tuna55 wrote: In reply to volvoclearinghouse: The cost of the car was basically 17,500
According to the online sources, even the most duded up 2015 Mitsu at full MSRP was around 15k. Which would be about 340 a month. But for the sake of the discussion, yes, if she financed 17k (possibly rolling in another loan?) it would be about 370 a month.
I figure that the dealership finance guy hit her with every add-on possible.
Things like Credit Life Insurance, Gap Insurance and the True Coat. You gotta have the True Coat.
In reply to John Welsh :
People are so weird when it comes to dealing with dollar figures they can't conceptualize. We'll agonize over the difference between a 99 cent can of beans and a $1.25 can of beans, but if the difference is between 12,000 and 13,000 dollars, for some stupid crap they don't understand, a lot of people won't even bat an eye.
volvoclearinghouse wrote:tuna55 wrote: In reply to volvoclearinghouse: The cost of the car was basically 17,500According to the online sources, even the most duded up 2015 Mitsu at full MSRP was around 15k. Which would be about 340 a month. But for the sake of the discussion, yes, if she financed 17k (possibly rolling in another loan?) it would be about 370 a month.
I've now seen the actual loan documentation. The monthly payment is $371, the interest rate is 15.93% and the loan amount was $17,148.50.
I won't conjecture as to why, but they certainly are not good terms. We tried that lightstream place and they denied her, probably because collateral is too low, they will tell her today and she will relay it to me.
volvoclearinghouse wrote: We'll agonize over the difference between a 99 cent can of beans and a $1.25 can of beans, but if the difference is between 12,000 and 13,000 dollars, for some stupid crap they don't understand, a lot of people won't even bat an eye.
I think the reason a lot of people don't bat an eye is that on a 6 year loan the difference is like $16 per payment period (I used 5%). They perceive some value in [insert service here] and say to themselves "That's worth $16 a month".
The state of car loans these days is nuts. 6 and 7 year loans is crazy. Especially in northern states. You have people hitting >100k miles and their car rusting out yet they are still making payments on it.
Trying to keep this not-political... I would be on board with some sort of legislation that helped prevent these situations. I know the extremely conservative approach is along the lines of "you knew what you were getting into, now you have to pay the consequences", however I don't feel our education system does a remotely good job of financial education.
In reply to ProDarwin:
Thanks for avoiding the politics.
I used to be very "you got yourself into it..." but I have seen life happen to people, and people be abused by lots of different variables that the rest of us either barely control or have the earning potential to shrug off.
Anyway, I want to help this person, and I don't have money to throw at it. Paul and I are working something bigger up for a long term solution, I'm not sure you could craft legislation which would absolutely fix this issue without creating lots of unintended consequences, but I certainly think it's immoral to take advantage of someone who doesn't know better. It's often less "I got a better end of the deal because I was a better negotiator" and more "I sold this lady a loaf of bread for $55 because she couldn't speak or read english, har har har".
Anyway, I'll post updates as they come. I also tool a look at her insurance and am asking her to whittle that down also. First priority is making sure she can pay the rent and keep the lights on.
tuna55 wrote: In reply to ProDarwin: Thanks for avoiding the politics. I used to be very "you got yourself into it..." but I have seen life happen to people, and people be abused by lots of different variables that the rest of us either barely control or have the earning potential to shrug off. Anyway, I want to help this person, and I don't have money to throw at it. Paul and I are working something bigger up for a long term solution, I'm not sure you could craft legislation which would absolutely fix this issue without creating lots of unintended consequences, but I certainly think it's immoral to take advantage of someone who doesn't know better. It's often less "I got a better end of the deal because I was a better negotiator" and more "I sold this lady a loaf of bread for $55 because she couldn't speak or read english, har har har". Anyway, I'll post updates as they come. I also tool a look at her insurance and am asking her to whittle that down also. First priority is making sure she can pay the rent and keep the lights on.
I went to a seminar on this very type of tactic for home improvement sales and left disgusted. The presenter basically said "why charge $7k cash when you can do the same job for $14k financed for 7 years, and all you have to do is tell them $199 a month and not even talk about the bottom line"
Education is the key to helping fix it, but politics.... nope we don't go there.
Those terms are horrible, but she's probably out of luck unless she can get unsecured personal loan with a lower rate. The problem here is the better your credit the easier it is to play the system and move balances around at low or no interest thus using their money for free. When your credit isn't good nobody will afford you the opportunity.
