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Record Consumer Credit Card Debt Approaches $1 Trillion

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IronWing

No Lifer
Jul 20, 2001
62,133
15,394
136
Originally posted by: blackangst1

No, not for retirees. Again. 2mill when we retire will pay you 45-50k/yr for about 20 years. That is NOT rich.
Not to detract from your point but your numbers are off. Assuming you retire at 65 and you expect to live 20 more years, $2mill should be plenty and you should be able to spend more than $50k/year, a lot more.

I like this planner for doing the calculations.
http://cgi.money.cnn.com/tools...irementplanner_101.jsp

Even with a conservative investment strategy it looks like you could spend ~$140,000/yr and have the money last.
 

jpeyton

Moderator in SFF, Notebooks, Pre-Built/Barebones
Moderator
Aug 23, 2003
25,375
141
116
Isn't the $2 million figure assuming you don't invest any of it?

The gains of a diversified $1 million portfolio would earn quite a bit for you during retirement.
 

blackangst1

Lifer
Feb 23, 2005
20,900
832
126
Originally posted by: ironwing
Originally posted by: blackangst1

No, not for retirees. Again. 2mill when we retire will pay you 45-50k/yr for about 20 years. That is NOT rich.
Not to detract from your point but your numbers are off. Assuming you retire at 65 and you expect to live 20 more years, $2mill should be plenty and you should be able to spend more than $50k/year, a lot more.

I like this planner for doing the calculations.
http://cgi.money.cnn.com/tools...irementplanner_101.jsp

Even with a conservative investment strategy it looks like you could spend ~$140,000/yr and have the money last.
Yes. I was taking into account a VERY conservative investment that keeps on par with inflation.
 

bamacre

Lifer
Jul 1, 2004
21,030
1
61
Originally posted by: LegendKiller
I just find it funny that you run around here claiming that people are being robbed by the "inflation tax", yet really have no idea what it really means to people in a practical manner. Truth be told, it doesn't really affect people as much as some would like to have you think.

It's telling that their propaganda has really put blinders on you. It appears to have been very effective in making you not think.

You don't have to be a finance guy to know all of this, you just have to know about what you need to do in the future to support yourself, or what others are currently doing. That type of education is what others fear you having, since their propaganda and bullshit won't be as nearly effective.

Welcome to the real world.

But it still effects many. Anyone who has cash or cash-equivalent holdings is burdened. And those who have an income which rises at a lower pace than inflation are certainly effected. It forces people to invest in some manner just to at least keep up. Not everyone can afford to invest. Many people live week-to-week or month-to-month.
 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: bamacre
Originally posted by: LegendKiller
I just find it funny that you run around here claiming that people are being robbed by the "inflation tax", yet really have no idea what it really means to people in a practical manner. Truth be told, it doesn't really affect people as much as some would like to have you think.

It's telling that their propaganda has really put blinders on you. It appears to have been very effective in making you not think.

You don't have to be a finance guy to know all of this, you just have to know about what you need to do in the future to support yourself, or what others are currently doing. That type of education is what others fear you having, since their propaganda and bullshit won't be as nearly effective.

Welcome to the real world.

But it still effects many. Anyone who has cash or cash-equivalent holdings is burdened. And those who have an income which rises at a lower pace than inflation are certainly effected. It forces people to invest in some manner just to at least keep up. Not everyone can afford to invest. Many people live week-to-week or month-to-month.
Smoking effects many. McDonalds effects many. No seat belts effects many. However, they effect the minority and the ones who cannot realize the downfalls of their policies.

Society, at large, benefit from a stable price system where inflation is relatively predictable, compared to a highly variable one that causes all sorts of problems.

When you finally get the idea that you're advocating harming society as a whole to benefit the relatively few, you'll realize you're advocating a socialist system with more control in one manner, and a lot less control on the other.
 

