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My natural tendencies are definitely in the libertarian/capitalist direction. I think that people should be able to whatever they damn well please with their mo

by harryh 7y ago

My natural tendencies are definitely in the libertarian/capitalist direction. I think that people should be able to whatever they damn well please with their money. I think that they will get it right more often than not and that when the government steps in to make laws restricting the free exchange of goods/services/money it's almost always a bad idea. But I'm also a personal finance nerd, so eventually I found myself reading https://www.reddit.com/r/personalfinance/ https://www.reddit.com/r/personalfinance/ And then I read different versions of the same story over and over and over again. People with far more credit card debt than they could ever pay off. More than a year's salary worth of debt. People that we just stupid about money, and bought way more stuff than they could afford encouraged all the way by the credit card companies and advertising and keeping up with the Joneses. So now, from time to time, I sometimes find myself wondering if credit cards should just be illegal. Such thoughts are heresy in my own mind, and I don't know how to deal with them really especially because I know that credit cards have been great for me with my 2% cash back and airline points. And I know that they can be great for people who get into a temporary cash crunch and know how to be wise about such things. But then I read another couple of pages of /r/personalfinance and I wonder again. Maybe people do need protecting from themselves. It certainly looks like some of the people posting there do. I find myself very sympathetic to the author's views.

save_ferris 7y ago
There’s a simple solution here that doesn’t require banning credit cards: requiring borrowers to demonstrate ability to pay before signing off on a loan. Most creditors do this, it’s usually only the ethically challenged lenders that ignore this. The previous administration passed regulations requiring payday lenders to verify ability to pay before handing out loans, which was promptly crushed by the current admin at the request of the payday loan lobby. Another solution is to cap the max interest rate far below current thresholds. The problem with these loans is that lenders are hoping you’ll get into debt, they’re in no way trying to create a mutually beneficial relationship with their borrowers.
- lostdog 7y ago
  I'm partial to an even simpler solution: Make it easier to go into bankruptcy, and discharge the loan in bankruptcy. If your debt load is unsustainable, such that your interest payments are more than XX% of your income, then you effectively already are bankrupt. We can either try to get people back on their feet, or let their debtors grind them into the dirt for a while longer.
  - tptacek 7y ago
    In reality, credit card companies will already settle for a fraction of owed principal if they believe you're seriously considering bankruptcy --- I've personally watched them come down to less than 20%, and my understanding is that people who are good at these negotiations can get them much lower still.
    - patio11 7y ago
      Can confirm. Remember, a) if they sell it to a debt collector, they're probably selling at 3 to 5 cents on the dollar [+] and b) they can't sell it, at all, if your bankruptcy notification gets to them before the Big Ponderous Corporate Process pulls your account into their package being sold to a debt collector. [+] More if they haven't worked it a lot internally or if it is sold while fresh or if you look like someone who is extremely collectible but let's say "Typical case for people who are on verge of bankruptcy" pushes you waaaaay down the stack on all possible ways to price debt.
    - deleted 7y ago
      [deleted]
pro8ndi 7y ago
I have a hard time thinking of money as personal property. It’s a social value store not a personal one. A dollar is toilet paper if enough people quit caring. Also you seem to ignore how much protectionism the elites get, while calling Redditors out as needing protection. The Senate itself was intended by Madison to protect the rich. So we’ve accepted protectionism from themselves is fine when “them” is a rich person. Oh the economy crashed because the bubble you all made burst? Well here’s a huge transfer payment to try again.
- gruez 7y ago
  >The Senate itself was intended by Madison to protect the rich. How?
  - pro8ndi 7y ago
    By keeping democracy in check: https://politics.stackexchange.com/questions/8793/what-did-james-madison-try-to-say-when-talking-about-agrarian-reform https://politics.stackexchange.com/questions/8793/what-did-j... There’s no explicit mechanism, but our politicians read this and study it. Academics know, and consider the Constitution an aristocratic document, protecting elite power. See it’s bailouts and tax cuts for the rich, and inequality, wage stagnation for the masses. The emotional programming for that comes from somewhere. The laws of physics only dictate who is economically advantaged in that they dictate how our brains work. And our brains are then easily emotionally manipulated into believing bullshit.
sneak 7y ago
People should be able to do whatever they dann well please with their money, including spending it on frivolous and stupid things and painting themselves into a corner. It’s not freedom unless it’s freedom to make bad decisions as well as good ones. If you believe the first, like you say you do, people do not need to be protected from themselves, as self-inflicted harm is the correct outcome of letting people do as they please. I think it’s ok for people who make bad decisions to go deep into debt. There’s no debtors prison in the USA, recourse against default on the extreme low end is pretty minimal. It may stress them out (as unpaid debt should, to some extent) but they likely won’t die over it.
- tonyedgecombe 7y ago
  Just as it's hard to stay healthy when everybody around you is sick, it's hard to stay wealthy when everybody around you is poor. Locking yourself away in gated communities to keep out the hoards isn't really freedom.
  - sneak 7y ago
    If your ideology requires violent coercion to work right, your ideology is fundamentally flawed. There are tons of better ways of getting people to make better financial decisions than sticking guns in the face of lending institutions that choose to do business with them.

