Banks Using Mobile Phone Usage To Gauge Credit Risk 196
Hugh Pickens writes "A new startup is revolutionizing the way financial service companies meet the needs of an estimated 2.7 billion people worldwide with a mobile phone but no access to formal financial services by developing sophisticated modeling software that can look at usage data from consumers' mobile phones and make predictions about credit risk. 'There's a vast market of consumers in countries like Brazil, China, India, and the Philippines who want access to financial services like credit cards, loans, or insurance,' says Jonathan Hakim, chief executive of Cignifi. 'But while they may have jobs, and some have bank accounts, there really is no credit history for them.' The way you use your phone is a proxy for your lifestyle say the developers. 'We're looking at things like the length of calls, the time of day, and the location you make them from. Also things like whether you top up [a pre-paid SIM card] regularly. We want to see how stable the patterns are. When you look at that, you can create these behavioral clusters that give you information about users' appetite for new [financial] products, and their ability to repay a debt.' Currently operating in Brazil, Cignifi doesn't plan to deploy the technology in the US. in the near-term. 'The business opportunity is so much bigger in Brazil, India, China, and Mexico, where you have around half a billion people in those four markets alone who have a mobile phone but no banking relationship.'"
The entire credit history thing is stupid (Score:5, Insightful)
Re:The entire credit history thing is stupid (Score:5, Informative)
I disagree. I live off of credit for day-to-day things for a very simple reason: my income is very consistent and infrequent (payday).
I know how much money I'll have at the end of the month down to the penny. I also know that my credit card is due 1 month after the statement. So if I want to make a big purchase that I can't afford for instance I can buy it now and pay it off in up to 2 months interest free. My bank account usually has enough cash on hand to cover my monthly expenses but when it doesn't I use it to smooth out the discrepancies between my wants and my pay-dates. Why wait a week for pay-day when the credit card bill won't be due until the end of the month? It makes my income and my expenses both equally predictable instead of the haphazard day-to-day uncertainty of spending.
As a result I've never paid a penny in interest, I've flown around the world on my miles and my bill paying is far more predictable and automated.
You could *gasp*, save. (Score:4, Insightful)
Course that would only be a sane thing to do if interest rates were positive and reasonably above the real rate of inflation.
Re: (Score:3)
So you get the boat for $9,700, an immediate savings of $300 (plus whatever retail sales taxes would have been on that $300), as opposed to getting "cash back" of $125 3 months later.
Cash is king for a reason. Even Best Buy will knock off a few percent on a big-ticket ite
Re: (Score:2)
I've often asked about these discounts and rarely been actually offered one. Especially for day-to-day purchases. The "$10k" was a hypothetical nice easy block of purchase. More likely we're talking about Groceries, phone bills etc.
Re: (Score:2)
One of my daughters did the same thing when she was buying a TV, living room set, etc - drove the guy nuts - "How much more will you knock off if I also buy this?" He had to work for his sale, and she saved hundreds of dollars.
If you don't ask, you don't get. They've already sunk $x of time into the deal - they'll work the numbers with their boss to come up wit
Re: (Score:2)
They think of a store as a service, rather than a trading opportunity. These are the same people that don't believe that participating in trade is most-often win-win, and maybe when they do it it isn't.
Re: (Score:2)
Of course,
Re: (Score:2)
It depends on the availability of someone at a store who is actually granted the ability to haggle. A low-level clerk is probably going to be bound by what the register will allow them to do and have no incentive to haggle, as they receive a flat paycheck regardless of what gets sold. A manager or someone in sales, on the other hand, is probably much more likely to do so, but only assuming they have a corporation flexible enough to offer anything other than a "shut the customer up" discount.
Real haggling is
Re: (Score:3)
I one worked in retail, and part of my job was being "a low-level clerk," ringing up things ranging from digital cameras to groceries to home electronics (including, as it were, TVs).
There were softkeys on the register which would allow me to select various levels of discount: IIRC, 2%, 5%, and 10%. I could also directly adjust the price downward by up to $2, per item.
