A Quote by William McKinley
The best way for the Government to maintain its credit is to pay as it goes-not by resorting to loans, but by keeping out of debt-through an adequate income secured by a system of taxation, external or internal, or both.
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But credit card debt is unsecured debt, which means if you get in trouble and cannot pay off your credit card, you can discharge it in bankruptcy. What are they going do to you? If you're in a financial position to just methodically pay off both credit card and student loans, pay them all.
There are two definitions of deflation. Most people think of it simply as prices going down. But debt deflation is what happens when people have to spend more and more of their income to carry the debts that they've run up - to pay their mortgage debt, to pay the credit card debt, to pay student loans.
A consolidation makes sense only if you can lower your overall interest rate. Many people consolidate by taking out a home equity line loan or home equity line of credit (HELOC), refinancing a mortgage, or taking out a personal loan. They then use this cheaper debt to pay off more expensive debt, most frequently credit card loans, but also auto loans, private student loans, or other debt.
Absolutely pay off credit card debt. If you're not getting a match in your 401(k) and you've got credit card debt, you've got to get yourself out of credit card debt. When you get out of credit card debt, your credit score goes up and interest starts to go down.
The current U.S. and Eurozone depression isn't because of China. It's because of domestic debt deflation. Commodity prices and consumer spending are falling, mainly because consumers have to pay most of their wages to the FIRE sector for rent or mortgage payments, student loans, bank and credit card debt, plus over 15 percent FICA wage withholding for Social Security and Medicare actually, to enable the government to cut taxes on the higher income brackets, as well income and sales taxes.
When you default on a secured debt, the creditor takes the asset that backs up that debt. When you convert credit card debt to mortgage debt, you are securing that credit card debt with your home. That's a risky proposition.
So we are in for years of debt deflation. That means that people have to pay so much debt service for mortgages, credit cards, student loans, bank loans and other obligations
that they have less to spend on goods and services. So markets shrink. New investment and employment fall off, and the economy is falls into a downward spiral.
What people do is they pay the small loans first. Why? Because they enjoy making the number of loans smaller. But of course it is a very ineffective way to pay debt down.
You also need to understand that when you consolidate credit card debt into mortgage debt - like a home equity loan or a HELOC [ home equity line of credit ] - you're taking an unsecured debt and turning it into a secured debt.
If you have to pay about forty to forty-three percent of your income for housing, you also have to pay fifteen percent of your paycheck for the FICA for Social Security wage withholding. You have to pay medical care, you have to pay the banks for your credit card debt, student loans. Then you only have about twenty-five or thirty-five percent, maybe one-third of your salary to buy goods and services. That's all.
Our focus is more on secured retail business like housing and car loans. While we will do some unsecured loans - credit cards and personal loans - we will do it primarily with existing customers.
Many argue that graduates earn a 'premium' because of their education, and should have to pay their way. I agree, and that's why I've always advocated a progressive taxation system - so if people do receive large salaries, they pay more income tax.
While payday loans are often the only source of credit for low-income Americans, these lenders are notorious for predatory practices that cause borrowers to fall deeper into debt.
Government, possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by taxation and otherwise, need not and should not borrow capital at interest as a means of financing government work and public enterprises.
Taxes are necessary. But the system of discriminatory taxation universally accepted under the misleading name of progressive taxation of income and inheritance is not a mode of taxation. It is rather a mode of disguised expropriation of the successful capitalists and entrepreneurs.
Bad debt is debt that makes you poorer. I count the mortgage on my home as bad debt, because I'm the one paying on it. Other forms of bad debt are car payments, credit card balances, or other consumer loans.
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