Does anyone else see an economic crash coming?

[Magpie]

I don't know how long it will last, but it is coming. The Greater Depression.

Maybe we are in it and we don't realise? Depressions will look 'different' as society changes perhaps? It used to be obvious when people were poor; now its easier to cover it up. At least here anyway.

 

[zoomzoom]

How does the average person get $100K to invest in a mutual fund?

The average person doesn't start with $100K.
I know we're all getting old but if you start early, with only a nominal amount, it adds up over the years.

Here's a hypothetical example. Start with $1000 and assume an annual return of 15%. That return is doable but obviously variable year-over-year.

Left column is year, right column is dollar value after the return and the return is rolled back in for the subsequent year.
In 4 years, your money almost doubles.
In 26 years, your $1000 is worth over $100,000.
In 30 years, you have almost a quarter million.

1​	1150​
2​	1380​
3​	1656​
4​	1987​
5​	2385​
6​	2862​
7​	3434​
8​	4121​
9​	4945​
10​	5934​
11​	7120​
12​	8545​
13​	10254​
14​	12304​
15​	14765​
16​	17718​
17​	21262​
18​	25514​
19​	30617​
20​	36740​
21​	44088​
22​	52906​
23​	63487​
24​	76184​
25​	91421​
26​	109706​
27​	131647​
28​	157976​
29​	189571​
30​	227486​

​

 

[Quark]

Maybe we are in it and we don't realise? Depressions will look 'different' as society changes perhaps? It used to be obvious when people were poor; now its easier to cover it up. At least here anyway.

We are in a depression. And when the music stops there are not going to be enough chairs and the empire collapses and everything with it.

 

[Quark]

I once explained Credit Cards to someone like this. It's like having a rich uncle & you get to decide if he is going to leave you money or leave you bills to pay. Properly used, credit cards are great. Improperly used & they will ruin you (like your friend). I look at them as saving me time & money. I save time by charging everything I buy, no writing of a bunch of checks, No running to the bank for money, just charge it. By doing that I save my time & I get to use someone else's money for around 30 days for FREE. A short term loan that I don't pay interest on. And as the cherry on top I make (rewards credit card) for every dollar I spend I get a penny back. A penny isn't much BUT if it's on every single dollar you spend it adds up. I literally have no reoccurring bills that don't go on my credit card & I write one check a month to pay it off.

So why do cc companies pay 1% back? It's simple, some people can not handle cc's wisely. They do exactly what your friend did. And those people pay a LOT of interest over their lifetimes. If a person falls into that category they should never ever use credit cards.

I found that if I carry cash I will spend it. Two bucks for a coke, hey I'm thirsty & how about a candy bar to go with it? Five bucks gone for nothing of value. I just realized that I "blew" cash when I carried it so for 30 year I almost never had more than 3 dollars in my wallet. Now days it doesn't matter that much so I might have a 20 in there.

There are no free lunches. You are paying one way or another.

 

[zoomzoom]

There are no free lunches. You are paying one way or another.

I'm with @old tex
Use a credit card properly and you do get, as you call it "a free lunch". It's those that don't control their CC spending and payments that are paying for my lunch.

We all pay retailers an extra 3% for credit card use but that's part of doing business. My card gives me 1-5% CASH back and most of my purchases are in the 5% category so my no-fee credit card actually pays me many hundreds of dollars per year.

 

[Haertig]

My bank keeps wondering if I want a credit card.
I have a friend that looooved to talk about his great credit score and all the crap he purchased with it.
His wife is leaving him and he will soon lose his house truck and crap purchased with his great credit.
Do I want credit?
NO

We purchased a car on a credit card. The dealership was a bit surprised when we asked if they took Visa. There were a few hundred dollars that could not put on the card - some laws about certain taxes or whatnot not being able to be charged. But 95% of the car's purchase price went onto the card. Which we paid off at the end of the month, so zero interest. And that gave us a whopper of a "cash back" from the credit card issuer. This was a Costco credit card - so that cash back was indeed cash back rather than airline miles, or "points", or something less flexible. You do have to have a good credit rating to get a card issued with a credit limit high enough to buy a car.

Remember, "using credit" does not mean "paying interest". It only equates to paying interest if you are using that credit to pay for things that you can't afford (or choose not to pay directly for, for other reasons).

Credit is not a bad thing to have, if you know how to use it. But most certainly, if you're irresponsible or don't know what you're doing, you can really dig yourself into a hole. Problems occur when credit is extended to people who are not credit worthy. That is a very bad mix, but it's a commonly seen mix. And sometimes you see those non-credit worthy people expecting others pay off their debts when they get themselves into trouble.

 

[Supervisor42]

We purchased a car on a credit card. The dealership was a bit surprised when we asked if they took Visa. There were a few hundred dollars that could not put on the card - some laws about certain taxes or whatnot not being able to be charged. But 95% of the car's purchase price went onto the card. Which we paid off at the end of the month, so zero interest. And that gave us a whopper of a "cash back" from the credit card issuer. This was a Costco credit card - so that cash back was indeed cash back rather than airline miles, or "points", or something less flexible. You do have to have a good credit rating to get a card issued with a credit limit high enough to buy a car.

