Model railroading yourself into debt...

[CP5415]

I did once.
I racked up almost a G note in one month. That was 4 years ago.
Never again have I done that.

Now, it's usually cash.

Gordon

[dragenrider]

QUOTE: Originally posted by aloco

Topics like this really annoy me. Suppose I were to start a topic about a model railroader I know who hoards locomotives? He doesn't run them, he doesn't put them on display, he just hoards them. Sure, I think it's silly, but should I worry about it? I've got more important things to think about, like running trains.

Ah, but money is the deciding factor in the intensity of our model railroading. Money, or the lack there of, often determines our direction as our layout and skills evolve. The decisions we make based on our funds often determines the outcome of our product. Buying used Atlas track versus new Micro Engineering turnouts, for instance.

The glitch comes when a modeler can not separate out his hobby budget from his financial obligations in life.

[aloco]

Topics like this really annoy me. Suppose I were to start a topic about a model railroader I know who hoards locomotives? He doesn't run them, he doesn't put them on display, he just hoards them. Sure, I think it's silly, but should I worry about it? I've got more important things to think about, like running trains.

[davekelly]

QUOTE: Originally posted by cwclark

QUOTE: Originally posted by DALCruiser

Chuck

I don't know about Texas, but in California it doesn't matter if the CC's are in your spouse's name: If you're married the debts are owed by both persons. Here if your wife runs up a bill for $100,000 in her name, YOU owe the debt!!![banghead] The only thing that can get you off the hook (possibly) is if they run up a big debt a couple of days before filing for a devorce. A friend of mine had this happen when his wife bought a new car then filed for devorce 2 days later. The devorce Court Judge really chewed her out and told her SHE was to pay for the car herself[:D].

Dave

yes, it is the same here in texas..it's a "community property" state..one married person can get a card, go to town with it ,and the other is responsible even if they are in the dark about the whole mess..that's why it took me a long time to pay off what she created on the credit cards... once i found out it was a tad bit too late...once i got rid of her and the card debt, things began to get back to normal again...if anyone of you are still young and unmarried, a word from someone that's been there..."choose your mate wisely"...the wrong person can really mess you up financially as well as emotionally...you older guys know all about the hindsight...sheez!.....chuck

Wise words!! Of course my "new" trade up wife is way cool. She loves that I have a hobby, always suggests that we go to a hobby store when out of town, thinks its cool that my trains now have sound and got me a good deal on three sheets of 1 inch foam (she works for an insulation company).

[cwclark]

QUOTE: Originally posted by DALCruiser

Chuck

I don't know about Texas, but in California it doesn't matter if the CC's are in your spouse's name: If you're married the debts are owed by both persons. Here if your wife runs up a bill for $100,000 in her name, YOU owe the debt!!![banghead] The only thing that can get you off the hook (possibly) is if they run up a big debt a couple of days before filing for a devorce. A friend of mine had this happen when his wife bought a new car then filed for devorce 2 days later. The devorce Court Judge really chewed her out and told her SHE was to pay for the car herself[:D].

Dave

yes, it is the same here in texas..it's a "community property" state..one married person can get a card, go to town with it ,and the other is responsible even if they are in the dark about the whole mess..that's why it took me a long time to pay off what she created on the credit cards... once i found out it was a tad bit too late...once i got rid of her and the card debt, things began to get back to normal again...if anyone of you are still young and unmarried, a word from someone that's been there..."choose your mate wisely"...the wrong person can really mess you up financially as well as emotionally...you older guys know all about the hindsight...sheez!.....chuck

[davekelly]

In actuality, I don't think credit card companies are that concerned with getting the principle back. With the high interest rates handed out to late payers etc, credit card companies can get their money back even when a debtor defaults on what appears to be a large balance. At 25 or 29 percent they are pretty set. That is why the minimum payment only covers a very small percent of the principle balance. As long as it is getting its interest covered, they are pretty good to go.

[IRONROOSTER]

QUOTE: Originally posted by DigitalGriffin

Part of the problem is that there are a lot of kits that are very limited run or out of production. So it increases that "Got to have it now before it disappears" mentality. ...

Been down that road. Fortunately, I now have enough limited run items that I don't need any more. Cuts my spending way back.
Enjoy
Paul

[DigitalGriffin]

Part of the problem is that there are a lot of kits that are very limited run or out of production. So it increases that "Got to have it now before it disappears" mentality. (BLI comes to mind. So does some Walthers models)

That's how I ended up spending $1500 in the last 2 months. (Still wish I could find that Walther's Bascule bridge) Luckily I do have the spare cash handy thanks to a very hefty Christmas bonus which I am greatful for.