I could do this all without involving management, through a system termed by the corporate overlords as "Cashier Empowerment." (Accomplishi
Re: (Score:2)
Re: (Score:3)
Why don't you control yourself for a few months, save a little bit of that money, and then never need a credit card again?
Sure, you're not paying interest (suposedly... every that I've heard say that before comes back with "Oh, except that one time, and the other time..."), but you could be EARNING interest on that money. Right now, Ally gives 0.8% on it's CHECKING accounts.
Re: (Score:2)
Or do both like I do. Put all your expenses on your rewards card, keep your cash in an interest bearing checking account (credit unions usually offer these w
Getting money in and out of Ally (Score:2)
Why don't you control yourself for a few months
Controlling oneself for a few months is often easier said than done. Consider what would happen if one's means of transportation to and from work were to break down, or one's health were to break down.
Right now, Ally gives 0.8% on it's CHECKING accounts... more than any brick & mortar banks are giving on even their savings or 1year CDs right now
But as I understand it, in order to get cash or checks into Ally, you have to deposit them into a bank with a local branch and then ACH the money to Ally. Then the local bank ties up $1500 of your money in a minimum daily balance.
Re: (Score:2)
Completely untrue. With any online banks, you can endorse and mail checks directly to them. Many even send you prepaid envelopes.
If you really have to deal with cash, you could go to the nearest gas station and turn it into a money order for a $1 fee.
Re: (Score:2)
I do this too, because I earn 6.5% p.a. tax free on the cash that I don't spend until the end of the month.
How do I get 6.5% tax free? Mortgage offset account [wikipedia.org]. These things are apparently a lot less common outside Australia, but basically I have a savings account which, rather than paying interest, reduces the balance used to calculate my monthly mortgage interest. Home loan interest rate is 6.5%, so that's what I effectively earn on my savings, and because it's applied as a discount, not paid as interest,
Re: (Score:2)
People were doing this for a while in the US, but as far as I know it never really caught on
Re: (Score:2)
There's other drawbacks, though; the home equity loan is variable rate, and generally much higher than a fixed-rate mortgage.
Variable rate is more or less the norm in Australia. Fixed rate is generally available for up to the first 3 years (sometimes more), but the rate depends on which way the bank thinks interest rates are moving, and even if rates are falling (putting fixed rate below variable), the longer fixed terms tend to have higher rates because there's increased risk to the lender that they're selling themselves short.
Re: (Score:2)
As a result
As a result, you've continually paid more for every product you buy in everyday life.
Do you honestly think banks give away those "miles" for free?
Banks make money off of credit cards out of merchant fees, this is a fee, usually a percentage of the purchase paid by the merchant to the credit card operator. The merchant must build this fee into their operating costs. The more people using credit, the more the merchant must raise their prices to compensate.
Now as for the interest argument, it's bolloc
Re: (Score:2)
Because that is 1 month worth of buffer that you can invest and earn some interest. For most people, it will only be around 5-20 dollars a month of extra interest, but hey, free money.
Re: (Score:2)
I do that as well currently, I pay my bills on time and my CC company rewards are more than the piddly amount of interest that the banks are willing to pay.
Re: (Score:2)
The average US household spends around 4000 a month. The fund BND pays 0.2% monthly in terms of dividends. That words out to 20 dollars a month.
Re: (Score:3)
Yep
It is the reason our economy is so bad and Europe is dangerously close to going into a 1930s style depression.
In the old days before deregulation there were usuary laws. You couldn't charge more than 6.5% interest by law! Can you imagine if they had that today? The financial industry controls too much of the worlds government to ever go back but it might be needed.
If interest rates were capped at 6.5% you bet poor people would not be targetted and could get credit cards, prices would go down for used car
Re:The entire credit history thing is stupid (Score:5, Insightful)
The problem isn't the interest rates in that regards, the problem is that the spread is so large. If I have an account at a bank the typical interest these days is roughly 0.1% on most accounts I've seen. A quick look at average rates reveals that low interest cards average out at about 10.75%. So on average they're borrowing money from account holders for 0.1% and they're lending it for an additional 10.65%. There is some overhead involved, but people wonder why savings rates in the US are so low. 0.1% is 1.9% below the Federal Reserves typical inflation target.
