Poverty

Online poker.

I actually did fairly ok in raw numbers, but I absolutely wasted a bunch of money on it. Whenever I would hit a little rush, I would invariably waste the money on nonsense, instead of practicing any form of bankroll discipline.

I had one super-heater rungood switch week where I went from $50-$9,500. Maybe 1/3 of that went to paying off school, which is really what I should have done with all of that. The rest went to nonsense (I can't even remember what. I think I paid way too much for a camera that wound up breaking inside of a month), and taking shots at 5-10.

See, here's the problem with taking such shots: it's not really the fact that it's more money. Well, it is, but in the end, I didn't mind a little bit of variance. It's the fact that the people there were so much better than me, that it almost wasn't gambling anymore. It was just setting money on fire. I got pretty badly outplayed, for more money than I should have been playing with. That's a bad combination.

That was in college when I had no financial responsibilities. My bankroll hasn't been that high since, and after Black Friday won't be any time soon.

 

Frankly I'm confused too. When I was paying the bills for my organization one of the bills was for credit card processing fees, but the amount was just a static fee plus an additional amount based on the number of transactions; not a percentage of the transaction amount. Nor were we getting billed from Visa or Mastercard for the service either.

 

When a merchant accepts a credit card, something like 2% of the ticket price is used to pay the processing bank. The processing bank passes roughly 1.4% to Visa or MC, and keeps the rest. They provide settlement, dispute resolution, et al, out of their piece.

So, to summate, each transaction paid for by CC, the merchant gets 98%, Visa/MC like 1.4%, the rest goes to your processing bank.

 

Reading this thread makes me want to go give a huge hug to both of my parents. They took it upon themselves to make sure their children could graduate with an undergraduate degree without any debt. Both my sister and I am attending an in state school with the same 8k a year scholarship, basically covering half of the expenses, which helps. I will be graduating in two more semesters with a BS and debt-free.

To do this my family lived well under our means for at least 5 years prior while they saved up a large amount of money. It turns out the scholarships we were awarded allowed them to use some of the money they had for college to have some of the house remodeled after the termite damage was found.

All of our cars have 250k+ miles on them though. They really should buy a new one soon, before the Honda Odyssey finally kicks the bucket.

 

Generally speaking, your processor is going to charge a set fee per transaction plus a percentage of the sale on top of all charges they have to pay. These charges are negotiable and based on sales volume.

In addition to the processors fees the Merchant pays the processor for their fees. Which come from Visa / Mastercard / Discover etc. The fees for this portion to the best of my knowledge are completely nonnegotiable and vary depending on the exact card type. Cards that are known to offer more rewards cost the Merchant more in this piece of the billing. American Express being the most expensive in my experience, then Visa Business, Discover, etc. The reward kick backs are paid for via the increased processing costs.

 

I started my career in investment banking back in the heyday when 25-year-old associates were making low-to-mid-6-figures. I was young, stupid, and single; and spent my money on frivolous shit becase I was banking on getting a big fat bonus at the end of each year. In the world I was in, it was not really that uncommon to live your life like this.

Your math is correct, though. I probably only had around $75k or so of debt when I was 25...I just remember paying it all off over a 2-year period and counting up over $100k of payments (interest, other purchases, etc.). It made me sick to my stomach. I wanted to to buy a condo, but had so much unsecured debt looming over my head, that I couldn't even think about it. Once I had my balance sheet cleaned up, I bought my first house, and learned to be a much more fiscally-responsible spender.

 

Worst financial decision was buying a condo back in 1989. The apartment we were living in was dirt cheap ($320/mo) because it was rent-controlled and we were subleting. We decided to buy the condo because we needed the tax break. 6 months after we bought, the condo market fell out from under us. Fortunately, we were relocating to New England in January, 1991 via my wife's job and part of the relo package was, if you sold your house or condo at a loss, the company would make up the difference between the sale price and what you paid for it (and they also grossed everything up so we didn't get nailed on taxes). It was a Godsend. We'd probably still be living in that one-bedroom had that not happened.

We've racked up CC debt in the past, a lot of it from my drinking and her retail therapy to cope with my drinking, but we got out of it and only have a small balance on one of our cards. Were pretty much use our debit card and Amex. Make a budget, stick to it, and save.

 

What's wrong with paying for everything in cash? My parents have never owned a credit card, and I'm 21 and don't own one as well. Whenever I need to buy things online I buy a pre-paid credit card and I'm good to go. The only thing credit cards are good for is to make people rich off stupid people.

 

So if you went to get a loan you have no credit history and will be denied. Also, if you can afford to pay cash for anything, why wouldn't you get a rewards credit and pay it off every month. You would have no interest charges and the banks would be paying you to use the card.

Plus credit cards give you added protection. They can give you extended warranties on items you buy. If you have a dispute they will work for you.

 

With enough of a down payment and a good enough income the bank will give you money. With no credit I still managed to get pre approved for a mortgage of $325 000.