Engineer

Elite Member
Oct 9, 1999
39,234
699
126
Originally posted by: maddogchen
I wonder what percentage of this credit card debt is from AORs
I would say very little. Most people don't know what an AOR is. Most of the debt has nothing to do with making money at the expense of the credit card money. I would say the credit card companies are doing quiet well off of most of the debt.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
Originally posted by: Engineer
Originally posted by: maddogchen
I wonder what percentage of this credit card debt is from AORs
I would say very little. Most people don't know what an AOR is. Most of the debt has nothing to do with making money at the expense of the credit card money. I would say the credit card companies are doing quiet well off of most of the debt.
I don't know what it is, but I have about $100-200 in credit card debt at this second, so that's ok. That doesn't include a few thousand on a canadian credit card, which frankly I have no fvcking intention of paying until the US dollar rebounds. And if it doesn't, damn!

 

Engineer

Elite Member
Oct 9, 1999
39,234
699
126
Originally posted by: Skoorb
Originally posted by: Engineer
Originally posted by: maddogchen
I wonder what percentage of this credit card debt is from AORs
I would say very little. Most people don't know what an AOR is. Most of the debt has nothing to do with making money at the expense of the credit card money. I would say the credit card companies are doing quiet well off of most of the debt.
I don't know what it is, but I have about $100-200 in credit card debt at this second, so that's ok. That doesn't include a few thousand on a canadian credit card, which frankly I have no fvcking intention of paying until the US dollar rebounds. And if it doesn't, damn!
AOR stand for App-O-Rama. It's a technique in which you apply for a large number of zero percent cards at one time (quickly over the internet) and receive many thousands of dollars (have heard of over $100, 000 in a few cases) that you can invest in high interest accounts and make money. It's risky but there are those that do it and successfully. I have never done a full out AOR, but have had up to $25,000 in zero percent money earning up to 6% interest from it for over 1 year.

AOR's are popular at the finance sites (FW Finance for example) but I don't think that the amount of money tied up by these is a large portion of the overall debt in the US. I don't think many people are brave (or smart) enough to do it. Most know that they'll just spend the money and end up paying it back with interest.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
AOR stand for App-O-Rama. It's a technique in which you apply for a large number of zero percent cards at one time (quickly over the internet) and receive many thousands of dollars (have heard of over $100, 000 in a few cases) that you can invest in high interest accounts and make money. It's risky but there are those that do it and successfully. I have never done a full out AOR, but have had up to $25,000 in zero percent money earning up to 6% interest from it for over 1 year.
Cool, I inquired about this a couple of years ago and thought of it again recently. I have good credit and could get some money aside, but it did seem like an awful lot of effort for the return, and with ING not giving much now (obviously, it would be insane to buy stocks with it), I didn't feel comfortable with it. I didn't know there were how-tos, though!
 
May 31, 2001
15,326
1
0
I have been working at paying off my credit card debt for a while now. One thing the falling dollar is going to allow me to do is move some big ticket merchandise to UK and European buyers for a higher payoff than usual, due to the currency exchange rates. It is tempting to sit on it for a bit longer though, since the dollar doesn't seem like it will hit bottom any time soon. Those profits are going towards my CC debt.
 

KrispyKreme50

Member
Jan 21, 2008
62
0
0
Originally posted by: Engineer
Originally posted by: Skoorb
Originally posted by: Engineer
Originally posted by: maddogchen
I wonder what percentage of this credit card debt is from AORs
I would say very little. Most people don't know what an AOR is. Most of the debt has nothing to do with making money at the expense of the credit card money. I would say the credit card companies are doing quiet well off of most of the debt.
I don't know what it is, but I have about $100-200 in credit card debt at this second, so that's ok. That doesn't include a few thousand on a canadian credit card, which frankly I have no fvcking intention of paying until the US dollar rebounds. And if it doesn't, damn!
AOR stand for App-O-Rama. It's a technique in which you apply for a large number of zero percent cards at one time (quickly over the internet) and receive many thousands of dollars (have heard of over $100, 000 in a few cases) that you can invest in high interest accounts and make money. It's risky but there are those that do it and successfully. I have never done a full out AOR, but have had up to $25,000 in zero percent money earning up to 6% interest from it for over 1 year.

AOR's are popular at the finance sites (FW Finance for example) but I don't think that the amount of money tied up by these is a large portion of the overall debt in the US. I don't think many people are brave (or smart) enough to do it. Most know that they'll just spend the money and end up paying it back with interest.