I don't agree with Ron Paul on pretty much anything, but the fact is that he's dead on when it comes to the harm that the Federal Reserve represents. Tax laws are nothing compared with the income redistribution that's resulted form the Fed purposely creating inflation and holding interest rates well below inflation.
Re: (Score:2)
Re: (Score:2)
Inflation is really necessary, as it requires people with money put it to work. If you just hang on to your money, it will depreciate in value and vanish. If you want your money to maintain its value, you need to invest it, and get that capital into circulation again. If your currency has negative or zero inflation, you'll have a massive "credit crunch" as all the people with capital stop loaning it out.
Re: (Score:2)
Inflation is really necessary, as it requires people with money put it to work.
That's true, because otherwise people would just pile up their cash in their vault and swim in it, like Scrooge McDuck.
Back in the real world, inflation is just another scam by which governments steal money from the productive members of society.
Re: (Score:3)
That's not true at all. The reason people put their money to work is so that in the future they won't have to work. Inflation just screws over people who don't have enough money to invest in the stock market.
Also, please stop spreading this FUD. The reason for a credit crunch is that people stop lending money. That's not going to happen with a negative or zero inflation scenario, the interest rates will typically rise to factor that in. Most recently we had a credit crunch because nobody felt safe lending m
Re: (Score:2)
While I don't think going back to the gold standard is a good idea (there was a reason for going off it for international commerce), something needs to peg our fiat currency back down to reality
Who told you that it was for international commerce? Thats complete bullshit.
The reason we dropped the silver and gold standards was because these standards put hard limits on government deficit spending, preventing debt from being issued willy-nilly like it is today.
Re: (Score:2)
Re: (Score:2)
You can have an excellent credit score by holding a single credit card that you never use. (This is true of any other kind of loan, but credit cards are generally the only credit you can hold at zero cost.) The only time this would be a problem is that these days, some credit card companies will close your account if you don't use your card occasionally. Many, however, don't.
In fact, many never-using-credit behaviors positively influence your credit score [myfico.com]. If you don't request credit, you should have no rec
Re: (Score:2)
I don't know what is the impression you have out there, but most people at Brazil are as stuck in debt as anybody at the US. The main differece is that interest here is highter, thus people get bankrupt earlier.
Yes, people do not take credit at banks, instead, they take credit at the stores, and those stores take credit at the banks. That is how people can be in debt without a relationship with a bank.
Re: (Score:2)
Actually no, doing exactly that isn't stupid, provided:
1) You have a credit card with a grace period for new purchases; (And if you don't, shame on you for being too stupid to shop around)
2) You pay your entire balance off each month during the grace period; (And if you don't, shame on you for being unable to manage your finance properly)
Using your credit card according to points 1 & 2 above gives you a short-t
Re: (Score:2)
Re: (Score:2)
What's more, there are no fees and most importantly no interest.
So, essentially same (or actually worse) than a credit card?
Re: (Score:2)
What's more, there are no fees and most importantly no interest.
So, essentially same (or actually worse) than a credit card?
Your credit card charges no interest and no fees? Sorry don't believe you.
Re:Things you cannot do without a credit card (Score:4, Insightful)
Pretty much all credit cards charge no interest if you pay in full every month. And many charge no fees to the cardholder. Indeed quite a few even give a small part of the fees they charge merchants to the cardholder to keep their business; as "rewards."
If you're not paying off your credit card in full every month, then you should consider rolling that debt into a longer-term debt product with a lower and more stable interest rate anyway. CC's charge usury rates if you keep a balance. Not quite as bad as payday loans, though.
Re: (Score:2)
Re: (Score:2)
Re: (Score:2)
1 - In Brazil that's quite easy.
2 - Yep, you either pay up front, or have a credit card.
3 - Our companies are making it hard to buy a ticket without a credit card, but there is no TSA here to be concerned about.
