with cash because it only cost them what a brand new car would cost me today.

[edit on 15-10-2008 by ExistenceUnknown]

Ahh you just pointed out the problem. You see if EVERYONE saved to buy houses you would see the prices fall dramatically wouldnt you? Because they would have to be in range of what people can afford. You thing the banks want the prices to fall dramatically? No of course not and that is why you are seeing these bailouts. They dont want pricing to fall to where people can buy this stuff cash. But now because everyone gets loans for them the prices are out of reach. I recommend watching a guy named Peter Schiff. He is intelligent and has seen this whole ordeal coming for awhile. I too was like you had no debt accept cars and house. But when the economy took a crap I had to get all sorts of credit to keep my business afloat. As Americans we need to stand up together and save for things.

[edit on 15-10-2008 by mybigunit]

The international banking system is the biggest pyramid scheme on the planet, and we ALL fell for it!! I've been trying to tell people this for years, that banks are a scam, that interest is creating something out of nothing, and that we don't need the system, but the system needs us. Now maybe some of you will start to believe me.

Good thread, man! S+F

I found a really good 10-point system... sounds good, I cover almost all of those points:

1. Save an emergency fund. Many people use their credit cards as a sort of emergency fund — if there’s an unexpected expense, the card comes out to the rescue. Instead, use the money you aren’t paying towards debt to build up a healthy emergency fund, keeping you out of debt when something unexpected comes up. Living without credit can be risky, but having a strong emergency fund (aim for $1,000 initially, then build it up to 3-6 months or more of expenses).

2. Save for goals. Once you’ve got the emergency fund adequately covered, you can start saving for other things. Set savings goals for yourself: do you want to travel, or buy a car, or save for college, or renovate your home, or buy a yacht? Decide on your highest-priority goals, and set a dollar figure. Now save towards those goals. Without debt, it should be fairly easy.

3. Get a debit card. If you need to use a credit card in certain situations, such as buying something online, often you can use a debit or check card instead, if it has the name of a major credit company such as Visa or Mastercard. I went several years without a credit card, but using a Mastercard debit card, and had no problems at all. It actually worked every place you would need a credit card, but I wasn’t buying stuff on credit — it was debited straight from my checking account, meaning I would need to have the money first before purchasing anything.

4. Earn interest instead of paying it. The problem with debt or credit is that you waste money paying interest. It eats away at your finances. Instead, make your money work for you by investing it. With the magic of compound interest, your investments will grow over time, meaning that money you would have been paying toward interest is now earning interest instead and multiplying. That’s good math.

5. Buy a car on cash. For those who have been buying vehicles with auto loans all their lives, it may seem impossible to buy a car on cash. But it’s very possible, and many people do it. My grandparents, for example, always buy their cars with cash (and always have, except for their first car 50 years ago). So instead of making loan payments, and paying double the price of the car or more over the term of the loan, they make savings deposits, and end up with the amount it costs to buy two cars in their bank account over the course of five years. This is something I’m trying to do myself — I’m going to use my current car as long as possible, save the amount that I’m now paying for my loan every month (it’s almost paid off now), and then buy my next car in cash. It’ll be a used car, but it’ll be all mine.

6. Invest for retirement. This is just common sense, no matter what your credit or debt situation, but without debt payments, it makes sense to accelerate your retirement investments (as one of your savings goals). Then you can retire early, thanks to not being in debt.

7. Travel without credit. It’s a common belief that you can’t rent a hotel room or a car without a credit card. This is false. It’s easy to rent a hotel room, for example, with a cash deposit. You just need to call around to find the right hotels. The same goes with car rentals (see this article for more evidence of this). And if you want to find a cash-only car rental company, see this listing.

8. Rent without credit. While no credit checks are done for apartment or house rentals on Guam, where I live, in many places a credit check is standard practice. However, there are options you can use to rent without a credit card or a credit check, including a larger deposit. See this article for more options.

