Taking a break from watching the documentary “Maxed Out” to check the interest rates of my cards. Woooh! It was long overdue but painful to go through. 24.99% (Target Visa), 28.9% (HSBC), 26.99% (HSBC), and my lowest, 12.4% (Capital One). Couldn’t find the interest rates for the two store cards online, so I’ll have to wait for the next paper statements to arrive. Lucky for me, none of the “second wave” credit cards have limits above $1000 (except one lame HSBC store card that I’ll never use again – fuck that bank!). Mostly $500 here, $750 credit limit there.
I call this my “second wave” of credit cards since my first came back in 1999 during my freshman year
at a state university. As already mentioned elsewhere on the blog, I was issued 5 credit cards (my fiancee received 7) though we admitted to not having jobs at the time. The free T-shirt offers drew us in and the one that stands out in mind was the MBNA offer. God, what a shitty company to deal with! We were young, dumb, broke, and financially inexperienced. Our bills went on the cards, along with frivolous expenditures like our honeymoon, and within a couple of years we were swimming in debt (for being as young as we were anyhow).
Going from no credit to bad credit doesn’t take much these days.
When he and I separated, we discussed filing bankruptcy to escape the burden of bills we had no way of paying for (on top of medical bills and student loans, the latter being exempt from bankruptcy for 5 years or so, we heard). But in my family, filing bankruptcy is considered a grave shame that reflects poorly on the family as a whole. My grandmother stepped in and transferred some of my credit card balances onto her cards, behind my back, in order to sabotage my plan. And it worked, setting me up to become forever indebted to her, as I remain.
My stepdad’s response to all of this was to hand me a NOLO bankruptcy book so that I may educate myself on how to go about it. But I never wound up filing bankruptcy.
As stated, in 2003 I became a prostitute in order to earn enough income to pay my current bills, move into an apartment on my own, and be able to afford to send money home to pay on the debt to my family. During the next 4 years, I abandoned the remaining “first wave” credit cards that hadn’t been paid off and closed out (some had been paid off but the banks gave us hell on closing them out, then decided to issue additional fees to reestablish a negative balance – fuck you, Discover Card!). The JCPenney store card and Target card were paid off and closed out; Sears gave us hell so I abandoned them. Then like now, most of the cards had balances of $1000 or less, so the debt wasn’t huge, but it just refused to go away even when paid off in some instances.
Abandoning one’s debt to creditors isn’t what I’d usually encourage and it isn’t how I was raised, but there comes a point where it will drown you, so you have to cut your losses and focus on what’s more important. As my friends commonly hear me say: “you can’t squeeze blood from a turnip.” I have no assets, no house, no known wages to garnish. So for four years, I walked away from the cards and medical bills (remember, no health insurance) and focused on earning my education instead. For four years solid, I did not use a credit card even once, having only a debit card for purchases. And guess what? My credit rating magically increased!
Kinda weird to think about it since the only thing I’d been paying on that was reported to the credit agencies during those 4 years was my truck payment. And it was paid faithfully each month. Occasionally payments were made on the interest on my student loans, but that was it. So how, with those past debts still sitting on my credit report today, did my credit rating increase? And why were credit card companies coming around again and offering cards, some from companies I still owed money to??
Well, back in 2006 I took the credit card companies up on some of those offers, which is what I refer to now as my “second wave” of cards. All told, their balances total no more than $2800 and most aren’t maxed out. Not anything worth balking over for someone in my position. But times have changed and I don’t live as I did back in 2003-2007, bringing in less income than then in exchange for gaining more peace of mind in my job and seeing fewer clients who are familiar and compatible. Possessing an entrepreneurial spirit, I’m pretty good about coming up with side jobs and ways to flip coins, so times aren’t terrible. If anything, I feel pretty fortunate to have learned the credit game early on and figured out a way to live outside of it.
My rendezvous with credit these days wasn’t meant to be a second go-round of stressing over bills and balances. The cynicism learned from dealing with credit card companies and debt collectors the first time around desensitized my sense of pride in taking financial responsibility, feeling as though the game is rigged and that the odds are stacked in favor of The House. And they certainly are. No, I had no intention of paying this latest wave of debt, no matter how small or large. Why do so when you’ve lost all faith in financial institutions and the American economic system? It looked like pure bullshit to me, so my aim was to take advantage of a system that is notorious for taking advantage of so many people unnecessarily. Mercilessly. Taking people’s land, foreclosing on homes, and harassing you by phone and mail all day, everyday (come to find out when HSBC called last Sunday to bitch at me about a late payment, which is becoming the new ritual). Why should I pay these weasels who get rich off charging astronomical interest rates on the money they loan? Why should I be honest to those who aren’t honest to me? Fuck ‘em.
Yeah, that was the gameplan. And still may be if it comes down to that. But I’ve decided to act a little better than that for the time being, having already caught up most of the cards and paid down their balances a bit. This one damned HSBC store card is giving me hell -a card only opened to pay for the bridesmaid dress for a girlfriend’s wedding- and if not for that, I’d be much more enthusiastic about paying those HSBC jackwads. Once they start harassing you over a late payment, putting your number on autodial where a recording rings your phone 4-5 times a day, letting their collectors talk shit to you at 8am, it’s tough to wrap your mind around paying these people. Do they really deserve it? And how come they have to hire such assholes to man their call centers? Do I really care if they go out of business? Personally, if their company was under my control, I sure as hell wouldn’t have issued not one but THREE credit cards to a student with questionable credit and no trackable employment. Dumb idea. And that would have been cool since I didn’t need the cards anyway.
