Cut Up All Your Credit Cards?
Early in my college years, I was constantly warned about the evils of credit cards. Horror stories were told of people who got in over their heads and eventually went bankrupt because of their high accumulation of debt. If a person had a credit card, they’d always be tempted to spend more than they could afford and be enslaved by minimum payments and accumulating interest. The solution given to me and many others who did not already have established credit was to never apply for a credit card. The advice to everybody else who had cards was to cut them up and never use them again or at least for the foreseeable future.
This advice, while having the appearance of wisdom, is not actually wise for everybody. It’s only good advice for impulsive people who cannot manage their own spending, or who have not mastered the art of using credit cards to their own advantage. For everybody else, especially those who have never established their own credit, it’s incredibly bad advice.
Doing some side work now in the mortgage business has been quite enlightening regarding people’s view and use of credit. Usually what happens is a potential borrower contacts me about securing a loan for a home purchase or a refinance. After taking down some basic information I inform them that I have to pull their credit. Within moments I am able to see the potential borrower’s credit score from the three major credit bureaus (a word of advice: always check your credit report each year because it’s very common to find errors. Also, always get your credit scores. Free reports usually don’t include the score for free, but it’s worth the cost to know your score. And don’t just get the score from only one bureau, get it from all three. Lenders almost always use the middle score, and if you only pull one score, it may not be the one on which you’re actually judged) and also their credit usage history.
After pulling the reports I very often find that people have dug themselves into a hole with their credit cards: very high balances, late payments, etc. But I also find another interesting scenario: would-be borrowers who have no credit cards and show little if anything in their actual credit file. The problem with this is that to obtain favorable loans (or a loan at all), you have to have a proven record of responsible use of credit.
So here’s the problem: No or bad credit history = no or low credit score = no loan ineligibility or sky-high interest rates.
At least the guy with the diminished credit can still maybe be approved for a subprime loan. But the young guy with no credit file and little if any money for a downpayment, will not get a loan at all. Not only that, but when he finally wakes up and realizes that it’s very hard to be economically successful with no credit history, he finds that it’s incredibly hard to establish credit. When the bank or whoever finally approves the consumer for a card it usually has a very low credit limit and very high interest rate. That’s OK, there’s still hope. Just keep reading.
When I talk to people who have the thin or nonexistent credit files, I ask them if they’ve considered taking out a credit card or department store card. Their response is like mine used to be: “Well, I always thought credit cards were a bad thing so I just avoid them.” Some remark, “I have a debit card, does that count”? (The answer is no for credit building purposes).
The hysteria against credit cards is an overreaction to the larger cultural problem of debt irresponsibility. You can have a credit card, including those really high-interest ones, and be completely responsible and never even pay a dime of interest as long as you have it. The solution is very simple: pay your balance in full each month. Forget the “minimum payment.” The minimum payment is designed to keep you enslaved to debt and make the lenders more money. Instead, you can make more off them in terms of convenience, building your credit file, and earning gimmicky “rewards” from the issuers, just for using your card responsibly. As long as you don’t spend more than you can completely pay off each month, you’re fine, and you’re not sinning or being wasteful by using a credit card in the process.
Let’s say you’re a grown adult who has never taken out any revolving credit in your lifetime (or maybe no credit period) and you’ve struggled to finally get approved for a card. They wind up giving you a card with a low credit limit of $500 and a 22% interest rate. Here’s what you do: just put some gas and food on the card each month and pay it all off every month, ignoring the “minimum payment.” Don’t ever be late. Do that for six months and you’ll be on the map with a credit score.
Give it another six months or so and apply for another card advertising great rates and rewards. After a year of responsible, timely credit usage, you’ll easily get approved, have a much higher credit limit, and a much better interest rate. But you won’t need to worry about the interest rate anyway since you’re going to pay it all off on time anyway. If you do leave a balance on occasion (as some credit building strategists advice), keep it small. Another thing lenders look at is what your available credit limit is in proportion to the amount of credit still available. The more credit available, the more responsible borrower you appear to be and the higher your credit score. Also, don’t close out that old card. Keep it as an active trade line by charging a small purchase or two a month each and then pay it all off.