9. Buy a home without credit. Now, if buying a car on cash seemed impossible, surely buying a home on cash just cannot be done. But it can, and people have done it. I’m even considering doing it myself. First of all, in many cases, renting a home instead of buying (and investing the savings) is smarter financially. If you can invest the difference and let that grow over time, you can buy a home on cash. And at the same time, you won’t pay triple the value of the home (as most people do over the course of a home mortgage, due to interest). This item actually deserves a full post on its own, as it requires a longer explanation, but I don’t feel qualified to write it. Suffice it to say that it can be done, and has been done.

10. Use PayPal online. I’m not a big fan of online shopping — well, actually I love to shop online, but I think it’s bad for your finances, only because it’s so easy to do. You end up buying stuff online that you might have resisted in the real world. But if you must buy something online, and don’t want to get a credit card (or a debit card), in many cases it can be done with PayPal — meaning that you have to have the money before you make the purchase. I’ve heard of people who don’t like PayPal, but I haven’t had a problem so far.

source

You know what George - this is the first thread I've read in a while that has an actual solution to the majority of the worlds problems. Think of all the things that would happen if the majority started actually living within their means.

Unfortunately there are too many people in this world that are so used to living on credit or some other hand-out that this way of life seems absurd or even hippy-ish (yes, that's what the mass media have portrayed living within your means - you being a smelly hippy that no one wants to know). It's even drilled into our children for gods sake - kids getting punched in the playground for not having the most recent clothing....

Your solution however is what I'm working towards, I have debt but no where near as much as most people so it will be easier for me to get out of it. I will never take credit again in any form. I easily make enough money for small luxuries that keep me and my partner happy such as cinema trips, meals out etc. I can afford the bills per month to keep me warm, clean and fed what more do I need?

I think if you have to rely on credit then you really need to re-evaluate things.

reply to post by absente


I already practice this.

But, it's sound advice, everyone needs to do this.

I agree with the OP, and I live without credit card, loanes or anything like that. I understand in the USA a car is required but in the Netherlands I can use public transport and my bicycle. I live very small but I don't need bigger housing, and pay very little rent. And I'm happy like this!

reply to post by absente
[Do you know how well do you feel, when everything you own is yours? Otherwise all your life belongs to the bank that gives you the loan. So you depend on them - you depend on the financial crisis. Why are you their slave? Stop it, while you can. ]

Yes! I always laugh at people who say USA slavery ended in 1865. When in reality more is in bondage than there was before 1865.

I think about 50,000 people are 'real' slaves in the US. I haven't checked the figures for other countries with higher counts but globally there are millions of slaves, or something close to it.

Slavery in all forms and degrees must be banned and societal models re-examined (ie: increased food banks/ communal kitchens-gardens, communal/basic shelter, meaningful security if necessary.

We have the will and the money to do it. Why is it not being done? Why does the money go to the military/police? This cycle of planetary overwork and 'progress' and prostitution and fighting is costing the human race its future.

Well said: 'Why are you their slave? Stop it, while you can.' I have recently stopped, and I feel great. Freedom tastes great on the outside. I can only imagine what it tastes like in the inside.

TPTB (The Powers That Be) doesn't want us to have freedom. They want to control us, and they do that through the banks. It's that simple. Freedom isn't free, and unfortunately because of that, a lot of people will be dead after fighting TPTB. They won't have the weapons and the personnel that TPTB have.

All these monies going to the military/police is having a killing effect on humanity.

George, thanks for posting this. I get the impression that you and I have a similar approach to banking and money.

I'm not sure why, or where it came from, but I have always had an absolute dislike for credit cards and debt. I don't like borrowing from people, so maybe that's where it stems from. But regardless, I avoid debt as much as I possibly can. I do have a debit/credit card for when I happen to run out of cash in my pocket and I just cannot wait to make a purchase. However, in those cases I am not pulling credit, I'm tapping into my checking account.