About buyer protection, if there is fraudulent activit with your debit card at Brazil, and the bank does not advances you the disputed value, you can call our central bank and odds are somebody will go to jail because of that. Few things work around here, that is one of those.
Re: (Score:3)
That's ridiculous.
First, you're saying that nobody should ever own a home. Because it's pretty much impossible for someone to buy a home with cash on a typical salary. It would take you 20+ years, and by that time your kids are gown and you don't need to own the house any longer.
Interest is money created out of thin air? No, it's not. Interest is additional debt incurred, the money that pays it is still real money. The debt may be created out of thin air, but the money is not.
That's like saying if you
Re:The entire credit history thing is stupid (Score:4, Informative)
Maybe you should consider moving somewhere that doesn't massively gouge you on housing prices. The average new home costs about three years' salary in the U.S. unless you are in a major city. Even in smaller cities (in most states), you can get a fairly nice home for maybe 200 grand, which is only about 4 years at U.S. median income.
Now I realize that you can't put 100% of your salary into a house, but assuming both of you work, it's hard to imagine not being able to save more than 10% of your combined total income every year.... That's how little you'd have to save for it to take 20 years (on average).
Re:The entire credit history thing is stupid (Score:5, Insightful)
Are you serious? I don't know of any family of 4 that can save money on $50k a year. Rent, clothing, food, etc.. they'd be lucky to save $100 a year, much less $10k.
Raising a family is expensive. Insurance alone can cost upwards of $500 a month. I think you're incredibly naive if you think that someone can put away 10% of their salary at that level.
Re:The entire credit history thing is stupid (Score:4, Interesting)
He is serious, he suffers from the mentality that there's always *something* more you could do.
He wants them to live like crap. Never do anything, sit in the empty living room with no tv or cable and absolutely never do anything that isn't tied to staying alive.
You get about $1500 every 2 weeks on 50,000 a year give or take taxes. $900 rent because you're 19 with no savings and can't get a house loan, $300 for your $7K car with a $13K payment (because you have no credit and had to get a high interest loan without family to co-sign), $200 for gas and car maintenance, $300 groceries, $50 phone, $50 internet, $60 cable, $300 car insurance (again you're young and it's insane rates for even a boring daily driver vehicle), $230 health-insurance.
Let's see here.... If you get $3000 a month with the above bills that's a whopping $610 to show after the above bills. Don't get bad teeth or a $1750 root canal will sink you. Don't do nothing wrong and get hit while stopped by another driver, $1000 deductible will sink you. Don't break your left foot in 3 places, that's $2700 and that will sink you. Don't forget your landlord will foreclose the house and stop paying the mortage so you have to immediately come up with $3500 to move and that will sink you!
Heaven forbid two or more things happen within the same year then you're really fucked. Take away another $70 a month to use check into cash services to keep the gas in the engine and the lights on since you have no family to help...... Don't forget that $130 license plate renewal right on your birthday and don't forget your renters insurance.
Now other people bitch that you even have TV to show for your hard working middle class salary.... You should probably cancel that and sit looking at the wall since you definitely want to be *active* after busting your ass for 11 hour days to make up for the vacation (borrowed mind you with a sobbing call to HR) you used while the foot was broken!!!!
FUCK THESE PEOPLE. Middle class means I should be enjoying my life for my hard labor. Fucking poor people on food stamps often have more spending money with ZERO effort.
THIS is what is wrong with society. Also looking forward to no pension or Social Security in 2060 when I'll need it..... I bet that's already spent too right?
Re: (Score:2)
First, even if you live somewhere in the U.S. with a very cheap cost of living, $50,000 for a two-earner family isn't considered middle class. That's right at what most folks consider to be the poverty line these days....
Second, nobody says you have to give up TV. What we're saying is that if you're living right at the poverty line, you're unlikely to be able to afford to buy a house, period, but if you are going to try, your choices are: A. move in with your parents so you don't have to pay rent, B. find
Re: (Score:2)
First, I misread the statistics and thought $50k was the median individual income rather than median household income, which means all of my numbers were off by a factor of 2. Mea culpa.