Does she have any credit cards? I would recommend she get a couple if not, if she can use them responsibly. By responsibly i mean charge something small every month and pay it to build up her credit, and it would help her score to have more available credit versus her balances(ie the car loan). I got a 13000 limit card a few months ago and my score went up just because my balances to available credit went down significantly. Not because i paid more on my truck but because citi gave me more credit. That's all i use all my cards for except the one i get hotel rewards from.
ProDarwin wrote: Trying to keep this not-political... I would be on board with some sort of legislation that helped prevent these situations. I know the extremely conservative approach is along the lines of "you knew what you were getting into, now you have to pay the consequences", however I don't feel our education system does a *remotely* good job of financial education.
It's a really big problem, but as tuna pointed out, I don't know how you would craft such legislation to avoid a lot of pitfalls. There's two sides to every coin, and for every regulation put in place to aid consumers, it adds some burden to business. I run a rental house on the side, and dealing with a) numerous regulations, and b) tenants who are "protected" by those regulations can be...trying.
In the world of minimum wage and double-digit interest rates and title loans and pawn shops and all the other so-called "Third-tier financial institutions" it's hard to say who's worse- the clientele who skip payments, default, steal, cheat, and defraud or the proprietors of said institutions who pretty much do the same thing.
Then you run into individual situations, such as this one, where someone legitimately is trying to break out of that cycle. But they're locked in.
Financial Education (lack, thereof) is the biggest part of the issue. And, unfortunately, it's hereditary. If one's parents suck with money, then the kids are likely to suck with money. Did your parents open you a savings account? My 3 year old has a ROTH IRA.
Consumerism is the second biggest part of the issue. Easy money feeds the consumerism cycle..aided by the poor-or-nonexistent financial education. And it spirals out of control.
I honestly wouldn't care a bit if every pawn shop, title loan place, payday loan place, rental wheel shop and rental furniture/ electronics establishment went out of business today.
In reply to volvoclearinghouse:
To put this in perspective, my in-laws came this weekend (still recovering) and have zero sympathy. They also retired from New York state jobs with huge government pensions and also inherited a few hundred grand. They own an RV, a 5 year old car they consider 'on its last legs', a Goldwing, a paid for house, some gold and silver sitting around, basically every toy they want, anyway my point is that their perspective is all screwed up. I was helping her with a resume. She has never had one.
They ask "Why didn't she pay attention in school when they showed her how to write a resume"
"Why doesn't she know how to get a car loan, didn't they teach that in high school?"
blah blah blah, basically saying that the school system was responsible for everything. I't's a miracle my wife succeeded with parenting like that.
Anyway, I am digressing here pretty badly. The point is that everyone expects that someone else teaches these things. The result is that lots of young people who haven't either figured it out or fallen on their face have no clue what mean and nasty people are just all sorts of excited to do to them and their financial futures.
Patrick wrote: Does she have any credit cards? I would recommend she get a couple if not, if she can use them responsibly. By responsibly i mean charge something small every month and pay it to build up her credit, and it would help her score to have more available credit versus her balances(ie the car loan). I got a 13000 limit card a few months ago and my score went up just because my balances to available credit went down significantly. Not because i paid more on my truck but because citi gave me more credit. That's all i use all my cards for except the one i get hotel rewards from.
I wonder. I'll ask.
ProDarwin wrote: I honestly wouldn't care a bit if every pawn shop, title loan place, payday loan place, rental wheel shop and rental furniture/ electronics establishment went out of business today.
Can we add neck and face tattoos to that list? If there is any one single thing a person can do to limit their future opportunity, it's get a face tatt.
In health care you often need an advocate to help you through the system. Many people don't feel up to the task of doing their own taxes and go to the library where retired volunteers will help them out. I wonder if there is a population of retired people who would enjoy sparring with car dealers on behalf of a client to help keep people out of situations like this?
In reply to tuna55:
I would agree it is somewhat hereditary. Personally, I saw it from both sides. My mother is fairly conservative with finances and pays close attention to her money and budgets. My father barely has any concept of a budget and acts like a millionaire the instant he gets a few bucks in his pocket. I am now more like my mother, but I have some history acting like my father. What saved me was getting a few inheritance windfalls as well as (almost literally) lucking into a pretty decent paying job. So while my current situation is similar to your relatives, I can also remember being pretty damn poor as I was growing up as my father rarely had a regular job until I was 10 and we essentially lived on whatever jobs my mother could get with a B.S. in Art History ("Do you want fries with that?").