by harryh 7y ago

save_ferris 7y ago

There’s a simple solution here that doesn’t require banning credit cards: requiring borrowers to demonstrate ability to pay before signing off on a loan. Most creditors do this, it’s usually only the ethically challenged lenders that ignore this. The previous administration passed regulations requiring payday lenders to verify ability to pay before handing out loans, which was promptly crushed by the current admin at the request of the payday loan lobby. Another solution is to cap the max interest rate far below current thresholds. The problem with these loans is that lenders are hoping you’ll get into debt, they’re in no way trying to create a mutually beneficial relationship with their borrowers.

lostdog 7y ago
I'm partial to an even simpler solution: Make it easier to go into bankruptcy, and discharge the loan in bankruptcy. If your debt load is unsustainable, such that your interest payments are more than XX% of your income, then you effectively already are bankrupt. We can either try to get people back on their feet, or let their debtors grind them into the dirt for a while longer.
- tptacek 7y ago
  In reality, credit card companies will already settle for a fraction of owed principal if they believe you're seriously considering bankruptcy --- I've personally watched them come down to less than 20%, and my understanding is that people who are good at these negotiations can get them much lower still.
  - patio11 7y ago
    Can confirm. Remember, a) if they sell it to a debt collector, they're probably selling at 3 to 5 cents on the dollar [+] and b) they can't sell it, at all, if your bankruptcy notification gets to them before the Big Ponderous Corporate Process pulls your account into their package being sold to a debt collector. [+] More if they haven't worked it a lot internally or if it is sold while fresh or if you look like someone who is extremely collectible but let's say "Typical case for people who are on verge of bankruptcy" pushes you waaaaay down the stack on all possible ways to price debt.
  - deleted 7y ago
    [deleted]

pro8ndi 7y ago

I have a hard time thinking of money as personal property. It’s a social value store not a personal one. A dollar is toilet paper if enough people quit caring. Also you seem to ignore how much protectionism the elites get, while calling Redditors out as needing protection. The Senate itself was intended by Madison to protect the rich. So we’ve accepted protectionism from themselves is fine when “them” is a rich person. Oh the economy crashed because the bubble you all made burst? Well here’s a huge transfer payment to try again.

gruez 7y ago
>The Senate itself was intended by Madison to protect the rich. How?
- pro8ndi 7y ago
  By keeping democracy in check: https://politics.stackexchange.com/questions/8793/what-did-james-madison-try-to-say-when-talking-about-agrarian-reform https://politics.stackexchange.com/questions/8793/what-did-j... There’s no explicit mechanism, but our politicians read this and study it. Academics know, and consider the Constitution an aristocratic document, protecting elite power. See it’s bailouts and tax cuts for the rich, and inequality, wage stagnation for the masses. The emotional programming for that comes from somewhere. The laws of physics only dictate who is economically advantaged in that they dictate how our brains work. And our brains are then easily emotionally manipulated into believing bullshit.

sneak 7y ago

People should be able to do whatever they dann well please with their money, including spending it on frivolous and stupid things and painting themselves into a corner. It’s not freedom unless it’s freedom to make bad decisions as well as good ones. If you believe the first, like you say you do, people do not need to be protected from themselves, as self-inflicted harm is the correct outcome of letting people do as they please. I think it’s ok for people who make bad decisions to go deep into debt. There’s no debtors prison in the USA, recourse against default on the extreme low end is pretty minimal. It may stress them out (as unpaid debt should, to some extent) but they likely won’t die over it.

tonyedgecombe 7y ago
Just as it's hard to stay healthy when everybody around you is sick, it's hard to stay wealthy when everybody around you is poor. Locking yourself away in gated communities to keep out the hoards isn't really freedom.
- sneak 7y ago
  If your ideology requires violent coercion to work right, your ideology is fundamentally flawed. There are tons of better ways of getting people to make better financial decisions than sticking guns in the face of lending institutions that choose to do business with them.