An Interesting Class This Week

[jonmulzer]

CC companies are a bigger ripoff than the mortgage people. Think about this, your bank gives you 3-4% interest to play with your money and they charge you 20+% to play with their money via a CC.

I haven't carried a balance on a CC in atleast 10 years. I pay every bill I can with a CC, for the protection and the % back, but I pay it off instantly. They don't make money on me.

Oh yes they do, they just refer to you as a "loser". Their insider term, not mine.

http://www.bankrate.com/brm/news/bank/19990122.asp

And that 16% spread is only part of it. Do some research on "Fractional Reserve Banking". For every dollar a bank has on deposit, depending on their rating with the Fed, they can loan out 8-30 times as much. So it is more like 128%-480%+. They basically print their own money through accounting ledgers.

You also receive the same protections through a debit card. The exact same policy protects debit card users that protects credit card users. As for the money back, see comment in above post about Siegfried and Roy.

[crokett]

On the topic of said annuity, why not just cash it out Crokett? You take a hit, but in most cases you could take the amount you get from the annuity company and invest it long-term and you stand a net gain if the stock market does what it has historically, grow at 12%.

Becauase he loses a huge percentage if he does. If he were to borrow against it at 5% (or open a home equity loan and use the annuity to pay it off) he could invest the load money and get his 12%. Then in the case of the equitly loan he could write off the interest and not take the huge hit for cashing out.

Look at it this way: Jg wentworth (or whoever) is saying we will give you your future money now but it will cost you 50% of it. Think of the payout as a loan and that 50% as interest, paid all at once. The bank says we will give you that same money now but it will cost 6%. Which deal would you take? I know what I'd do.

[jonmulzer]

Not JG Wentworth. Just talk to the annuity fund themselves. It is rare (in my limited experience) for you to not be able to get your money out, ever. It would be an early withdrawal penalty, usually an insignificant percentage. And annuities usually get crap growth rates. You are almost always money ahead to cash it out and invest it yourself in some good mutual funds. But, I have never dealt with one that is attached to a settlement or whatnot. I do not know the particulars, but most allow for some sort of withdrawal, they just don't want you to because in most cases, they are really crappy investments and want to keep you there.

[Kristofor]

A CEO didn't get 100-500x the normal joe employees wages either. That is where the pension $$ went.

Well, you're not going to find too many folks who will stand up for CEOs making that much, and I wouldn't either, but frankly even at 500x in a medium sized organization that CEO's pay would cover only a tiny percentage of the pension costs.

The bigger problem with the traditional defined benefits pension plans is that they were built on much the same pyramid scheme, er, model that Social Security and Medicare were. It's great if you've got 20 people working to support 1 retiree, but it's not so viable when that ratio is trending downward rapidly.

At that point the company/government can either charge/contribute more; Give you the money, tell you to invest it wisely, and leave you on the hook for the good/bad results; Or keep contributing at the same rate and cut the benefits you receive... Pretty sure we'll keep seeing all three of these...