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> Luckily, there is just such a concept: It’s called material security. This is really important. There are people that are one paycheck away from not being ab

by kartan 8y ago

> Luckily, there is just such a concept: It’s called material security. This is really important. There are people that are one paycheck away from not being able to afford rent and basic necessities. I have lost my job in the past. I was calm and just enjoyed the time while I was looking for a new job. I have money saved. For a lot of people that will have been an extremely stressful situation. That kind of stress is related to bad-decision taking and reduced life expectancy. I have seen the rise of the credit card in my country. People used to have assets, a modest life and salary increases above inflation. Nowadays they depend more and more on credits and increase the amount borrowed from their loans. Salaries do not grow, but debt does. That is not a good life at all.

chrisco255 8y ago
Honestly, the availability of cheap credit has made me worry a bit less about getting slammed with some unexpected expense. That's not to say that I don't put money away for retirement and rainy days...but credit cards do make it easier to float if you suddenly find yourself unemployed.
- lotsofpulp 8y ago
  I’ve never heard anyone refer to 20%+ interest as cheap credit until now.
  - zackify 8y ago
    He probably meant for 1-2 months, so that you can use your card today, but it wont be on the statement for a month, and due 20 days after that or something.
  - SaltyBackendGuy 8y ago
    This only really works if you have good credit and can get a 6 mo. or 1 yr. 0% interest. Also, pay that money off before you start paying the juice or get hit with a larger fee. But it's definitely still a gamble. Edit: 'Only' maybe too strong as there are other scenarios that would work.
  - InclinedPlane 8y ago
    This may surprise you, but many people have high limit credit cards with APRs well below 20%, some even well below 10%. If you have great credit then you can get loans and credit pretty cheap.
    - munk-a 8y ago
      If you're in a position to secure one of those pleasant credit cards is it likely you'd be one of the people relying on a credit card as a sole means to survive a sudden layoff? I think you're assuming that because it's easy for people when they're doing well it must always be easy.
      - lazyasciiart 8y ago
        There are plenty of people with a good income and reasonable housing costs, and from memory that's about all that's asked for on a credit application. But they spend everything else on vacations and private schools and whatever, so they'd go down fast if their income stopped.
  - ip26 8y ago
    Your parent is probably thinking about leveraging the grace period. It's a useful strategy that lets you pay for an unexpected expense & liquidate assets at your leisure, instead of needing to sit on large quantities of low-return liquid assets. This strategy does require strong discipline, but I agree with your parent, I find it is a very useful tool.
    - lotsofpulp 8y ago
      Yes, that makes more sense, I probably assumed incorrectly.
      - ip26 8y ago
        It also depends on the context of where you live, I do believe in some countries there is no grace period, in which case this doesn't really work as well and you would be right to say it's not cheap at all!
  - refurb 8y ago
    Get an unsecured line of credit at your bank for a lot less than 20%. Or find one of those credit cards with 0% APR for the first 12 months.
    - ams6110 8y ago
      Generally hard to do with no current income. Or don't they check?
      - refurb 8y ago
        Well I think the goal is to line it up when you do have a job.
      - scarface74 8y ago
        Lending Club didn’t ask me for proof of income awhile back.
  - scarface74 8y ago
    I get checks weekly to borrow against my credit card for a 3% fee and a year before interesr is charged. If I get laid off because of micro economic issues (my employer went bust) and not macro issues (the entire economy sucks), as a software developer/architect, I can basically email my list of local recruiters and have a job or at least a contract within two weeks. That’s not theoretical. Over 20 years it’s never taken me more than a three weeks from the time I started looking to having another job. I’m not saying using a credit card instead of savings is a good idea.
- SwellJoe 8y ago
  I know so many folks deeply underwater because they "floated" on credit card debt during lean times. I've been there, even, when I started my first company I ended up racking up tens of thousands of dollars worth of credit card debt, before finding a profitable niche (several years later than I expected...when I quit my first job I had $$36,000 in savings, which at ~25 seemed like a lot of money). It's pretty dangerous to carry credit card debt, because it is so expensive to carry. Lots of folks get into the minimum payment trap, and the debt just keeps growing.
  - seiferteric 8y ago