[Anonymous]

Somebody may have already mentioned this... However, closing the account is the worst thing you can do. It will lock you into whatever interst rate was at that time. So when you start trying to deal with the account, it becomes a lot harder to try and do anything about lowering the rate.

[jondrd]

QUOTE: Originally posted by Railroading_Brit

Good advice here. When I changed over to a "student bank account" a couple of years ago I was astonished by the number of credit card offers the bank made. All of them went straight to the shredder, but I do know people who accepted them and now have a hefty credit card balance to add to their student loan, all of which they'll have to pay off. I just feel that banks are being thoroughly irresponsible in giving cards to people who cannot afford them. As a standard part of the account I got a debit card, which has no interest fees and is accepted everywhere I shop. All the security benefits of not carrying large amounts of cash around but with none of the potential dangers of a credit card - why would anyone in my position need more?

I do wonder if the lenders are in for a hefty shock in about 40-50 years time. Apparently people are taking out loans that they have no chance of paying off (but they can meet the minimum monthly payment), so what happens when they die? I suspect a lot of credit providers will probably go under as they suddenly have to write off considerable debts.

[2c] [soapbox] If it even appears as a possibility that a lot of credit providers would go under your Congress will bail 'em out(for the good of the country). They bailed out the Savings & Loans when their excesses could no longer be sustained. They bailed out a hedge fund for the good of the country. The credit lenders are well represented in D.C. the most recent example of the effectiveness of that representation is the tightened bankruptcy laws. Oh, oh, clear the decks; Ford & GM may need some public assistance. Bottom line hurting? Walk away from your pension obligations-not a problem, there's a federal agency which will guarantee your plan's obligation at taxpayer expense.

[soapbox] There doesn't seem to be any fall back positions via the federal government when those who are irresponsible with their credit have to pay up to 29.99% for late payments. Didn't there used to be laws against excessive interest? If the laws are still in effect the ceiling must have been raised. That lobbyist sure is an effective fellow isn't he?

And so it goes..
Jon

[sebamat]

I will sound like a old time moralist, but I am amazed of how many peoples here on the forum have had experiences of heavy debit loads.
Probably we are not used because here in Europe until few years ago Credit cards were mostly only for businnes peoples and world travelers (I got my firt CC because of car renting in my US vacation). Now it is changing, and yung peoples also started having heavy (for their financial capacity) debt loads.

During my student time I spent a lot for trains, but I had to cut all the other spending(partiing, movies, no car, etc) ... call me nerdy!
Beside that, the compulsory army time gave me some money reserve (very low wage, but not easy to spend when in the wilderness).

[Anonymous]

Good advice here. When I changed over to a "student bank account" a couple of years ago I was astonished by the number of credit card offers the bank made. All of them went straight to the shredder, but I do know people who accepted them and now have a hefty credit card balance to add to their student loan, all of which they'll have to pay off. I just feel that banks are being thoroughly irresponsible in giving cards to people who cannot afford them. As a standard part of the account I got a debit card, which has no interest fees and is accepted everywhere I shop. All the security benefits of not carrying large amounts of cash around but with none of the potential dangers of a credit card - why would anyone in my position need more?

I do wonder if the lenders are in for a hefty shock in about 40-50 years time. Apparently people are taking out loans that they have no chance of paying off (but they can meet the minimum monthly payment), so what happens when they die? I suspect a lot of credit providers will probably go under as they suddenly have to write off considerable debts.

[Anonymous]

At my LHS ,if I see something I like, I use the layaway plan. I put maybe $10 - $20 a week on something. Sure it takes longer,but I dont run myself short that way.I don't have a credit card,cause (I have a wife that likes to spend.)Thats a smart choce rite there.( hahaha)[oops]

[DALCruiser]

Chuck

I don't know about Texas, but in California it doesn't matter if the CC's are in your spouse's name: If you're married the debts are owed by both persons. Here if your wife runs up a bill for $100,000 in her name, YOU owe the debt!!![banghead] The only thing that can get you off the hook (possibly) is if they run up a big debt a couple of days before filing for a devorce. A friend of mine had this happen when his wife bought a new car then filed for devorce 2 days later. The devorce Court Judge really chewed her out and told her SHE was to pay for the car herself[:D].