On a whole, credit cards can be very convenient. But don’t look at them as a tool to “buy” something today and pay it off next year. Your purchase will wind up costing you much more than the original price after interest piles on. Think of it as buying something today and paying for it in a couple weeks. Instead of carrying around large sums of cash, you can instead pay with your card, and then in a couple weeks pay off your card online with convenient online banking (Who still sends checks these days? If it’s you, get with the times!). And in the process your credit score grows and your purchasing power increases. Make your credit a tool for your own success instead of an instrument of irresponsible spending and piling debt.
Bankers have a name for people who use credit responsibly and as a tool for their own success: they call them “deadbeats.” That’s because when you use credit to your own benefit, you are enriching yourself, and not the banks.
Anti-debt hysteriacs are leading too many young adults astray with their fear mongering of credit cards. They have “thrown the baby out with the bathwater” to use an odd expression. They assume that everybody who uses credit cards is on the path towards bankruptcy, just as many teetotalers assume that every person who enjoys an occasional glass of wine with dinner is on the fast track to becoming an alcoholic.
They even go so far as to say that taking out a home loan is sinful or economically unwise in every circumstance. So unless you have 100K upfront to fork over for a small and modest house, you should rent your entire life rather than buying a home in your price range with payments you can realistically afford. Nevermind that some of these “debt-free” enthusiasts are multimillionaires. Their books sales and radio shows enable them to put all the money down for their homes and follow their own advice. Most likely, you don’t have that luxury. Nor will you ever have much purchasing power if you avoid credit completely.
So, cut up all your cards? Only if you’re impulsive and have no self-control. If that’s you, then yeah, you need to go cold-turkey and get the temptation out of your path. But for everybody else, you’re much better off to use debt and credit to your advantage. If you haven’t established any credit yet, now is the time to get started. And one of those little cards might just be the trick.
Thursday, June 28, 2007
Sunday, June 24, 2007
Revivalism, R.I.P.?
"Revival" is of often thrown around term these days that rarely has anything to do with its meaning and certainly bears no resemblance to the First, Second, and Third Great Awakenings in America. We often hear in churches and Christian colleges that "we are praying for a revival." In the holiness and even some Baptist traditions, holding church "revivals" was and sometimes still is a regular event. Even back a few decades ago, churches would hold "revival," call in a big shot evangelist and pack the place out. The preacher would deliver a series of convicting sermons, invite people to "come forward" during the altar call, where people would pray the sinner's prayer, "asking Jesus into your heart" and so on.
Today revivals have mostly gone by the wayside. A lot of churches still try them, but they are a shadow of their former glory. This is what a revival means today for the average church that is still doing them: "We are bringing in a special speaker who is different from the guy you normally hear (sometimes still the formerly big deal, but now much older Evangelist) and we're going to have a week of evening services where a third to one half of the congregation will show up."I've preached revival services. I like the concept. I wish they were still a big deal. But in my experience in speaking at them, and even trying them at my own church, 98% of the people coming are the leaders and the people who already come to everything. Those riding the fence spiritually usually don't show and usually visitors aren't attending in any meaningful number. I say usually because there are exceptions of course. I know of some examples from different churches who made their first commitments during a revival service. But more often than not, it's just a week of extra evenings of church with sermons focusing on salvation and the Holy Spirit and attended by people who are already long-time Christians. The days appear to be gone, at least in the regions I've lived, where the whole neighborhood would come out for revival services. Now you're lucky to get half of your congregation to come out to these services.
Camp meetings have also been going out of style the last couple decades as well. Brown City Camp (my annual denominational family camp in Michigan) is an exception in that the camp is still booming with over 2,000 people at evening services, but even there, I'd say 90% of the people are the same attenders year after year. This figure is even higher in regards to people who actually stay on the camp grounds, since there is a multi-year long waiting list for new people to get camp lots. So your best hope is for people to find someone to stay with on the grounds, or commute to evening services, but generally it's mostly the same people coming to camp. Revivalist camps love the altar call, as do most churches out of the revivalist movement. I'm not opposed to them, I think they can be useful, but I think they are overrated. One thing I've always noticed about altar calls is that normally it's the same people who come forward, and more often than not, it's the people who are already serious about things. The minority of respondents are people who come forward time and time again about the same sin issue, or feel the need to get saved 20 times.