    That's not the same thing, you funded your company on credit cards...
    - SwellJoe 8y ago
      Meh, more like paid my mortgage and bought food. But, even if we frame it as funding a company on credit cards, it was a mistake, and one I would discourage others from making.
      - seiferteric 8y ago
        Money is fungible
esotericn 8y ago
> I was calm and just enjoyed the time while I was looking for a new job. I have money saved. For a lot of people that will have been an extremely stressful situation. That kind of stress is related to bad-decision taking Without that phenomenon (the "must get a job very soon / now" mindset), loads of low paid / unskilled positions would just never be filled. No-one would work crap jobs. It feels to me like the economy is fundamentally structured around that concept, that most people don't have "FU money" and can't just sit around waiting for better employment situations. To me, it feels like the alternative, even if you could fix it, would result in eliminating swathes of currently provided services. Take food delivery as an example - the economics don't work out, because the driver and restauranteur would be paid about as well as the person ordering, or perhaps even more (because it's less desirable work) and it'd be hilariously expensive as a result. Can we fix it?
- kibwen 8y ago
  This attitude seems alien to me. If there's a job that nobody wants to do, the employer should offer more compensation. If that raises the price of the service such that the venture is no longer profitable, then that indicates a fundamental lack of demand for that service relative to its cost. No poor person should be expected to subsidize the comfort of the higher classes via their desperation.
  - pm90 8y ago
    > No poor person should be expected to subsidize the comfort of the higher classes via their desperation. Why do you think sweatshops exist?
    - tathougies 8y ago
      Because the cost of labor / covering up illegal hiring is lower than the cost of the item produced?
  - esotericn 8y ago
    It's not an attitude - I agree wholeheartedly with what you're saying. It's what I see when I look out of my window. That is to say, how I think the economy actually works. Basically no-one with a meaningful amount of capital takes low end jobs, because they don't have to. They can sit, read, wait, research, calmly consider, study, and find a way out. They have negotiating power (which is more than just telling a prospective boss a higher number - it's walking away, doing something else entirely, not even showing up to begin with). Poor people can't do that, which is why they take jobs that barely pay subsistence. They have no other choice and need to take the job that pays them _now_ with the skills they have _now_. Fundamentally this is why learning to spend less than you earn is probably the most important thing anyone can ever do. If you ever spend all of your money and have no access to credit, your freedom essentially disappears as you're forced to do almost anything someone with money tells you (legal or not).
batty_alex 8y ago
> That kind of stress is related to bad-decision taking and reduced life expectancy. I can't tell if you're really meaning to say that people down on their luck are there because they deserve it. It's just not that black-and-white. EDIT: I read this wrong. I agree with what you're saying, "related to" would have made more sense as "leads to". > Nowadays they depend more and more on credits and increase the amount borrowed from their loans. Why is this a problem if they can afford to take on the debt? Are you suggesting that debt is evil? EDIT: Because I misunderstood the first portion, I misunderstood this too - sorry.
- esotericn 8y ago
  No, it's the other way around. People fail, and then there's a downward spiral, because if you're poor you eat bad food and have no time and can't _think_. That is to say, there wasn't necessarily 'choice' involved (beyond in some cases an initial choice which was made without full vision of the future).
  - batty_alex 8y ago
    Thanks for pointing this out, the wording from OP's post was a bit confusing to me. This was my retort, that it's not black-and-white that poor decisions were made and someone is now a missed paycheck away from living on the streets.
- kartan 8y ago
  > EDIT: I read this wrong. I agree with what you're saying, "related to" would have made more sense as "leads to". Yes. Thank you. "Leads to" is what I meant. :)
pm90 8y ago
> I have lost my job in the past. I was calm and just enjoyed the time while I was looking for a new job. I have money saved. For a lot of people that will have been an extremely stressful situation. That kind of stress is related to bad-decision taking and reduced life expectancy. Same experience. I was laid off my first job out of college; but I had enough money saved that I basically calmly job searched. Even that was stressful: not having an income is really really bad, couldn't sleep well etc. But if I had to worry about finances too... man, that would suck so bad.
deleted 8y ago
[deleted]