Dave

[IRONROOSTER]

I agree with staying out of credit card debt, like I others I learned this the hard way.

But there are some things about check cards that you should be aware of.
1. When you make a room or car reservation, a hold gets put against your card. If you're using a check card this will tie up money in your bank account. Even if you later cancel, it make take a little while for the creditor to clear the hold. Same if you buy something on your check card and return it. With a regular credit card some of your credit limit not your money is tied up.
2. Rip off'ed card number, a form of identity theft. Twice I have had my credit card number fraudulently used by, I presume, the clerk who processed my order. Once when I ordered over the telephone and once when I bought something at a store. Fortunately in both cases, the card company caught it immediately and I didn't have my money tied up. But that's not always the case.

As a result, I have a credit card that I use for traveling, phone orders, mail orders, internet orders, or local orders where the clerk/waiter/etc. has to take the card somewhere else to process it.

It's also handy emergency cash if you need it, just pay it off before buying any extras.

Enjoy
Paul

[cwclark]

it's not a good thing for sure...My ex-wife(another reason I divorced her from the other many reasons)... got herself a credit card in my name and for some reason went to town with it maxing it out ..what's going to happen?...well for one thing the phone calls from the creditors will be relentless, and after that it goes onto your credit report and if your credit is too bad you can forget about purchasing anything on credit for the next 7 years..she was hiding everything from me and the way i found out was that the phone calls started..I eventually paid off the debt at a lower interest but even up to 5 years ago, my credit card score was low because of the "late" payments and it was still hard to get credit even after everything was caught up...today i have great credit (finally got rid of the root problem 15 years ago..my ex wife) and i'll never let it get that bad again ...I have my own credit cards now and my wife has hers and we both agreed that the credit cards aren't in each others name...i've never personally used a credit card in my entire life before until reciently (last three years) and i'm very careful with it...in fact, i need to purchase some stuff with it right now but won't until i pay off my previous balance from last month...credit (or lack of) can get you into more trouble than you really want to bargin for...chuck

[vsmith]

Credit Cards are EVIL

You hear that kids? EVIL! The card companies actively encourage you to go into debt, with free gifts if you spend X amount a month. Dont believe them and dont go down that road!

Went all the way thru college living on $40 a week, graduated, got a job, and then a credit card with a $1000 limit which was used like free cash whenever I couldnt get to a bank or out with friends and ran a large bar or dinner bill, whenever i got close to the credit limit, the holder just raised the limit, within ONE year I had $3K on that card and then got stupid and instead of paying it off just got 2 other cards. I luckily came to my senses before it got real bad and sloooowly started paying off the cards, eventually paying each off and cancelling all but one card, also if you miss ONE payment or are even late ONE day on you payment they jack your interest rate sky high! This is common considering that most card holders will INTENTIONALLY not process high balance members on-time payments till AFTER the due date so they can stick them with the higher rate and hence higher profits! This guy has no one but himself to blame, some people just can't control their spending.

Just an aside, I had a buddy in college, whos then girlfriend- he told me, had over $40K in credit card debt ! He said her father told him he was hoping she would get married, so someone else could take over the payments!

Luckily for my buddy, she dumped him for some other guy, poor guy!

edit PS $50 a paycheck was my RR budget for many years, even now I stick to it.

[dragenrider]

Wow, what a topic. I've been down that debt road, too, and it ain't fun. [V]

I bought audio books by Dave Ramsey and John Cummuta and followed their advice. All my credit cards and bad debt are paid off and I have an emergency fund for those bad times. I hope to pay off my home equity loan in April. That'll leave just the house as a debt. [tup]

I used to grab the credit card whenever I was in need of my hobby fix and didn't have the cash. My railroad purchases sometimes were lacking in financial wisdom. But, now I don't buy anything I can't pay off when the CC bill comes.

I'm happy to say I manage my hobby spending better. I take a set amount of ca***o each train show. When it's gone, I'm done spending. Sometimes I have to make choices over which purchase is the most important, but in the end my financial freedom is always my highest priority.

[sleeper33]

no card no debt no problem

[icmr]

So do I.



Victor

Happy Railroading.[swg][swg]

[waltersrails]

i agree for the most part.

[Anonymous]

QUOTE: Originally posted by icmr

I dont know why people max out a credit card. IMHO you should not have one at all. NSR i disagree with you that they should be used only for emergencies. They should not be used at all. What I am saying is if aint got the cash not and you know you aint going to have it later then why mess up your credit rating when you can wait, save up the money and get it without messing up your rating.