Let's face it, we live in a society where spending money is fashionable. Credit is just a phone call away. Unless you're pulling in a very nice paycheck every week and have plenty of money left over after taking care of essential expenses, then it takes an unusual mentality and some self control to be able to live without relying on credit. For some it might even require a change in lifestyle.

I have a simple rule - that works. If I don't have the money in my pocket - I don't spend it! An I don't care if my neighbor has a better phone, a better car or a better suite - If i can't afford it - I can't! - I have to wait, make some savings and then buy it.

I second that rule. It works when you really want it to. Again, it's all about the mentality taken towards money and borrowing. If you want to be free, don't borrow. If you're in debt, do everything can to pay it off as soon as possible.

I've only had one type of borrowing credit card that I felt comfortable using. I decided to purchase some furniture locally at one of the chain furniture stores. They were offering 0% interest for a year. So I could put the cost of the purchase on the credit card they gave me, pay it off in a year, and not worry about any interest. Deal! But here's the thing. I KNEW I could pay it off in time.

Well, those are my somewhat jumbled thoughts on this topic. I really hope people start taking a different, less dependent approach to how they deal with money. All it really takes is self control and some responsibility. And once you get used to it, knowing that you're able to work with what you earned and not borrowed...that is a wonderful feeling.

Originally posted by ambushrocks
I agree with the OP, and I live without credit card, loanes or anything like that. I understand in the USA a car is required but in the Netherlands I can use public transport and my bicycle. I live very small but I don't need bigger housing, and pay very little rent. And I'm happy like this!

A car isn't required by credit either, the best sound financial advice one needs to live by is to make sure in your life that you live well below your means.

My car was paid for with cash in 2003, I'm still driving it today, it was a used car, but here is the thing:

NEVER go into debt for something that depreciates in value. The ONLY time I'd recommend going into debt is for a home. But don't go buy a 200,000 home just because you can afford it if you stay on a tight budget, buy a 40,000 dollar home and make a triple payment, and fix it up.

Totally agree with this way of living saving up for something may take time but it saves you money in the end. Although credit cards are OK if your careful with them pay off the balance every month, you can keep the convenience without ever paying a penny in interest. A house is the only thing that is really impossible to save up for but you can make sure you get a large deposit before hand that way you keep the interest to a minimum and then you can pay off as much as you can afford each month as most mortgages let you over pay by quite a bit. Debt really is the worst way to live and forms the basis for modern slavery that so many find themselves in.

Me and my wife struggles with this very month.... we are always in debt for 3 to 6 future monthly payments.... Its sad, but there seems always something else needed to buy we cant ignore...

Last was a computer, Vista and Office for my work (it coulnd be avoided).

I have a very solid thinking on buying me a house in cash.
I will take 10 years... but i will be free, and my rent its not overwhelming.

Thanks for this topic, but i guess we need to fry our credit cards to never use it.

This thread is a bit badly titled... it should be named "Why do you need a credit card".

And why indeed. I dont use them - ever. I dont like being in debt for the exact reasons mentioned here. None of my friends brag about what stuff they have. If you have that kind of friends, maybe you need new ones?

Originally posted by palehorse28uk
Totally agree with this way of living saving up for something may take time but it saves you money in the end. Although credit cards are OK if your careful with them pay off the balance every month, you can keep the convenience without ever paying a penny in interest. A house is the only thing that is really impossible to save up for but you can make sure you get a large deposit before hand that way you keep the interest to a minimum and then you can pay off as much as you can afford each month as most mortgages let you over pay by quite a bit. Debt really is the worst way to live and forms the basis for modern slavery that so many find themselves in.

Ur missing the fundamentals though, it's fine to acquire credit to purchase items that appreciate in value over the years.