Second, that $10,000 is based on living in a city, in which case you're probably making well above the median. Outside of cities, in most places, you should be able to find a decent home for a lot less than $200,000. Half that, even. And there's almost always the option of driving into a city to work at city wage levels.
Re: (Score:3, Insightful)
I make $34K. My wife stays at home with our four kids. And we save about $400 a month.
I know a lot of people think we're poor. Heck, the state says we're eligible for food stamps. But we don't do any of that stuff.
We've had a mortgage for 8 years now, and are planning to pay it off in another 10.
Oh, and no credit card debt at all.
My job does give us really low-cost health insurance.
I think that besides stupid credit cards, the biggest trouble people get in is student loans and car loans.
I worked my way thro
Re: (Score:2)
That's how little you'd have to save for it to take 20 years (on average).
I don't really understand - Let's say you're married at 30 and have kids at 33 and 35 years old. Are you saying you should save for 20 years and buy a house when when you're 50, and move into it when your kids are 17 and 15? Why not take out a mortgage and actually own the house by the time you're 50?
Re: (Score:2)
Of course I'm not saying that. I'm saying that it is possible to buy a house on cash without waiting 20+ years to do it. The most obvious way is to start out somewhere with a high cost of living, work for a decade with a high salary, then move somewhere with a lower cost of living.
Re: (Score:2)
The most obvious way is to start out somewhere with a high cost of living, work for a decade with a high salary
And you live in your mom's basement during this phase?
Re: (Score:3)
Don't be so sure about your position, there. "The debt may be created out of thin air, but the money is not." The United States has fiat money. The value of our currency is tied to nothing at all. The value of our money is purely whimsical. So long as people have faith in the currency, it is valuable. When faith begins to fade, it will have no value.
Lest you have missed it, faith in the US currency is already eroding. Remember the oil embargo? Certain OPEC nations refused to accept US dollars for oi
Re: (Score:2)
Your point is irrelevant. A bank charging interest on a credit card is NOT creating money out of thin air. It's creating DEBT out of thin air, the money still has to be earned.
Taxes drive the value of money (Score:2)
The United States has fiat money. The value of our currency is tied to nothing at all. The value of our money is purely whimsical. So long as people have faith in the currency, it is valuable. When faith begins to fade, it will have no value.
No matter how little "faith" people have in the US$ - and what the hell does "faith" mean in that context anyway? - they will still have to use US$ to pay their taxes, because the government says so. That is the floor that prevents the value of US$ from dropping to zero, and in fact taxes are where the value of money initially came from. Taxes drive money [blogspot.com]. Not enough people are aware of that, even though it's kind of obvious once you really think it through.
Re: (Score:2)
You've also completely forgotten that the money you've "saved" by not getting a mortgage will simply go back into rent for the place where you're staying in the meantime, which I do promise will ultimately end up costing more than any interest charged on the house you'd be living in during the same time period.
Of course this is all null and void if you stay with your parents until all of your bills in life are saved up for, but American culture isn't really big on large multi-family households anymore (whic
Re: (Score:2)
That doesn't work with todays realities. You're essentially locking people into a single location. They can't financially justify moving somewhere else, and they have to find jobs close to their homes (and that's not feasible for a lot of people).
Not to mention, I spent 18 years with my family, I don't want to spend the rest of my life living with them. I'd go insane.
Re: (Score:2)
Building higher shared buildings makes each square meter ground cheaper for each participant. Shared infrastructure also helps.
???
They already have these all over the world. They're called condominiums. The business model you describe is exactly how they operate.
Re: (Score:3)
A country can print more money, you and I as citizens cannot (legally) do so. Nor can the banks.
A bank charging you interest does not create money out of thin air. You have to work to earn that money to pay that debt.
If I say i'll break your knee caps if you don't pay me $1000, does that magically create $1000 out of thin air? No.
There is a huge difference between the govenrment controlling it's supply of money and us who use that money.