To be honest, I'm not really a traveller so these shortfalls of pre-paid CC's don't effect me.

 

But they won't give you the lowest interest rate.

 

The world has changed a lot since the days your parents make their big purchases in life. It's much more important nowdays to have a good credit rating. Here are some reasons beyond just wanting to get a loan:

-Without a credit history you will have a hard time getting an apartment since many landlords now run credit checks
-You will likely pay more for car insurance since many if not most insurers now calculate your credit rating into your premiums
-You may have trouble gaining in employment in certain sectors; the finance industry comes to mind

Really, there's no good reason not to have a credit history in this day and age. Most credit cards don't have any annual fees tied to them so there's literally no cost to having a credit card - unless you're the type of person who's not responsible enough to handle one. And if that's the case, your goal should be becoming more responsible, not avoiding an extremely useful tool for living in the 21st century.

Edit since this went up while I was posting:

A pre-approval for a mortgage means literally nothing.

 

1) I'll never live in an apartment.

2) Ive been with the same insurance compnay since I was 16, and have a good driving record so my rate is already pretty low.

3) I'm in the career I want to be in, so I highly doubt in the next few years I'd so desperately want to work in the financial sector that I'd kick myself in the ass for not owning a CC.

If I truly needed a CC, I'd have one. So far there hasn't been one occasion where I wished I'd had a CC.

 

I'm 20 and not in debt. My parents struggled with credit card debt; growing up, I got to watch my dad get so stressed out because he would work his ass off to get a huge bonus... which would go straight to creditors. 18-hour days, seven days a week at Christmastime. Just to keep the monkey off his back for another year. Year after year after year. He just finished paying off that debt, and now, at the age of 47, he can start saving for retirement. Sweet deal.

Watching that has made debt a pretty taboo subject for me. It just isn't going to fucking happen. I would rather starve and live in a cardboard box than live like my dad did.

I just bought a car; I saved up for a year to get it, and it's all mine. I still live like a monk, and I don't give a fuck what anyone thinks about my lack of a motorcycle, muscle car, or firearms. I'd rather save and invest it.

 

I thought building credit was common sense for our generation since a lot of my friends started mentioning it when we turned 18. When I turned 18 my dad told me three things. 1. I needed a credit card. 2. I needed to actually USE it and not let it sit somewhere in my apartment. 3. Pay the entire balance every single month, and get the check in the mail well before the due date. If I couldn't pay the entire balance I needed to slow the fuck down and reel in the spending. I mostly used it to buy gas and for online purchases. I think the threat/idea of going into massive, snowballing credit card debt (THAT WOULD RUIN MY LIFE FOREVER...my Pops' words) deterred me from making any truly idiotic purchases at a young age.

I have really great credit now, thanks to the guidance he's given me over the years. It's made renting apartments really easy (and dropped deposits...some complexes have little rewards for good credit), and it made getting a student loan for grad school really easy.

 

I make enough money that I use my credit card for regular purchases and pay it off every month. Shortly before I got a credit card, however, I got caught out. I had to travel for work and the hotel needed a credit card. I sure felt stupid having to fax my mom at work just so I'd be able to get a hotel room for the night. It's like a passport. You can get by just fine without one, but then when you do need one, you can never get it fast enough.

 

The guys like Dave Ramsey who advocate NO credit at all are largely responsible for people who don't start working on and maintaining their credit.
I've been in debt. I've been debt free (excepting a car payment). I've then been sunk back into debt. I was lucky in my second divorce. He got the house (I didn't want it). He kept his piece of shit Mustang (I damn sure didn't want it). He kept everything to do with his child custody battles, I didn't take any loans out with him for that (in fact I GAVE him my own money to DO it but that's beside the point). I walked away homeless, but aside from my Jeep, I walked away without any debt. Since then, I've got two credit cards and traded the Jeep in. Other than that, I don't own a home (I'm not ready) and I pay for everything I get in cash. Credit isn't a bad thing to have, but it's easy to let snowball. Discipline is hard, for a lot of people.

 

You don't know that for a fact. And if you think you do, you're an idiot.

I've actually never heard of (but don't disbelieve) credit rating affecting car insurance rates, but you don't know that insurance company will still be around and offering competitive rates forever

Do you really want to find out you could have used one after it's too late?

Dude, we're not saying you need to get a credit card, make it rain and max out your limit, we're just saying that if you get one and use it properly it's free money. Both in terms of rewards points and lower interest rates whenever you do need to get a loan for something. And let's say best case scenario that need never arises, is not having a credit card in your life really going to give you that much pride? I think you have the wrong point of view with them, they are not debt accrual machines if you manage them properly, they are a source of interest free loans and cash back if you know not to spend more than you have.

And on top of everything, they are fucking easy as hell to manage, you can set up auto payments and pay them online in seconds. You're sounding like an early 90's journalist that won't use a computer because typewriters still work.