Victor

Happy Railroading.[swg][swg]

Victor -

Understand that credit ratings are a device invented and supported by the finance industry. They are skewed to how they WANT you to behave to maximize their profit. For instance, working on a cash basis is about the WORST thing you can do for your credit rating. Paying off your credit card each month will give you a LOWER score than paying regularly but carrying a balance.

Why? They like earning the interest of you carrying a balance. The people who are the best financial-manager of their budget are often NOT those with the highest credit ratings, and the people who are slightly irresponsible (i.e. more debt than they should have, but manage to keep making payments) will often have very high scores and get offered MORE credit.

That's how you get these stories of "she was in trouble but they just kept offering her more credit"... It's almost like dealing drugs... once they see you're an addict, they view you as a "prime customer"...

Just wanted to clarify that a "good credit rating" and responsible financial management are _not_ necessarily one and the same.

[Anonymous]

Let's not get too extreme here. Debt and credit are both useful financial tools, if you have the maturity and discipline to USE them, not abuse them.

Easiest example: Mortgages. How many folks would own a home without them. You're buying an asset that increases in value (usually). It's as 'good' as debt gets. "If I ain't got cash I ain't buying" would have 90% of the populace renting (probably from the other 10% who took a mortgage to buy income property).

Another one. Much as they're maligned, student loans are a good investment. The average BA holder will earn $1,000,000 more over a career than a HS Diploma holder, per the federal govt. So yeah, borrowing $60K for school that ends up costing you $90K overall is painful. It's a bi*tch making payments when you're just working and not making much.... But anytime I can invest amount X and get back 10X over a reasonable time frame, I'll do it. Not to mention all the additional benefits the extra income gives you... such as being able to avoid debt!

I do think Credit Cards have there place, though I'd recommend "charge" cards instead, e.g. American Express original green card, i.e. you gotta pay it each month. Such "revolving" credit can actually be a very good way to track expenses and manage your money, rather than a wad of ca***hat 30 days later you're not quite sure where it all went.

The core of the problem is we, as a society, don't teach our kids how to manage money. I know of no high school or college that makes "how to balance your checkbook" or "the power of compound interest" or "how to make and stick to a budget" as required courses... or at all for that matter... My kids won't suffer from that deficiency because I'll teach them this stuff myself... Too few do.

[icmr]

The only card I will have is a check card.



Victor

Happy Railroading.[swg][swg]

[waltersrails]

50/50 on credit cards with me

[icmr]

I dont know why people max out a credit card. IMHO you should not have one at all. NSR i disagree with you that they should be used only for emergencies. They should not be used at all. What I am saying is if you aint got the cash now and you know you aint going to have it later then why mess up your credit rating when you can wait, save up the money and get the thing without messing up your rating.



Victor

Happy Railroading.[swg][swg]

[davekelly]

I once called a guy when representing a creditor. The idea was to work out a plan in which the debt could be paid - my client was very willing to work with the guy in order to come up with a workable solution. The guy said "if you want the money - sue me." So I did. He ended up defaulting in court and needless to say his wife wasn't all that happy when the Sheriff knocked on his door to execute the judgement (his brand new boat was in the drive way). Given court costs, the sheriffs' fee, my fees etc etc I think his $5000 debt turned out to cost him something like $6000. My client was very happy - he got his money in full in half the time.

[waltersrails]

if buy it on credit as long as you pay your bill on time theres no intrest on most cards you don't pay on time you lose money plan and simple.

[Tracklayer]

QUOTE: Originally posted by loathar

QUOTE: Originally posted by Adelie

If the debt is big enough, litigation, wage garnishment and possible attachment of assets. If it can be proven that he deliberately rang up the debt and is refusing to pay, maybe worse.

Credit cards can't garnish your wages. About all they can do is ding your credit. Most of the time they won't even take you to court. I have a bother with $150,000 in bad credit card debt. He just got a 6% rate home loan. The morgage company said his credit was fine.[%-)][%-)][%-)] (and no he didn't declare bankruptcy) I don't get it???
Tracklayer- Only the courts and the government can put you in jail for oweing THEM money. If he's getting badgered by collections people all he has to do is say "Don't ever call this # again or I'll sue you" By law, they have to stop.

Thanks loathar. I'll pass this on to Linda to tell Bill.

Tracklayer