The Cost of Folly, Part I
Just about two weeks ago, at the same time we were switching to a new server, the hard drive on my primary computer crashed, forcing me to take this machine in. Today and over $500 later, I have this Mac back, my hard drive restored, having lost only some old mail.
I can only blame myself for the loss and the cost. This has happened before. I should have backed up my files more often.
As I waited from the folks at the store to get back to me, letting me know whether they could recover the lost data, I did a more extensive review of my own finances than I normally do, seeing if I could come up with some more savings to make up for the cost of the repairs. And I realized that had I been more prudent, I could have saved upwards of $500 over the past year by sacrificing only the convenience of having a home fax with a separate fax line. (I canceled the line.) The additional savings would come from always doing what I normally do–paying my bills on time.
I realized that, over the past year, I had lost about $120 in late payment fees to my various credit cards. To make sure I have no further late payment fees, I’m making one minor adjustment in my habits–I’m paying off each bill as soon as it comes in.
At the same time as I realize what I could do to save money, the Democratic Congress has passed legislation “to limit the penalties on riskier borrowers.” To make up for the lost income, credit card companies will be changing their policies, causing those who pay off their bills on time to subsidize those who don’t. People with credit problems will thus be a little less responsible for their own folly, while those more careful with their money will help pay off their debts.
Guess, I was wrong to review my own finances to see how I could save a little money; I should instead haved asked Uncle Sam or a favor. I mean, isn’t that the way things are in Barack Obama’s Washington?
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First – backup. I use “Mozy” to back up my Mac – works great and is transparent (doesn’t seem to affect performance).
I’m wary of anything Congress does but the credit card companies (banks) have brought this on themselves with abusive and misleading practices. A little discipline on their part would have averted this mess (especially since they got to write the earlier bankruptcy bill). Unlike the banks, we can’t lean on the gummint to loan us money at zero percent when we screw up.
I’ve known people who’ve gotten in deep water on their bills and the credit card companies essentially hand them an anvil (big rate increases along with draconian late fees pushing the balance over their limit which triggers big over-limit fees that persist month after month); they never catch up.
Then there’s the practice where the rate on an account will go up when the card holder is late on another account… and there was the practice at Providian of holding payments past the due date and then hitting customers with late charges figuring that some percentage wouldn’t complain (reported on PBS a few years ago).
Years ago, a friend’s father was a “credit addict”. Anyone with access to his credit file would know he was in trouble (minimum payments, near limits, 15+ accounts) and yet they kept raising his limits and sending card offers. Who’s the dummy?
I know I’ve paid enough interest of cards to cover everything I’ve bought and then some… I know better now but it takes a while to get them paid off.
Comment by SoCalRobert — May 20, 2009 @ 9:12 pm - May 20, 2009
Well, God forbid that the credit issuers actually stop extending credit to people who aren’t really credit worthy. Seems we’ve reached a point where credit could use some tightening. That linked article is ludicrous. Banks are sweating because they thought they beat this with new bankruptcy law from 4 years ago. (which apparently, didn’t work too well since it still remained the last resort for people who still qualified for the even narrower requirements to apply for bankruptcy).
Banks know they take a risk when they extend revolving, unsecured credit to anyone, regardless of income. They cry as if they’ve been hoodwinked, but danged if they haven’t been doing their best to advertise anywhere and everywhere to get people to open accounts. They engage in the same reckless behavior that mortgage companies did, except there’s no specific value that can go up and down on revolving credit like there is for a home.
Several years ago, I had a credit card with a balance on it. I was moving for a new job, mailed my payment (this was before electronic payment was so easy) a bit late and it apparently arrived 1 day after the due date. Because of this, they raised my interest rate to a whopping 29%. When I contacted them about lowering it, not only did they refuse to do so, they told me so in a way as if some outside force had made them raise the rate and there was nothing they could do about it. Well, that card was paid off quickly and I contacted them to close the account. They asked if there was anything they could do to keep me as a customer. I asked they lower the rate and of course that’s the one thing they couldn’t do. Further to that, they tried to “counsel” me that it could look bad for my credit rating if I closed out an account with them. puh-lease.
Comment by Kevin — May 21, 2009 @ 1:10 am - May 21, 2009
Actually, it does. You should have kept it and used it to buy gas and paid it off on time each month. Unless, of course, you have 10 other cards. In that case, it would have been better to close it.
Now as far as the rate, you can negotiate it down if you’re persistent enough. You could have called back and talked to somebody else or asked for a supervisor.
Comment by ThatGayConservative — May 21, 2009 @ 2:28 am - May 21, 2009
What’s more, Kevin, maybe you can explain to us how when government gets us into a mess, we should rely on them to get us out. Explain to us why we shouldn’t be worried about Chairman Obama expanding his reach with the creation of government agencies policing mortgages, insurance, mutual funds etc.
Also, explain to us where the “greed” is when companies loan to people who can’t pay it back and they have to sell off the debt for a few paltry cents on the dollar.
Comment by ThatGayConservative — May 21, 2009 @ 5:15 am - May 21, 2009
Thanks for the reminder — I haven’t backed-up my files since December ‘08.
Read those messages from the credit card companies carefully. One new “policy” for those of us who pay one time will be YEARLY FEES!
Shop around! Or just use you debit card.
Comment by Julie the Jarhead — May 21, 2009 @ 8:14 am - May 21, 2009
Motto of this government.
Make the responsible citizens pay for the irresponsible ones. You get more votes that way.
Comment by Leah — May 21, 2009 @ 11:49 am - May 21, 2009