This raises another interesting question about the altar call. Preachers tend to get real excited when a lot of people come forward, but is it perhaps a bit troubling if the same people are coming forward for the same struggles year after year? (and/or always the leaders that most of us would already like to emulate coming forward, whom you could preach a sermon to about the need not to torture kittens, and they would still feel convicted for some reason and come forward).I hope these type of revivalist concepts stick around for awhile.
Honestly, I generally like evangelists, camp meeting, special services (however I'm becoming less and less fond of the "sinner's prayer" though I still employ it), altar calls, ect. But is the revivalist movement on life support, or at least approaching it's Medicaid years?
"Revival" is of often thrown around term these days that rarely has anything to do with its meaning and certainly bears no resemblance to the First, Second, and Third Great Awakenings in America. We often hear in churches and Christian colleges that "we are praying for a revival." In the holiness and even some Baptist traditions, holding church "revivals" was and sometimes still is a regular event. Even back a few decades ago, churches would hold "revival," call in a big shot evangelist and pack the place out. The preacher would deliver a series of convicting sermons, invite people to "come forward" during the altar call, where people would pray the sinner's prayer, "asking Jesus into your heart" and so on.
Today revivals have mostly gone by the wayside. A lot of churches still try them, but they are a shadow of their former glory. This is what a revival means today for the average church that is still doing them: "We are bringing in a special speaker who is different from the guy you normally hear (sometimes still the formerly big deal, but now much older Evangelist) and we're going to have a week of evening services where a third to one half of the congregation will show up."I've preached revival services. I like the concept. I wish they were still a big deal. But in my experience in speaking at them, and even trying them at my own church, 98% of the people coming are the leaders and the people who already come to everything. Those riding the fence spiritually usually don't show and usually visitors aren't attending in any meaningful number. I say usually because there are exceptions of course. I know of some examples from different churches who made their first commitments during a revival service. But more often than not, it's just a week of extra evenings of church with sermons focusing on salvation and the Holy Spirit and attended by people who are already long-time Christians. The days appear to be gone, at least in the regions I've lived, where the whole neighborhood would come out for revival services. Now you're lucky to get half of your congregation to come out to these services.
Camp meetings have also been going out of style the last couple decades as well. Brown City Camp (my annual denominational family camp in Michigan) is an exception in that the camp is still booming with over 2,000 people at evening services, but even there, I'd say 90% of the people are the same attenders year after year. This figure is even higher in regards to people who actually stay on the camp grounds, since there is a multi-year long waiting list for new people to get camp lots. So your best hope is for people to find someone to stay with on the grounds, or commute to evening services, but generally it's mostly the same people coming to camp. Revivalist camps love the altar call, as do most churches out of the revivalist movement. I'm not opposed to them, I think they can be useful, but I think they are overrated. One thing I've always noticed about altar calls is that normally it's the same people who come forward, and more often than not, it's the people who are already serious about things. The minority of respondents are people who come forward time and time again about the same sin issue, or feel the need to get saved 20 times.
This raises another interesting question about the altar call. Preachers tend to get real excited when a lot of people come forward, but is it perhaps a bit troubling if the same people are coming forward for the same struggles year after year? (and/or always the leaders that most of us would already like to emulate coming forward, whom you could preach a sermon to about the need not to torture kittens, and they would still feel convicted for some reason and come forward).I hope these type of revivalist concepts stick around for awhile.
Honestly, I generally like evangelists, camp meeting, special services (however I'm becoming less and less fond of the "sinner's prayer" though I still employ it), altar calls, ect. But is the revivalist movement on life support, or at least approaching it's Medicaid years?
Thursday, June 07, 2007
Why Do You Believe Or Not Believe in God?