by kartan 8y ago

chrisco255 8y ago

Honestly, the availability of cheap credit has made me worry a bit less about getting slammed with some unexpected expense. That's not to say that I don't put money away for retirement and rainy days...but credit cards do make it easier to float if you suddenly find yourself unemployed.

lotsofpulp 8y ago
I’ve never heard anyone refer to 20%+ interest as cheap credit until now.
- zackify 8y ago
  He probably meant for 1-2 months, so that you can use your card today, but it wont be on the statement for a month, and due 20 days after that or something.
- SaltyBackendGuy 8y ago
  This only really works if you have good credit and can get a 6 mo. or 1 yr. 0% interest. Also, pay that money off before you start paying the juice or get hit with a larger fee. But it's definitely still a gamble. Edit: 'Only' maybe too strong as there are other scenarios that would work.
- InclinedPlane 8y ago
  This may surprise you, but many people have high limit credit cards with APRs well below 20%, some even well below 10%. If you have great credit then you can get loans and credit pretty cheap.
  - munk-a 8y ago
    If you're in a position to secure one of those pleasant credit cards is it likely you'd be one of the people relying on a credit card as a sole means to survive a sudden layoff? I think you're assuming that because it's easy for people when they're doing well it must always be easy.
    - lazyasciiart 8y ago
      There are plenty of people with a good income and reasonable housing costs, and from memory that's about all that's asked for on a credit application. But they spend everything else on vacations and private schools and whatever, so they'd go down fast if their income stopped.
- ip26 8y ago
  Your parent is probably thinking about leveraging the grace period. It's a useful strategy that lets you pay for an unexpected expense & liquidate assets at your leisure, instead of needing to sit on large quantities of low-return liquid assets. This strategy does require strong discipline, but I agree with your parent, I find it is a very useful tool.
  - lotsofpulp 8y ago
    Yes, that makes more sense, I probably assumed incorrectly.
    - ip26 8y ago
      It also depends on the context of where you live, I do believe in some countries there is no grace period, in which case this doesn't really work as well and you would be right to say it's not cheap at all!
- refurb 8y ago
  Get an unsecured line of credit at your bank for a lot less than 20%. Or find one of those credit cards with 0% APR for the first 12 months.
  - ams6110 8y ago
    Generally hard to do with no current income. Or don't they check?
    - refurb 8y ago
      Well I think the goal is to line it up when you do have a job.
    - scarface74 8y ago
      Lending Club didn’t ask me for proof of income awhile back.
- scarface74 8y ago
  I get checks weekly to borrow against my credit card for a 3% fee and a year before interesr is charged. If I get laid off because of micro economic issues (my employer went bust) and not macro issues (the entire economy sucks), as a software developer/architect, I can basically email my list of local recruiters and have a job or at least a contract within two weeks. That’s not theoretical. Over 20 years it’s never taken me more than a three weeks from the time I started looking to having another job. I’m not saying using a credit card instead of savings is a good idea.
SwellJoe 8y ago
I know so many folks deeply underwater because they "floated" on credit card debt during lean times. I've been there, even, when I started my first company I ended up racking up tens of thousands of dollars worth of credit card debt, before finding a profitable niche (several years later than I expected...when I quit my first job I had $$36,000 in savings, which at ~25 seemed like a lot of money). It's pretty dangerous to carry credit card debt, because it is so expensive to carry. Lots of folks get into the minimum payment trap, and the debt just keeps growing.
- seiferteric 8y ago
  That's not the same thing, you funded your company on credit cards...
  - SwellJoe 8y ago
    Meh, more like paid my mortgage and bought food. But, even if we frame it as funding a company on credit cards, it was a mistake, and one I would discourage others from making.
    - seiferteric 8y ago
      Money is fungible