Never go into debt for things that depreciate in value, that's throwing money away 100% of the time.

this is a great thread and i agree that people live far beyond their means and it should be drawn in a great deal.

when i first got out on my own over a decade ago, i ran into some problems with credit, since i was on my own i acquired a couple of credit cards and got some furniture by financing, etc. before i knew it i was up to my ears in debt and then i lost my job. i defaulted and hurt my credit pretty badly.

now all these years later, i've learned to live without credit for the most part. i do have one card but it is for a specific store where i purchase music gear and i only use it when they run no payment, no interest for 12 months specials. that gives me a chance to get the gear i want now and pay it off over 12 months without having to worry about all the finance charges, etc, which works out great for me.



i think that other people would do well to realize they don't have to have the nicest house or the fanciest cars to be happy, nor should they spoil their children by maxing their credit cards during the holidays. the children quickly bore of what they get and it teaches them a bad lesson on how things work, in my opinion.

Is your problem with banks or is it credit? There's a BIG difference between the two. Some people's jobs require that they have a bank account for direct deposit. Yes, I said require. Not only that, but where else would you get checks cashed? Yes, I still get checks every now and then and they need to be cashed and cash checking places can be sketchy and sometimes takes more in fees then Id like while my bank will cash a check for free. It seems as though it's credit you have a problem with, not banks. JMHO(Just my honest opinion)

Tela

[edit on 10/15/2008 by Telafree]

I have chosen to live by this one golden rule regarding spending from now on and that is I ask myself the following - in order - and unless my answer is an absolute YES then it's rounded down to a NO for me:

1. Do I NEED this?
2. Can I afford this?
3. Can I get it anywhere else cheaper?

You'll see this rule plastered all over the sensible money websites such as MoneySavingExpert which is a website based for the UK market and it's brilliant. I use this for EVERY purchase and 90% of the time I turn away at question 1!!

To Copernicus - I think the thread title is perfect since it's banks that give the credit cards. I believe the major reason why there is an economic meltdown now is because banks have been using the monetary system completely irresponsibly. All money now is digital numbers in a database - add up all those numbers and I can guarantee there is not enough money IN EXISTENCE to cover it. Ergo - the problem!

Excellent thread George. I think you said it perfectly, and I applaud your clear thinking. I was "sold" the American dream when I was young -- and it was a good dream for the time, however unrealistic. It was dependent upon being "successful" and making money. There's nothing wrong with this view, IMO, as long as a person remembers what is truly important at the end of the day. Life shouldn't be a fond gaze forward to a time when a person will be happy. It should be a process wherein one is happy while in the pursuit of their goals and dreams.

I was once, long ago in a land far away, caught up in a self-made credit crunch. I couldn't afford to save any money, as I was paying rent, and had dug a credit hole for myself to the tune of $12,000. I was literally working to pay off the minimum charge (AKA Vigorish, or Vig) while not paying much if anything toward lowering the debt. Vig is normally considered a term applied to loan-shark loans, but when you get into trouble, the credit card companies can tell -- this is what they want, I think, and your interest rates are jacked up.

I moved to a dinky apartment -- a studio in a bad part of town, and took another part-time job. I also made marquetry pictures and sold them on the weekends. I clawed my way out and never looked back. Saved, bought a house, flipped it, and we moved down here to the Caribbean.

We have one credit card now, and never use it unless we know we can pay it off when the bill comes in. We use it mostly for ordering goods from the U.S., and it's easier with car rentals/hotels, etc. We work primarily on a cash basis. We don't have much. We don't need much, other than each other and a roof. We are rich in the way that matters to us. I've never bought an unused car in my life. I see my neighbors and cousins buying vehicles for what I could build a house for. Crazy. And for what? Flash? Speed?

I already consider my Social Security to be lost to me. Hopefully I'll be wrong. Likewise with my government-mandated retirement. So it goes. If/when there is no more work, then I will tend our garden plots more, fish more, crack more coconuts, eat more bananas and other fruit from trees we grew. I want to take the 3-4 tons of rock on the beach and make an observation tower, with a central stairway made of rock and a middle floor that the two of us could sleep in.

It's good to have dreams. Mine were always pretty distant until I found someone to share them with.

Cheers


[edit on 15-10-2008 by argentus]