Recently I've read some high profile skeptic books such as Hitchens' "God Is Not Great" and Dawknins' "The God Delusion." Unfortunately for them, their works did not cause any crisis of faith and I'm quite content following Jesus, however I will acknowledge that their books were decent reads, though they did quite often vastly overstate their cases. But I enjoy reading such works, as well as theistic works by my favorite Christian authors and theologians. My question to anyone reading this is: Why do you believe in God, or why don't you? And if you care to follow it up, "Why do you believe in the specific tenets of your faith?" Let's hear your testimonies.
Recently I've read some high profile skeptic books such as Hitchens' "God Is Not Great" and Dawknins' "The God Delusion." Unfortunately for them, their works did not cause any crisis of faith and I'm quite content following Jesus, however I will acknowledge that their books were decent reads, though they did quite often vastly overstate their cases. But I enjoy reading such works, as well as theistic works by my favorite Christian authors and theologians. My question to anyone reading this is: Why do you believe in God, or why don't you? And if you care to follow it up, "Why do you believe in the specific tenets of your faith?" Let's hear your testimonies.
Tuesday, June 05, 2007
Ron Paul and the Rest of the Republicans in Tonight's Debate
Just what the flip is up with the mainstream of the Republican party? Listening to the the media and establishment "frontrunner" Rudy Giuliani, and his two sidekicks in the so-called "Big Three" scares me. Especially with Giuliani and McCain, these guys take warmongering to a new level. If left up to them, the war in Iraq would have a blank check for an indefinite time period. Their supporters love them because they are such hawks, but it is on these points that these two seem most oblivious to reality. Just how many years, how many deaths, and how many hundreds of billions of dollars need to be spent before they retreat from their gospel of nation building and spreading global democracy? There appears to be no sign that Americans are "safer" today than we were four years ago, and it seems we are even less so, especially overseas. Terrorist recruitment is not suffering for a lack of converts. Yet King Rudy & Co. see this as a validation of their failed policies. Basically what they want is perpetual war for perpetual peace. And it's a good way to bankrupt and demoralize the country.
The Republican base loves this tough talking rhetoric. They apparently love failed policies as well. Especially on Iraq, they apparently don't grasp empirical evidence that trying to remake the country in our image just isn't going to work. McCain, however, just wants to blame it on Bush's "flawed policy and management," and wants to replace it with his own policy and management which I'm almost certain will be just as bad or worse. Here's the kicker, 65% of the country basically agrees with this above assessment. Republican primary voters do not. They will hold onto their obtuse and irrational beliefs regarding militarism even though the vast majority of the country is rejecting their foreign policy.
Funny the transformation of Republicans in the past 7 years. Back then, I could write columns like this and conservatives cheered (though note that I have toned down the meanness over the years). Today, if I apply those same foreign policy standards, I am an American-hating loon. I had thought in those days that Republicans were turning over a new leaf, when in reality they were just trying to stick it to Bill Clinton. Of course, plenty of leftists flip-flopped as well but such is the nature of politics.
One person who has stayed very consistent is Ron Paul. I always like Dr. Paul, but I didn't think tonight was his best night. For one, he had less than half the time to speak compared to the "Big Three" and some of his answers tonight--on immigration for instance-- weren't particularly impressive. One of Dr. Paul's problems is that he's too nice. I would like to see him be more aggressive in these debates in contrasting himself with other individual candidates instead of just running against the pack in general. I'm not saying he should be harsh, defamatory, unfair, or engage in unnecessary name-calling. But he has plenty of room to contrast his views with theirs individually. I was hoping he'd strike back at Giuliani attacks. Basically, Paul got so much attention last time because of his scuffle with Rudy. He needs to do something in these debates to stir the waters. Just stating anti-war positions is not going to do it anymore. If he doesn't do anything to stir the waters a bit, he'll get as much coverage and attention as Tommy Thompson.