But did I learn any of this in school - absolutely not. While I do remember having some "home economics" classes in middle school, they were more focused on the "home" parts and there was no real "economics" teaching. Everything I know about basic home finances (balancing a checkbook, doing my taxes, etc.) I learned from my mother. Who learned it from my grandfather.
tuna55 wrote: Anyway, I am digressing here pretty badly. The point is that everyone expects that someone else teaches these things. The result is that lots of young people who haven't either figured it out or fallen on their face have no clue what mean and nasty people are just all sorts of excited to do to them and their financial futures.
Exactly. Parents fall on their face with regard to financial education- usually because they don't know themselves.
Its a slight digression from the immediate situation but going forward, if this young person (and the many others like her) have any hope for getting ahead, they need the tools to do so. We have whole hoards of kids being set loose in the world without any skillsets whatsoever. Its like expecting someone to overhaul, install, balance and calibrate a set of SU carburetors with a plastic child's toy tool set.
It's not just the very poor, either. I have a relative who has something like 100k in student loans. 60k of that is at 10% interest. They make something like 40k a year, out of school for a few years now. Monthly P+I on the loans is more than rent. 
Situations like this aren't uncommon.
Just chiming in to state that I believe the banking industry is both over and under regulated. The amount of overhead necessary that is providing a checked regulatory box as the only value add is incredible and unnecessary, yet loans like these are still possible.
Tuna, I know your situation. My parents seem to have little sympathy and are always judging the "poor choices" others are making. They retired in their 50s, have a house on the lake with a boat, another condo, and basically zero financial concerns. Looking back, they never taught me a lot of this stuff, but they also never spent that smart growing up, they just happened to have the income to power through it. Being an engineer and dealing so much with math, I'm lucky that its kind of in my nature to figure out how things such as finances work. And even then, I didn't do it "right" until I was almost 30. Before that I believed that "I have no debt, so I'm in great shape!" although my retirement account balance was zero.
Possibly a question for a new thread: on the subject of financial literacy - how does one fix it? The stuff I had in school was a joke... and I came from one of the best school systems in the county. It varies widely from system to system/state to state.
There is a volunteer group here that teaches it. I signed up with them a while ago but haven't actually been to any events 
. I need to go do that.
I found some information about the credit card situation.
It's bad.
In reply to ProDarwin:
There was an article in a recent Wall Street Journal recently about financial summer camps. WSJ online is a pay site, but here's a similar article.
Something like that would be really beneficial. Perhaps a non-profit set up to give scholarships to send kids to them?
A few of the people I work with have talked about their "financial planners". I know these people both make less money than I do and have fewer assets than I do. My dad was an accountant- he once told me, no one is more interested in your money than YOU. I have a friend who's father is a CFP, and he's told me unless you have 7 figures worth of assets, a CFP is basically worthless.
That said, you and I are engineers, we can do maths- or find online calculators to do it for us, and interpret the results. E36 M3, I have an Excel spreadsheet on my computer I programmed to do a full amortization schedule.
Read a tactic somewhere where the bad credit person took out a $500 unsecured loan for six months. Dumped $550 dollars into a savings account at the same bank. And setup auto payments on that loan from the savings account. The regular payments on the loan apparently bumped the credit score up enough to make it worth while since a better credit score makes you insurable for less. Plus the better credit score gave them a discounted rate on the car loan they were actually going for. That might have actually been on this site.
And as far as politics goes, legislating out ignorance is never a full solution. Legislating out stupid is an impossible task.
ProDarwin wrote: Possibly a question for a new thread: on the subject of financial literacy - how does one fix it? The stuff I had in school was a joke... and I came from one of the best school systems in the county. It varies widely from system to system/state to state. There is a volunteer group here that teaches it. I signed up with them a while ago but haven't actually been to any events
That's a difficult question to answer and unfortunately one that can go political faster than one would hope. Let's face it, as it stands right now, "the system" benefits from a generally under-educated public. Attempts to fix that situation would bring about a fight that would spin your head.
As Carlin put it:
Governments don't want well-informed, well-educated people capable of critical thinking. That is against their interests. They want obedient workers who are just smart enough to run the machines and do the paperwork. And just dumb enough to passively accept it.
Carlin was brilliant.
I certainly have no idea how to fix it on a large scale, but I'm not even sure I know how to fix it in my own family.
I have always had open conversations with my kids about money. However, as they come of age, they seem embarrassed to talk with me about it. I am not convinced they are making good decisions, but don't know how to talk about it with my adult children who are out of the house and unwilling to have open conversations.
I think there is a cultural problem- when we become "grown ups", we are supposed to know how to act like a grownup about our finances. It's embarrassing for most people to admit they are ignorant on very basic things, and we promote a culture of financial secrecy.