Remember, "using credit" does not mean "paying interest". It only equates to paying interest if you are using that credit to pay for things that you can't afford (or choose not to pay directly for, for other reasons).

That's the way you do it!!!
Why pay with a check and lose $400 in free money?
My last 'cash back' that I cashed-in was $437.
I like free money!

 

[zoomzoom]

Hmmm.
We bought 3 SUV's this year. In each case, the dealer would only allow us to put $5K on a CC towards the purchase.

 

[Supervisor42]

Hmmm.
We bought 3 SUV's this year. In each case, the dealer would only allow us to put $5K on a CC towards the purchase.

Did your card have a $5K spending limit on it?
Either way, you still have work to do.
My CC companies will give me more than 10X the rope I need to hang myself.
But I work them shamelessly because they have billion$ flooding in from stupid people that will pay 25.9% interest, and they will happily give me a cut of it.

 

[Haertig]

Hmmm.
We bought 3 SUV's this year. In each case, the dealer would only allow us to put $5K on a CC towards the purchase.

Was it the car dealer imposing the limit, or your credit card company? Or maybe even your state laws imposing the limit? In my case, the dealer was a company dealership, not an unaffiliated place.

 

[Haertig]

We bought 3 SUV's this year

That probably set you back more than my house cost me back in 1982.

 

[zoomzoom]

Each time, it was the dealership. They knew they were going to pay the 3%.
Not sure about the laws

 

[zoomzoom]

That probably set you back more than my house cost me back in 1982.

Probably.
We (my daughter) bought a new RAV-4 and I bought (2) lightly used Mazda CX-5's. Around $90K total.
For the record, both Mazda's were purchased with... gains made from the stock market in the last couple years.

 

[elkhound]

guy i know ran all his monthly bills through a cc and it give something back like credit at grocery store he used. he paid off each month..but by doing it once a year he told grocery how many whole chickens he wanted..the full value of credit on cc. so he got a full years worth of chicken by doing that for free.filled freezer once a year.

 

[Supervisor42]

guy i know ran all his monthly bills through a cc and it give something back like credit at grocery store he used. he paid off each month..but by doing it once a year he told grocery how many whole chickens he wanted..the full value of credit on cc. so he got a full years worth of chicken by doing that for free.filled freezer once a year.

Were you talking about me?
I call it 'laundering'.
I run/launder about $30,000 thru mine each year.
Only the electric company requires transfer from checking.

 

[old tex]

About 7 years ago we had a cc that had an advertised deal going. You build up your 1% back up to $750 & they would pay you $1,000, built it up to $1,000 & they would pay you $1,250, build it up to $1250 & they would pay you $1,500. We collected the $1,500 twice before they were bought by a bigger bank & it ended the "deal.

I think that I was wrong on the above numbers. I believe if you had $1,000 built up they gave you $1,500.

Oh & our Sam's cc we get 3% & 5% back on restaurants & gas (I can't remember which earn what). After the above deal ended we switched & started using our Sam's card as our primary. That ended when we went over our limit. It turned out that I only had a $14,000 limit on that card & above our normal stuff I charged a AC compressor & instillation. I talked to them about changing it, nope their ultimate limit was $20,000. Let's just say I was a little torqued. So.....I almost closed that card (wife talked me out of it) but I did switch everything to our other CC which had a limit double of Sam's & it paid the same 1%.

 

[montanabill]

My name is Bill and I am a CC junkie. The problem is when I pay off a card to zero they raise my limit and increase my credit score...
How many people in the next year will lose their house or have a lien put on it because of credit card debt.....

 

[Haertig]

How many people in the next year will lose their house or have a lien put on it because of credit card debt.....

I expect that would be limited to non-credit worthy, irresponsible, or just plain stupid credit card users. There really are no if, and's or but's when it comes to spending more money than you actually have or can reliably predict you'll have in short order.

Sorry, but if things get to the point of losing one's house over credit card debt, there's pretty much no helping that level of stupidity. Destroy the credit cards and seek out professional help (which is different than "loan forgiveness"). This will in all likelihood require declaring bankruptcy and being screwed for many years (not to mention all the other people you screwed by declaring bankruptcy).

 

[Amish Heart]

Maybe we are in it and we don't realise? Depressions will look 'different' as society changes perhaps? It used to be obvious when people were poor; now its easier to cover it up. At least here anyway.

I agree, but I bet it's going to get alot worse

 

[Amish Heart]

My name is Bill and I am a CC junkie. The problem is when I pay off a card to zero they raise my limit and increase my credit score...
How many people in the next year will lose their house or have a lien put on it because of credit card debt.....

Well, not me. I hate debt.