esotericn 8y ago

> I was calm and just enjoyed the time while I was looking for a new job. I have money saved. For a lot of people that will have been an extremely stressful situation. That kind of stress is related to bad-decision taking Without that phenomenon (the "must get a job very soon / now" mindset), loads of low paid / unskilled positions would just never be filled. No-one would work crap jobs. It feels to me like the economy is fundamentally structured around that concept, that most people don't have "FU money" and can't just sit around waiting for better employment situations. To me, it feels like the alternative, even if you could fix it, would result in eliminating swathes of currently provided services. Take food delivery as an example - the economics don't work out, because the driver and restauranteur would be paid about as well as the person ordering, or perhaps even more (because it's less desirable work) and it'd be hilariously expensive as a result. Can we fix it?

kibwen 8y ago
This attitude seems alien to me. If there's a job that nobody wants to do, the employer should offer more compensation. If that raises the price of the service such that the venture is no longer profitable, then that indicates a fundamental lack of demand for that service relative to its cost. No poor person should be expected to subsidize the comfort of the higher classes via their desperation.
- pm90 8y ago
  > No poor person should be expected to subsidize the comfort of the higher classes via their desperation. Why do you think sweatshops exist?
  - tathougies 8y ago
    Because the cost of labor / covering up illegal hiring is lower than the cost of the item produced?
- esotericn 8y ago
  It's not an attitude - I agree wholeheartedly with what you're saying. It's what I see when I look out of my window. That is to say, how I think the economy actually works. Basically no-one with a meaningful amount of capital takes low end jobs, because they don't have to. They can sit, read, wait, research, calmly consider, study, and find a way out. They have negotiating power (which is more than just telling a prospective boss a higher number - it's walking away, doing something else entirely, not even showing up to begin with). Poor people can't do that, which is why they take jobs that barely pay subsistence. They have no other choice and need to take the job that pays them _now_ with the skills they have _now_. Fundamentally this is why learning to spend less than you earn is probably the most important thing anyone can ever do. If you ever spend all of your money and have no access to credit, your freedom essentially disappears as you're forced to do almost anything someone with money tells you (legal or not).

batty_alex 8y ago

> That kind of stress is related to bad-decision taking and reduced life expectancy. I can't tell if you're really meaning to say that people down on their luck are there because they deserve it. It's just not that black-and-white. EDIT: I read this wrong. I agree with what you're saying, "related to" would have made more sense as "leads to". > Nowadays they depend more and more on credits and increase the amount borrowed from their loans. Why is this a problem if they can afford to take on the debt? Are you suggesting that debt is evil? EDIT: Because I misunderstood the first portion, I misunderstood this too - sorry.

esotericn 8y ago
No, it's the other way around. People fail, and then there's a downward spiral, because if you're poor you eat bad food and have no time and can't _think_. That is to say, there wasn't necessarily 'choice' involved (beyond in some cases an initial choice which was made without full vision of the future).
- batty_alex 8y ago
  Thanks for pointing this out, the wording from OP's post was a bit confusing to me. This was my retort, that it's not black-and-white that poor decisions were made and someone is now a missed paycheck away from living on the streets.
kartan 8y ago
> EDIT: I read this wrong. I agree with what you're saying, "related to" would have made more sense as "leads to". Yes. Thank you. "Leads to" is what I meant. :)

pm90 8y ago

> I have lost my job in the past. I was calm and just enjoyed the time while I was looking for a new job. I have money saved. For a lot of people that will have been an extremely stressful situation. That kind of stress is related to bad-decision taking and reduced life expectancy. Same experience. I was laid off my first job out of college; but I had enough money saved that I basically calmly job searched. Even that was stressful: not having an income is really really bad, couldn't sleep well etc. But if I had to worry about finances too... man, that would suck so bad.

deleted 8y ago

[deleted]