This is not all Paul's fault. Even though he's not part of the "Big Three" he's been the most controversial of the "second and third tier candidates." With Paul, we actually could have a debate between he and the other candidates. Right now, these 10 man contests are more of a beauty contest, a test who can get in more cutsey one-liners and who can pander to militarists the most. While there is more uniformity amongst the current crop of Democratic candidates, their debate on Sunday at least had elements of a "debate" (contrast), even though the contrasts were mostly fabricated by the candidates. Today's Republican debate, on the other hand, was fairly boring. But overall, this campaign has been great for Ron Paul and has given him more visibility than ever. I just hope he can continue to be a part of the discussion and make more waves in the future. If the GOP doesn't get off of its World Policeman kick eventually, not only will the party pay, but so will the nation. I sincerely fear a Giuliani or McCain presidency.
Just what the flip is up with the mainstream of the Republican party? Listening to the the media and establishment "frontrunner" Rudy Giuliani, and his two sidekicks in the so-called "Big Three" scares me. Especially with Giuliani and McCain, these guys take warmongering to a new level. If left up to them, the war in Iraq would have a blank check for an indefinite time period. Their supporters love them because they are such hawks, but it is on these points that these two seem most oblivious to reality. Just how many years, how many deaths, and how many hundreds of billions of dollars need to be spent before they retreat from their gospel of nation building and spreading global democracy? There appears to be no sign that Americans are "safer" today than we were four years ago, and it seems we are even less so, especially overseas. Terrorist recruitment is not suffering for a lack of converts. Yet King Rudy & Co. see this as a validation of their failed policies. Basically what they want is perpetual war for perpetual peace. And it's a good way to bankrupt and demoralize the country.
The Republican base loves this tough talking rhetoric. They apparently love failed policies as well. Especially on Iraq, they apparently don't grasp empirical evidence that trying to remake the country in our image just isn't going to work. McCain, however, just wants to blame it on Bush's "flawed policy and management," and wants to replace it with his own policy and management which I'm almost certain will be just as bad or worse. Here's the kicker, 65% of the country basically agrees with this above assessment. Republican primary voters do not. They will hold onto their obtuse and irrational beliefs regarding militarism even though the vast majority of the country is rejecting their foreign policy.
Funny the transformation of Republicans in the past 7 years. Back then, I could write columns like this and conservatives cheered (though note that I have toned down the meanness over the years). Today, if I apply those same foreign policy standards, I am an American-hating loon. I had thought in those days that Republicans were turning over a new leaf, when in reality they were just trying to stick it to Bill Clinton. Of course, plenty of leftists flip-flopped as well but such is the nature of politics.
One person who has stayed very consistent is Ron Paul. I always like Dr. Paul, but I didn't think tonight was his best night. For one, he had less than half the time to speak compared to the "Big Three" and some of his answers tonight--on immigration for instance-- weren't particularly impressive. One of Dr. Paul's problems is that he's too nice. I would like to see him be more aggressive in these debates in contrasting himself with other individual candidates instead of just running against the pack in general. I'm not saying he should be harsh, defamatory, unfair, or engage in unnecessary name-calling. But he has plenty of room to contrast his views with theirs individually. I was hoping he'd strike back at Giuliani attacks. Basically, Paul got so much attention last time because of his scuffle with Rudy. He needs to do something in these debates to stir the waters. Just stating anti-war positions is not going to do it anymore. If he doesn't do anything to stir the waters a bit, he'll get as much coverage and attention as Tommy Thompson.
This is not all Paul's fault. Even though he's not part of the "Big Three" he's been the most controversial of the "second and third tier candidates." With Paul, we actually could have a debate between he and the other candidates. Right now, these 10 man contests are more of a beauty contest, a test who can get in more cutsey one-liners and who can pander to militarists the most. While there is more uniformity amongst the current crop of Democratic candidates, their debate on Sunday at least had elements of a "debate" (contrast), even though the contrasts were mostly fabricated by the candidates. Today's Republican debate, on the other hand, was fairly boring. But overall, this campaign has been great for Ron Paul and has given him more visibility than ever. I just hope he can continue to be a part of the discussion and make more waves in the future. If the GOP doesn't get off of its World Policeman kick eventually, not only will the party pay, but so will the nation. I sincerely fear a Giuliani or McCain presidency.
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