For example, the standard in non-government and non-union employment positions is to not discuss salaries. In some places you can get fired for discussing salaries. This accomplishes nothing other than promoting a culture of secrecy and shame.
I use an Excel tool that I built. It looks at this week plus 5 weeks worth of income and outlay. I provide my bi weekly income (take home), and then insert my bills that each paycheck will pay, plus additional known costs like gas and groceries. I include some incidentals like dinners out or movie tix. Its not so much a planner, as it is a digital balance sheet. I know how much I can put into savings each week, and how much I can spend on fun stuff. Occasionally, the fun stuff balance is zero. If its zero, its zero, and I have to suck it up and watch re-runs on the weekend. But it works, and it keeps me in the black. I live on cash. This tool was born out of necessity.
I used to bounce my account constantly. US Bank and others had their schemes: They would reorganize charges to pay out the larger ones first, thereby optimizing the likelihood that each transaction had the potential for bouncing your account. Then, they would hit you with $35 fees for every charge after the balance hit 0. So, a $6 Big Mac meal that hit after your electric payment bounced your account, had the same affect as dinner for 2 at Outback. When you confront the bank, and I was told this on more than one occasion, they would say the reordering of charges was to avoid the embarrassment of a declination if those bigger charges were being made to utilities or some other larger institution. When I would argue that if the charges were not reordered, then the declination would have nothing to do with the order in which I charged them, I was given very thinly veiled insults that I needed to be better with my money...which, indeed was the case in the end. But, the banks tactics were definitely directly intended to get at my money in the form of overdraft fees. Crooked is as crooked does
It wasnt until years and year later that congress got involved, after the bailout. They made things like the reordering of charges illegal, and also instituted tiered charges. If an overdrafted charge was less than (Im making this up) say $20, you could only be charged $6, between $20 and 35, $20, and $35 and above was $35. They also had to make the enrollment in overdraft availability voluntary. A class action lawsuit got me compensation - I received a check for $64
All that said, and knowing that on many many (Im somewhat embarrassed by how many "manys" are appropriate here) occasions, I had entire paychecks swallowed up by overdraft fees from the past week, I still feel that people, in the end, are on the hook for the decisions they make. I learned at the school for hard knocks. I wouldnt be at all surprised if the total for the overdraft fees, late fees, additional interest etc that I have paid (and am still paying) make up nearly a years salary. I needed to lose a lot, and really, REALLY feel the sting of living on nothing, with poor credit, and a car that barely ran, dealing with the disappointment of, and the burden on my family, and many other problems that come from the fallout of financial illiteracy, in order for me to finally, FINALLY do something about it.
Between the missus teaching me some skills, and just knuckling down and deciding that I wasnt going to be a victim anymore, I sat down and learned how to live within my means. Ive been lucky to have a safety net in the past: a family that was willing and able to help me in the short term (I never lived in my car or ate out of a dumpster, but I often wasnt far from it). But, it boiled down to me helping me learn to break the cycle.
What Tuna is doing is helping this girl do the same. She needs a helping hand. With his assistance, she could make some headway, provided she is sincere in her wish to change her situation. It wont be easy, and it will be uncomfortable, but it can be done. But its her decisions, and her responsibility (or lack thereof) which will get her out, or keep her in the poverty cycle.
In the end, its up to her, and she is who the one to blame, or to be applauded. You either choose to stay a uneducated, stay a victim... or you choose to be something else.
tuna55 wrote: They ask "Why didn't she pay attention in school when they showed her how to write a resume" "Why doesn't she know how to get a car loan, didn't they teach that in high school?"
I do not know about you, but I am almost 47 and I was NEVER taught that stuff in High School.
tuna55 wrote:Patrick wrote: Does she have any credit cards? I would recommend she get a couple if not, if she can use them responsibly. By responsibly i mean charge something small every month and pay it to build up her credit, and it would help her score to have more available credit versus her balances(ie the car loan). I got a 13000 limit card a few months ago and my score went up just because my balances to available credit went down significantly. Not because i paid more on my truck but because citi gave me more credit. That's all i use all my cards for except the one i get hotel rewards from.I wonder. I'll ask.
I think that's a bad idea. I think it is a whole lot like someone that is a recovering heroin addict keeping 100 bucks worth of smack around to show the world how clean they are.
mad_machine wrote:tuna55 wrote: They ask "Why didn't she pay attention in school when they showed her how to write a resume" "Why doesn't she know how to get a car loan, didn't they teach that in high school?"I do not know about you, but I am almost 47 and I was NEVER taught that stuff in High School.
Neither was I. I am pretty sure they are just happy with their own success and assume it's all normal.
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