Isn't that tactic self defeating in the long run? Your credit score is partly based on your historical/present balances and I would assume that the drop in your credit score would more than offset any interest income you can generate by raising borrowing costs in the future.
 

blackangst1

Lifer
Feb 23, 2005
20,900
832
126
Originally posted by: KrispyKreme50
Originally posted by: Engineer
Originally posted by: Skoorb
Originally posted by: Engineer
Originally posted by: maddogchen
I wonder what percentage of this credit card debt is from AORs
I would say very little. Most people don't know what an AOR is. Most of the debt has nothing to do with making money at the expense of the credit card money. I would say the credit card companies are doing quiet well off of most of the debt.
I don't know what it is, but I have about $100-200 in credit card debt at this second, so that's ok. That doesn't include a few thousand on a canadian credit card, which frankly I have no fvcking intention of paying until the US dollar rebounds. And if it doesn't, damn!
AOR stand for App-O-Rama. It's a technique in which you apply for a large number of zero percent cards at one time (quickly over the internet) and receive many thousands of dollars (have heard of over $100, 000 in a few cases) that you can invest in high interest accounts and make money. It's risky but there are those that do it and successfully. I have never done a full out AOR, but have had up to $25,000 in zero percent money earning up to 6% interest from it for over 1 year.

AOR's are popular at the finance sites (FW Finance for example) but I don't think that the amount of money tied up by these is a large portion of the overall debt in the US. I don't think many people are brave (or smart) enough to do it. Most know that they'll just spend the money and end up paying it back with interest.

Isn't that tactic self defeating in the long run? Your credit score is partly based on your historical/present balances and I would assume that the drop in your credit score would more than offset any interest income you can generate by raising borrowing costs in the future.
Its only a temp drop. After 3 months or so, assuming payments are made and theyre current, FICO will rise again.
 

Engineer

Elite Member
Oct 9, 1999
39,234
699
126
Originally posted by: KrispyKreme50
Isn't that tactic self defeating in the long run? Your credit score is partly based on your historical/present balances and I would assume that the drop in your credit score would more than offset any interest income you can generate by raising borrowing costs in the future.
blackangst1 answered the question pretty good. In reality, over time as you build up more and more credit limits from paying off and not using the cards any more, your percent of debt to available credit drops and can actually help you. There are people who have credit limits that total in the millions from doing this (seriously).
 

kranky

Elite Member
Oct 9, 1999
20,999
109
106
I did a mini-AOR in January of 07 (4 cards) and took no-fee 0% BT money on all of them. Earned over $3K before taxes but for most of the year the money market fund was paying over 5%. At current rates, not worth it.

It dropped my credit score over 50 points but I knew I would not need credit during the time I had the BT money outstanding, so I didn't care what happened to my score temporarily. Last payment on the last card is next week so my score should rebound to where it was originally.

Even if I could still earn 5% on cash, I don't think I'd do an AOR today. So many CC issuers are nervous and, for example, Chase has been known to close accounts that have only been open for a couple of weeks if they think someone is applying for too many cards.
 

rudder

Lifer
Nov 9, 2000
19,434
84
91
Originally posted by: blackangst1
Originally posted by: GrGr
Originally posted by: blackangst1
Originally posted by: GrGr
Originally posted by: blackangst1
Originally posted by: Jhhnn
It's been awhile since I looked it up, blackangst1- thanks for the update.

The rest of the article you link is illustrative, as well, showing the one step forward and two steps back situation faced by many elderly people.

Which bolsters what I said, rather than countering it- both of us would probably starve to death on $1053/mo, and for about 1/3 of America's elderly, SS is their total income...

Meaning that many do, in truth, live in extended family situations, contrary to LK's assertion, even those who have other income sources. And the current situation of rising debt and increased expense for families in general tells us more about reality than any well massaged govt inflation figures...

Nor is it merely about debt per se, but about assets, which fewer and fewer actually have, and about the overhead of daily life, which isn't getting any smaller, even for the frugal...

And about unrealistic expectations, unrealistic faith in the system, and often unwarranted faith in the future... People wouldn't go into debt otherwise...
I agree. I suspect more than 30%, but Im too lazy to look it up.

