Will,
I enjoy reading your blog and generally agree with the content. For instance, I agree that we need cowboys. However, I am not sure I would have used Ty Murray as an example. I have a problem with a cowboy making any amount of money, let alone $1,000,000.00, by mounting a bull and digging cold, steel spurs into its sides. As you say, it is something he loves to do and he does it well, but that does not make it right. In my opinion, this is an antiquated practice that needs to be abolished. Most of your blogs contain information for the betterment of our society, which I am all for. But not at the expense of our humanity. The recent Michael Vick case is still fresh in our minds. Let’s do all the things you pointed out in this blog to get America back on track, but let’s do it humanely. That gives me peace of mind.
Keep the blogs coming,they are interesting.
Respectfully,
Those of you who follow my rants know that I hate debt. Debt is dumb and
cash is king! In the past, I have ranted about the use of cash, avoiding
debt at all cost and cutting up those shackles in your wallet called credit
cards.
Some of you have really fought me on this issue. (By the way I love the
intellectual sparring!)
We’ve bought into the notion in this country that our FICO score is the
measure of the person. We believe we should work hard to increase our credit
scores by any means necessary. Can you say dumb? This, to me, is one of the
stupidest financial moves you can make.
Unfair Isaac Corporation (abbreviated FICO) has recently updated its recipe
for cooking up your credit score. If it’s the Holy Grail of Money, then why
did they need to change the recipe? According to Unfair Isaac, the new
system will reduce default rates on consumer credit by up to 15%. In other
words, they will be able to predict, with up to 15% better accuracy, whether
you can pay for what you are trying to buy.
Well I know a way of predicting whether you can pay for something with 100%
accuracy. You want to hear it? Per my fancy calculations, using all the
calculus and differential equations I know, if you don’t have the money in
the bank - you can’t pay for it!
I can hear you whining now. But what about stuff you don’t have all the cash
for like a car or a house.
I’m glad you brought that up. People pay cash for cars every day and so
could you. Of course they may not be driving a 2008 Hummer but if you don’t
have the $65,000 it cost, it might be a strong clue that you shouldn’t buy
one.
I can see needing credit to purchase a home. There is a process called
manual underwriting where banks/lenders look that a myriad of factors and
make a decision of your credit worthiness. Credit score is just one of those
factors.
Student loans generally don’t look at credit as long as they are federally
guaranteed.
Yes, a few companies use credit scores in hiring decisions. Yes, your FICO
score can affect your insurance rates. However, can you justify
“purposefully” getting into debt just to improve your credit score?
Everything that goes into the score is a function of debt. Hence, the only
way to improve it is to take on and manage more debt. Theoretically, if you
paid for everything with cash, your FICO would be 0! Talk about bad credit!
See http://www.myfico.com/CreditEducation/
Think on this. If someone put $1,000,000.00 in your bank account today, how
would your credit score change? It wouldn’t!!! Needless to say, your
lifestyle probably would.
The primary focus of your “financial thought process” should be about
building and protecting wealth. Wealth is the difference between your assets
and what you owe. The more you owe the lower your wealth, compared to what
it could be.
Ironically though, the only way to establish and build your Unfair Isaac
(FICO) score is to tirelessly chase and hopefully juggle (manage) more debt.
Happy juggling… I mean managing… your FICO score in 08.
Just my 20 cents!
Will, I just started to wake from my hibernation and WOW! I read your latest and boy you are on point. I am working three jobs not including being a single parent of one. I have a legal career (or does it have me?), while working a home based business(future seeds) while also providing bookkeeping duties for my partner’s business to make ends meet. Is the age of multitasking or what? And, what is retirement? Can someone really explain this urban legend to me?
Keep stiring the pot with your thoughts, I know it keeps me on my toes.
Thanks.
Excellent points, Will. I’m currently very worried about the falling value of the dollar and, consequently, the falling value of my savings. Seems like even with the discipline of saving 10% of income, we’re still screwed by the credit encouraging acts of the Federal Reserve and other factors of inflation. How do we protect ourselves from those influence beyond our control?
Although stopping our own credit abuse a core issue, another central issue is this: Why has productivity made quantum leaps yet wages pay for less and less a percentage of essentials. Two people must now work for essentials, whereas one did before. In addition to being kept debt slaves, we are also kept wage slaves, and the benefits of our productivity are kept by the rich. Two people working merely meant wages could be lowered such that both must work. Our economy is fine, but we gave tax breaks so wealth would “trickle down” and then the weatlhy asked why they should share their hard earned wealth with those who gave them the tax breaks to get there. What a scam, and 300 million people fell victim of it.
It has long been looking for this information, Thank you for your work.
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