Re: (Score:2)
There is no magic. Debt is a promise of future work. Therefore debt is a value of your potential. As long as you meet the promise of work, debt works wonderfully in letting you cash in for future work now. This enables tapping of significantly larger pool of resources.
Many people have watched movies like "money as debt", but missed the message because it wasn't delivered in a simple enough format. There was a continuation of that movie which went into more detail, but to really understand you have to actual
Re: (Score:2)
GDP is a measure of how much work will be done during the year.
Sum of assets means a total value of held assets.
Many assets take years and decades of work to build and contain both US and foreign assets. The number is realistic.
Also, debt = promise of future work done. In many regards, this is not a bad thing at all. It allows you to use promise of work that you will do in the future to pay for a product now. As long as you can deliver on the promise of work, there is no problem. Problems arise when people
Phone service is a credit account (Score:2)
All phone service is really a credit account because you have access to overage minutes, pay-for numbers, etc. You can run up an unlimited bill if you or your teenager goes over the usage plan. Pay those bills on time and you can gain credit score points, run up a higher bill than you can pay and it goes as a missed payment.
Re: (Score:3)
In most countries cell phone service is pre-paid. From what I understand if u don't have extra money in your account the extra service like pay-for numbers doesnt go through. Can anyone with more info on this verify?
That is correct, and I'm surprised this method is so alien to the US.
It used to be the normal way of paying for mobile phone service in the UK... and it still is, just about:
This phenomenon has been especially evident in the UK, where since Q4 2007 the share of contract customers has risen from around a third (35.4 percent) to almost half (48.6 percent in Q2 2011) of all subscribers, due in part to the introduction of new types of contract tariffs aimed at attracting existing prepaid users to switch to contracts.
(Source) [wirelessintelligence.com]
With a pre-pay phone you don't need a bank, credit card, address, or any of the infrastructure for that. The original method (still used) to add balance is to buy "vouchers" from a shop. Scratch of the silver panel, type it into the phone, £10 instantly credited. Nowadays you can also top up online, by text, by phone,
Re: (Score:3)
It used to be the normal way of paying for mobile phone service in the UK... and it still is, just about:
Actually, no it wasn't; pre-paid mobile phones came out a long time after contracts. I can say this with a straight face because I happened to be working for one of the phone companies when PAYG first started*.
That pre-pay customers outnumber post-pay has nothing to do with how long the service has been available. If I were to guess I'd say the increase in the proportion of contract customers was a result of newer, "must-have" handsets (smartphones in particular) being priced so highly when bought sim-free
Re: (Score:2)
No science to it (Score:5, Interesting)
Re: (Score:2)
Mod up
Sadly, the banks are looking at loan sharking as great fiancial instrustments. Is there any professionalism in them left?
Greed has gone out of control and reading about Foxconn 3 stories down, and now this I feel time warped back in the 1880s. Big greed, child labor, loan sharking, riots and unrest, and the formation of unions. What finally ended it was The Great Depression.
Maybe if the market fully froze in 2008 a reset would ahve cleaned up this mess. Anyway not to go offtopic but this is just insan
Re: (Score:2)
They just use this as a mean of hiding the fact that banks really have no idea if you'll be good for the money they are loaning you.
There may be some science to it, but that does not negate the idea that the banks have no other data about you in these countries. That is, after all, the main tenant of the article. It is precisely because banks have no way of evaluating your repayment potential that they want to surf your phone records.
And of course they have no plans to bring this business model to the North America or the EU precisely because such practices are outlawed in these countries. Even with a signed letter of authorization t
Re: (Score:2)
It is precisely because banks have no way of evaluating your repayment potential that they want to surf your phone records.
And of course they have no plans to bring this business model to the North America or the EU precisely because such practices are outlawed in these countries.
No, the reason they have no plans to bring this model to North America or the EU is precisely because they have other (better) was of evaluating your repayment potential. For example, the big 3 credit reporting agencies: as flawed as their data may be from time to time (and I fully support laws requiring them to give you a copy, help to correct mistakes, etc), this data "lubricates" the economy (facilitating transactions between strangers) to an astonishing degree. The information gives sellers a wider mar
Re: (Score:2)
The credit report agencies are complete criminals. The regulations surrounding their 'business' are so flawed it's unbelievable.
