Credit

And Here Is Your Open Thread

— From Jake Halpern’s New York Times Magazine piece on the dark, lucrative world of debt collection.

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How President Obama Does Credit Cards

Last Thursday, President Obama visited Austin’s Franklin Barbecue and committed two minor breaches of etiquette.

The first is that he cut the line. Reportedly, he is the first person in history to cut the Franklin Barbecue line, which often requires patrons to wait for up to three hours. If you would like to read angry tweets about Obama’s line-cutting, Eater Austin has collected several, such as:

apparently Obama skipped the line at Franklin's BBQ today. DICK move, bro!

— Ben (@BensWJ) July 10, 2014

The second breach of etiquette is that he flashed his JP Morgan Select credit card in front of everybody. Literally held it up for all to see, right before paying for his own food as well as at least one other patron’s meal.

So now there are images of President Obama’s credit card bouncing around the internet. (I hope he got someone on his staff to request a new credit card number.)

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Nobody’s Default But My Own: What Happened When I Decided to Stop Paying My Credit Card Debt

I should have never gotten a credit card, and I knew it. Nobody without a job, savings, or assets of any kind should, especially if their income is less than their rent. It’s basic math.

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My Spreadsheet Summer

I’ve never really put myself on a budget before, which I find kind of shameful. Fed up with constantly being a couple hundred dollars behind on my Visa, I’ve decided to do something about it. I set up a spreadsheet, planning my budget over the next few months and will be obsessively tracking my progress. I’ve got a pretty simple set-up: one column for the date, one for the balance of each of my bank accounts, one for my Visa, and one for notes. It looks like this…

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I Used to Dodge Debt Collectors & Now I Have a Great Credit Score

Hiding the car from the repo man and renting a private mailbox so he didn’t have to provide a home address were just two of the ways Dan Nainan was trying to deal with his debt a decade ago.

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Link Round Up: Student Loans and More Student Loans; Millennials Hoarding Cash Like Dragons

President Obama’s move to help ease the student loan crisis started a cascade of think pieces about student loans over the weekend. Here are a couple of the most interesting:

Here’s Why the Student Loan Market Is Completely Insane, via Businessweek. Complete with charts! Oh, and facts, lots of sobering facts:

Default rates at such places as Stanford, Duke, Carnegie Mellon, MIT, and Yale are all less than 2 percent. Not surprisingly, graduates from these schools command high salaries in the job market. At such places as West Virginia, Louisville, South Florida, and Boise State—schools much better known for athletics than academics—default rates are 10 percent. Further down the food chain are much higher default rates at places such as Alcorn State (16 percent), Colorado Technical University (23 percent), University of Phoenix (26 percent), Lincoln Technical Institute (30 percent), and Arizona Automotive Institute (42 percent).

+ Finding Shock Absorbers for Student Debt, via the NYT, also concerns itself with the problem of default, and wants to help cushion students against the risks they incur by paying for college.

The core problem with student debt is that we don’t adequately insure students against the risk of investing in college. While a vast majority of undergraduates have borrowed much less than some headlines suggest — in one study from the last decade, 98 percent borrowed less than $50,000 and four out of 10 borrowed nothing at all — millions are in default or behind on payments. With damaged credit records, they face higher interest rates on car and home loans, rejected rental applications and lost job opportunities. … But how can we help in the short term? We should allow student-loan payments to rise and fall with income, as we do with Social Security and taxes. If borrowers hit a tough spell, payments should drop automatically. If they score well-paying jobs, payments should rise. This is called “income-based repayment.”

+ Perhaps all of this has something to do with why millennials are hoarding cash like dragons?

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Is Debt Management Just Part of Being an Adult?

Following up on Josh’s post, “We Need a New Kind of Financial Advice,” I’d like to posit the following, to be taught in all schools and financial literacy courses immediately:

For most of us, debt management is part of being an adult.

Right now, the standard financial advice is get out of debt immediately because debt is bad. Or, the more nuanced version: because the longer it takes to pay off your debts, the more you have to pay in interest.

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What Happens If I Don’t Pay My Credit Card Bill?

Many of us have thought, “What would happen if I just pretended this credit card bill didn’t exist? Hmmm…”

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Buying A First Car: The American Dream

Ester: Hello Judah! Would you like to introduce yourself for the Billfold readership?

Judah: Hi Billfold, my name is Judah Bloom and I am a new car shopper and, hopefully, owner.

Ester: And you are related to me!

Judah: That, too. I am your youngest brother.

Ester: That makes it sound like I have 15 younger brothers, each cuter and more princely than the last! But I only have you. Luckily, you’re great!

Judah: Well thank you. I am just trying to avoid the “little” brother routine that typically arises.

Ester: Yes, we middle children are notoriously insensitive to the feelings of our younger siblings. ANYWAY. You are not little; you are in fact almost 30, are you not?

Judah Yes I am. I am turning 30 in August and have been working a steady job for the past, almost three years.

Ester: Let the record show: You are a millennial with a strong work ethic. You’re virtually a unicorn! What other markers of traditional adulthood can you offer? Can you cook yourself dinner?

Judah: If ordering online or turning on the microwave count, then yes, absolutely. However, I have been a success at living by myself and going to work everyday, which is an achievement.

Ester: In this day and age, that basically warrants you a Nobel prize. Or, as it happens, A NEW CAR! So tell me about your decision to purchase an automobile!

Judah Well, the car I am currently driving is an 11-year-old Acura RSX (two door hatchback) that I got from my parents. It has taken me cross country 3-4 times and been with me for as long as I have been able to drive. However, it is reaching old age and becoming untenable/not financially viable to maintain.

Ester: You mean it’s time to put it in a home?

Judah: I was actually going to try to find it a nice farm up north to let it run around with other old cars.

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A Call To Abolish Employment Credit Checks

Back in the day when my credit was very, very bad and I didn’t have any real sense of urgency about doing something about it, per se, my mom would try to put the fear of god in me by saying that when I applied for jobs, prospective employers could looking up my credit and, seeing how irresponsible I was, decide not to hire me. This seemed (and seems!) both totally unfair and hardly believable.

According to a recent survey-based study from public policy org Demos (h/t Astra Taylor), employment credit checks are actually fairly common: 1 in 4 of unemployed people who were surveyed reported having their credit checked as part of a job application. Among the unemployed with ‘blemished’ credit histories, 1 in 7 has been informed they missed out on a job because of their credit.

Employment credit checks are legal under federal law. The Fair Credit Reporting Act (FCRA) permits employers to request credit reports on job applicants and existing employees.4 Under the statute, employers must first obtain written permission from the individual whose credit report they seek to review. Employers are also required to notify individuals before they take “adverse action” (in this case, failing to hire, promote or retain an employee) based in whole or in part on any information in the credit report. The employer is required to offer a copy of the credit report and a written summary of the consumer’s rights along with this notification. After providing job applicants with a short period of time (typically three to five business days) to identify and begin disputing any errors in their credit report, employers may then take action based on the report and must once again notify the job applicant.

I’ve never been informed that a prospective employer was going to run a credit check on me (MIKE DANG???), so I suppose that means it hasn’t happened.

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