The main problem is that our government's solution is to find ways to fund the current system for future retirees, and the people's solution is to hire (read: elect) politicians that will do this. The real solution is to reverse the trend of reliance on the government for retirement, and teach people how to save themselves. There's two ways to make alot of money. 1. a little bit of money and alot of time, or 2. alot of money and a little bit of time. Most people have the former. It doesnt take alot to accumulate $1 million + if you start early. Unfortunantly most people dont underastand finances, think it costs too much to invest, and are too selfish and want to spend money on other things.

If people retire poor, it's no one's fault but their own. And before you flame me, this is a generalization. Generalizations are genrally true.
If everybody retired "rich" nobody would be "rich" since the definition of "rich" would change. Since it is impossible for everybody to retire "rich" SS and the like were invented to help support those who cannot retire "rich" but need help to survive in their dotage.
You're not getting it. Im not talking about "rich" here. Im talking about middle class. Let me give you an example. Im 42. If I plan on retiring at 65, and living 20 years afterwards, and to get $45,000/yr in today's dollar, and based on an average inflation rate of 4%, I will need $1,750,000 to do that.

You think almost $2 mill is rich? Youre out of your mind.
So a millionaire isn't rich any longer?

I guess soon (in another 100 years if not before) you need to be a billionaire to retire, heh.
No, not for retirees. Again. 2mill when we retire will pay you 45-50k/yr for about 20 years. That is NOT rich.

Even if you only got 45K per year from a 2 million nest egg, that is still comfortable. Not rich, but not poor. Hopefully the person did not take out a 40 year mortgage and has no bills beyond monthly utilities.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
Originally posted by: kranky
I did a mini-AOR in January of 07 (4 cards) and took no-fee 0% BT money on all of them. Earned over $3K before taxes but for most of the year the money market fund was paying over 5%. At current rates, not worth it.

It dropped my credit score over 50 points but I knew I would not need credit during the time I had the BT money outstanding, so I didn't care what happened to my score temporarily. Last payment on the last card is next week so my score should rebound to where it was originally.

Even if I could still earn 5% on cash, I don't think I'd do an AOR today. So many CC issuers are nervous and, for example, Chase has been known to close accounts that have only been open for a couple of weeks if they think someone is applying for too many cards.
Also, since they can call in the money at any time (not sure whether most would or not), like you said even if they didn't kill the account, they could effectively do so by raising the interest rate (unless introductory 0% offers are outside the bounds of a CC company's legal ability to change APR at any time).

 

Engineer

Elite Member
Oct 9, 1999
39,234
699
126
Originally posted by: kranky
I did a mini-AOR in January of 07 (4 cards) and took no-fee 0% BT money on all of them. Earned over $3K before taxes but for most of the year the money market fund was paying over 5%. At current rates, not worth it.

It dropped my credit score over 50 points but I knew I would not need credit during the time I had the BT money outstanding, so I didn't care what happened to my score temporarily. Last payment on the last card is next week so my score should rebound to where it was originally.

Even if I could still earn 5% on cash, I don't think I'd do an AOR today. So many CC issuers are nervous and, for example, Chase has been known to close accounts that have only been open for a couple of weeks if they think someone is applying for too many cards.
That's pretty much the reason that I haven't done an AOR all out. I keep a few floating zero % balances and make a few hundred bucks a year but not worth much more in todays lower rate markets.
 

kranky

Elite Member
Oct 9, 1999
20,999
109
106
Originally posted by: Skoorb
Also, since they can call in the money at any time (not sure whether most would or not), like you said even if they didn't kill the account, they could effectively do so by raising the interest rate (unless introductory 0% offers are outside the bounds of a CC company's legal ability to change APR at any time).
They cannot revoke your 0% offer as long as you are not in default (late payment, returned check, etc.). But they can reduce your credit line to where the card is essentially unusable and worthless.

If you start with a $10,000 BT, then pay it down to $8,000, they could cut your credit line to $8,200. Pay it down to $4,000, they cut it to $4,200, etc. Leave you no room to charge anything new (not that you would anyway, with a 0% rate), then keep pushing the available credit down as you pay off the balance.

They can even close your account at any time, but you are able to pay back existing balances under the existing terms.
 

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