They should be required to give you a free copy of the data they have on you, and they should be required to correct mistakes. I wouldn't mind them not having to give me a report every time I ask - perhaps once a year to stop people wasting their time. But it's almost impossible to get them to correct mistakes.
They rely (at least in the UK - anyone able to comment on other countrie
Re: (Score:2)
The credit reporting agencies (at least in the US) do not make credit decisions - they merely REPORT information (hence the name) and let the recipient make the decision.
It does seem like they ought to work more aggressively to correct mistakes, but it's harder than it sounds: EVERYBODY is going to claim that they paid the bill on time and it must have gotten lost in the mail (or whatever), so it's hard
Re: (Score:2)
Getting a person's call list is illegal at Brazil to,.nNo difference. They may get around that by not releasing any number with the data, but I'm not sure if that is actualy legal.
Again, no difference he
Re: (Score:2)
Let me get this right (Score:3, Interesting)
So, phone companies are selling who i call, how long and where did i make the call to this companies? Isn't that invasion of privacy?
Re: (Score:2)
The Laws Of Personal Finance (Score:4, Insightful)
Re: (Score:2)
Re:The Laws Of Personal Finance (Score:5, Informative)
In civilised countries you only need steady income and a valid payment plan.
Re:The Laws Of Personal Finance (Score:4, Informative)
That may work for you, but most of us don't have >100.000 euro in our bank accounts when we want/need a house.
Which isn't a problem, because houses would be cheaper. Loans make things more expensive by creating artificial demand.
You'd think that after the recent housing debacle people would understand that.
Re: (Score:2)
Owning your home gives you the ability to lose your job and not be a homeless.
But, of course, if you have a mortage, you won't have that ability either. I said owning it, not renting it from the bank.
Property tax is not unlike rent (Score:2)
Owning your home gives you the ability to lose your job and not be a homeless.
You still rent the land on which your house sits from the government. Stop paying property tax and see to what extent you "own" a piece of land that you hold in fee simple.
Re: (Score:2)
Having the flexibility to move as you please.
When you "move as you please" to follow the jobs, don't you have to find a new job for your SO and a new school for the kids? And last time I checked, a tenant lacked authority to modify the building and had to pay the landlord's marked-up charges for pulling, say, Cat-6 or HDMI cables through the wall.
Re: (Score:2, Interesting)
Loan? Did you somehow miss the first three sentences of GP's post? If you can't afford a house, don't buy one.
Speaking of home loans, I wonder how affordable homes would be if it were not for banks artificially giving everyone the "buying" power to get one (temporarily).
The typical home loan (30 years of debt) is financially insane, and has made home ownership (i.e. with no debt on the house) harder for everyone. Some of the price inflation caused by loans could be witnessed after the 2008 home mortgage "cr
95% of money is based on debt (Score:2)
98% in the EU.
Your chances of avoiding all debt are small.
Re: (Score:2)
Buy low, sell high.
Buy high, sell higher.
Buy when undervalued, sell when overvalued
Buy, add value, resell.
Profit.
Depending on what you do, debt may be, or may not be a bad thing. There are things that are pretty stupid to get into debt (meaning with interest) such as cars, furniture, TVs, computers, etc. but lets say you have a skillset to work with aging luxury cars and restoring them and selling them at a much higher price. If you don't have enough capital to buy the
Re: (Score:2)
congrats! you're now a small, on-foot, homeless loser who minimized a trivial expense and lowered your income potential and your quality of life. w00t?
okay, seriously, debt is a tool, not a sin. as a tool, you can injure yourself with it or build something useful. and to throw another cliche, for every problem there is a short, simple solution that's wrong. or in your case, not exactly wrong, just sub-optimal
H. A. N. D.!
Interest, rent, what is difference? (Score:2)
Rent an apartment
If the interest on a mortgage is less than rent, how would one be better off renting? What is the fundamental difference between interest and rent?
oh, I forgot, they don't have decent public transit in the U.S. do they?