Well, today while watching this documentary (you can read a review on the Master Your Card blog), I got to thinking about it all again and the financial situation my family members find themselves in. It’s a sad situation for them because their income is so low and debt so high (even though they are extremely frugal and not ones to spend frivolously) and they aren’t getting any younger, having passed retirement age though unable to stop working. All this talk about me heading overseas keeps nagging at my conscience, as a couple of friends know, making me wonder if maybe I’m being an asshole, running away when my efforts could prove useful for those I will forever owe. *sigh* Gotta make peace with sticking around and delaying plans to see other nations. Gotta find a way to put this degree to good use and help those who have shown me so much love.
But damn. I can’t help but be disappointed.
Anyway, the significance of today is that I paid off most of the low APR card so that I may transfer the balance from the HSBC store card and close it out. My next step will be to pay the low APR card down again (another $400 or so) and transfer the balance of one of the other HSBC cards that has a 26.99% APR, then close it out too. The remaining HSBC card is for a store that I very rarely shop at for clothes, but which I intend to keep open. It is half paid already and has only been used maybe once in the last year. In the end, my goal is to close out two of the HSBC cards and pay down the Target Visa and Capital One, keeping these on hand for emergencies only. The two remaining store cards carry relatively small balances and shall remain open, though the plan is to pay them off over time. The past “first wave” credit card debt will remain unpaid as it is dead to me. Same goes for old medical bills. The most recent medical bills are being negotiated currently. This only leaves a fairly small balance due to the government (for overpayment during only 5 weeks visiting the Army – charged back at 4% interest) and student loans (the mammoth). Oh, and the car ($10,000 still owed), which eventually I aim to trade in once paid down enough.
To handle the student loans, the best option is loan forgiveness if it can be attained. I’ve looked into high-need programs for teaching and whatnot that do offer this (policing does as well, though I don’t plan to go that route). One program I’m looking into offers to pay $3,000 per year toward outstanding student loans, though at that rate it would take 10+ years to pay mine down (not even calculating in the interest accumulation). Hmmm…
A debtor nation…that’s really what we’ve become. It will be tricky to navigate the financial landscape in the future. My only advice would be to avoid debt as much as possible, though it really isn’t possible for those lacking sufficient income and insurance to cover emergencies and medical costs. This system is set up to trap people who can’t afford to pay enough and are therefore locked in to paying only the minimum. We know this already. But how will we overhaul this system is what I’d like to know? How will we redesign it into something more equitable, wrestling it away from the powerful few who manipulate it in their favor currently? Can it be done, and if so, where do we start? Because Capitalism is a system dependent on slavery or slave/cheap wages. This cannot last. Communism isn’t realistic nor has it ever even been truly practiced. The totalitarian regimes parading as communism were just as corrupt as the fascist/corporatist group running things today. And every system has elements of Socialism, so I’m not sure why it’s regarded as a dirty word when discussing economic models. (Bad connotations linger from it being used interchangeably with “communism” to describe what really amounted to despotism that had nothing to do with sharing or redistributing the public wealth.)
What we need is a whole new economic model…a fresh idea for how to go forward from here both as a country and as a member of the international community. Our capitalist system requires life support to stay alive, as we’re seeing with the bailouts. There is no better contending economic system to turn to. To throw our hands up and say that this is what we have so we should make the best of it is a defeatist strategy that will benefit very few. We Americans are more creative than that. We can learn from past mistakes and devise better approaches. First we just need to open one another up to dialogue on this and related matters.
If we’re going down with the ship, we might as well fight like hell in the meantime, right? Use some of that human ingenuity to bring about change or at least die trying. Why not? What else have we to lose? You’re already losing your homes and pensions, and my age group has a bleak future to look forward to with little chance for retirement, social security, affordable healthcare or any other 20th century dream. Gaining an education puts you in debt for decades while jobs continue to flow overseas, replaced by migrant workers willing to work for less on U.S. soil. Things have changed. Everything we thought we knew apparently wasn’t right and some of it was flat-out wrong. I see no other way around it other than to become creative in brand new ways, which starts with taking time to educate ourselves on what we’re up against and learning to let go of those teachings that have been proven false.
There’s a silver lining in there somewhere, and never before have we had so much recorded history to learn from and guide us in our future decisions. But too, it surely will get worse before it gets better.
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wakemenow said
To get more information on unethical, predatory credit lending and other banking practices, you can visit Americans for Fairness in Lending web site: http://www.affil.org
wakemenow said
Just got turned down by Wells Fargo for auto refinancing, which is no big surprise. My credit rating is pretty pathetic and my income is largely unverifiable. The current interest rate for the bank it’s financed through now is 10.5% and Wells Fargo said anything they’d offer would likely double that rate. Damn. So much for that idea.
I can afford the car now, it’s just so dang expensive with the insurance and gas prices added in. But oh well. Guess it’s back to the original plan of figuring a way to pay it down early and trade it in on another reasonably-priced used car before it starts having mechanical problems. The beauty of returning home to live is that there are plenty of shade tree mechanics to help keep our automobiles running. Mine’s only 4-5 years old, so there’s time. The extended warranty hasn’t even run out yet.
wakemenow said
I closed down that asshole HSBC store card! Paid it off and shut it down! Might leave a bad mark on my credit but I don’t care. They decide the rules to this game, so it’s not surprising that closing a credit account actually can hinder your chances of being approved for other loans. Oh well. To hell with them! Tired of them calling at 8am, blessing me out like I don’t have any sense. No, I didn’t have any money and those folks wouldn’t send out a paper statement. There was no reason to treat me as they did. Just opened the account in the spring and closed it in the fall.
March’s Economic Considerations « Wake Me Now said
[...] largely remain a mystery to me. Hell, I can’t even figure out how interest is compounded on my credit cards and am willing to bet plenty of others share this financial ignorance. It’s too damned [...]