Correct. Citilink buses in Fort Wayne, Indiana, for example, do not run at night, on Saturday evenings, on Sundays, or on major holidays, and the routes serving outer parts of town don't even run on Saturdays.
Re:The Laws Of Personal Finance (Score:5, Informative)
Appliances other than those that heat your food (Score:2)
Seriously (Score:4, Insightful)
FUCK OFF
I normally do not use those strong tones in my slashdot replies but what I do, and what videos I watch are no ones business! Why is this even for sale?
When employers tried to call your doctors and pyschologists to weed out applicants with potential issues like depression people were outraged and HIIPA became law. The medical industry hates it but it was a must as in an alternative universe anyone who has taken an anti depressent would be labeled a credit risk and unemployable or someone with ADD would be unemployable and another credit risk etc.
I think the same should apply. I mean what is next? Installing video cameras that view into your house all over the street? Maybe looking for who you invite over or what you do in the bedroom next?
Re: (Score:2)
This is not for the US. Nor any other western nation so calm down.
In the west banks can already buy this kind of detailed personal information without having to ask phone companies for it.
Countries mentioned in the fine summary are places like India, Brazil and the Philipines, in these places people dont have ready access to legitimate sources of credi
Yeah, (Score:2)
Give me your phone number and I tell you your credit worth.
Start it in another country where it's possible, then expand...
How exactly is that data available?! (Score:2)
Almost enough said.
Assuming such correlation is useful for credit analysis, how does someone other than the telcos access that kind of information to produce such evaluations?! I'd say it is private information. Correct me if I'm wrong...
Next : Fortune telling from turd (Score:2)
For this is where we are headed to. it is utterly stupid to think that people behave the same way in every aspect of life.
My Private Phone Records (Score:2)
If any telco shares my phone records with anyone or anything outside itself, I'm suing.
If I volunteer to release those records to a specific other person/thing, because I want to use it to prove something, that's my privilege if the telco allows access to it. But never before than.
I have the rights to be secure in my person, home, papers and effects. And I have a government we created to protect those rights.
Another Step to Total Information Awareness (Score:4, Insightful)
I'm not a tinfoiler (in fact, part of my job is to try to help tinfoilers) but this is just another (? inexorable) step towards total information awareness. MasterCard and others have demonstrated an almost spooky ability to make future predictions based on seemingly irrelevant data, predictions that hold true and provide valuable guidance for large populations, despite the fact that individuals will be harmed. With a little more database interconnectivity, coupled with a gigantic complex of computers, there's no limit...
-Dan
Snake oil (Score:2)
You can't predict credit risk based on phone usage. There are far too many system inputs to even begin to separate this kind of data. You might as well argue that you can predict credit risk based on television viewing habits or toothbrush selection.
Since when the bank care about credit risk? (Score:2)
Since when the bank care about credit risk? They didn't care about that in the morgage crises, they didn't care for Greece or Italy, they didn't care in the credig card crisis (or the credit card buble), they didn't care for American students if they can ever pay back their loans.
In fact, the more banks lend out, the more captial they have. And if they make bad loans, they just get bail out from the government. But of course they are now sitting on so much cash (also they get interest for the money they s
counterfeiters' innovation (Score:2)
Re: (Score:2)
Re: (Score:3)
Not supporting is much more powerful than influencing and it allows everyone to decide for themselves without forcing it on others. My decision not to support X corporation will not affect someone else who has no problems supportin
Re: (Score:2)
If you had read Marx, you would realize that his communism was revolved around truly voluntary exchanges, and then a little critical thinking would tell you that the states of the USSR and North Korea are (or were) authoritarian regimes, and not at all communist.
All communist states are authoritarian, because you can't have a voluntary communist state. Capitalist behaviour is prohibited by force in a communist state, whereas you're free to set up a communist commune in a capitalist state so long as you buy the land first and 'progressives' haven't eliminated property rights.