vania-janet/multiturn-rag-retrieval-data huggingface dataset:
A loan from a bank with no real purpose could be a bad idea and end up costing you more money than it needs to. As someone with a loan and credit card debts accrued over university, I would say avoid it if at all possible. Certainly don't sign up to a large loan if you have no current plans for the money (car, house repair, etc). It sounds as though you're fairly careful with your money, but just want a bit of extra security in case a purchase you didn't account for slips by. If this is the case and you're set on obtaining a source of credit, I'd suggest getting an overdraft if you haven't already. Overdrafts are a lot more flexible, and are better for short term debt that you plan to pay off immediately, such as unexpected charges coming in at the end of the month.  It's worth mentioning that this is from the perspective of a UK banking customer. Overdraft conditions will vary depending on the country.
This is a great idea and I can't think of any downside. The best part about it is in the future when you have built up your emergency fund beyond the maximum contributions to the Roth IRA, you can then move your Roth funds into a higher yielding investment. I might take it a step further. In addition to this, try to get a line of credit from your bank (with no annual fee). In case of emergency, you can decide if you want to take the money from your Roth or borrow from the line and pay some interest temporarily. Depending on the situation it may actually make sense to pay a little bit of interest and leave the money in the Roth, since over the long run the future earnings of that money could easily make you more than the interest you'll pay for (let's hope) a short amount of time. To really hit home why your idea is fantastic:
Actually, a few lenders now will offer a consolidation loan that will consolidate both Federal and private student loans. One example is Cedar Ed, http://cedaredlending.com/PrivateConsolidationLoan.htm
This is fine and can definitely be done. The bank will be perfectly fine with it since you're paying interest on the money, as long as they're confident that you can repay the whole (growing) balance. Of course, there's the issue of the credit limit which you'll eventually reach and then you won't be able to pull this off any longer. Problems start when the bank either loses that confidence, or the credit line is term limited (like HELOC, for example) and comes to term. In either case, you'll be required to cover the balance, and especially in the first case - as a balloon payment. If they call on you when you do that - you will most likely go bankrupt, and the longer you keep doing it - the higher are the chances of that happening.
Having no debt should be the ultimate goal for every household, IMHO, but at what cost? As an example, I had some clients (before they started working with me) that had outstanding debt when they retired and were gung-ho to pay it off.  They opted to take it out of their retirement accounts.  They didn't set aside enough for taxes which was their first mistake.    After a few years, they now have realized they should not have paid off everything as now they have other medical issues that have arisen and not enough in their retirement accounts to satisfy their monthly requirement.
"The responses here are excellent. I'd add just a couple points. Debt is not generic. It ranges from low (my HELOC is 2.5%) to insane (24% credit card, anyone?).  When I read about the obsession to be completely debt free, I ask questions. Are you saving in your 401(k) at least up to the match? I disagree with the ""debt is evil"" people who advise to ignore retirement savings while paying off every last debt. My company offers a dollar for dollar match on the first 5% of income deposited. So a $60K earner will see a $3000 deposit doubled. 5 years of this, and he has 1/2 a year's income in his retirement account, more with positive returns. (note - for those so fearful of losses, all 401(k) accounts have to offer a fixed income, low risk choice. currently 1% or less, but the opposite of ""I can lose it all"".) After that, paying off the higher debt is great. When it's time to hack away at student debt and mortgage, I am concerned that if it's at the risk of having no savings, I'd hold off. Consider - Two people in homes worth $250K. One has a mortgage of $250K and $100K in the bank. The other has his mortgage paid down to $150K.  When they lose their jobs, the guy with the $100K in the bank has the funds to float himself through a period of unemployment as well as a house the bank is less likely to foreclose on. The guy with no money is in deep trouble, and the bank can sell his house for $150K and run away (after proper foreclosure proceedings of course.) My mortgage is one bill, like any other, and only a bit more than my property tax. I don't lose sleep over it. It will be paid before I retire, and before my 11yr old is off to college. I don't think you stupid for paying your low interest debt at your own pace."
I'll add a little to the already great advice here. It certainly sounds like you are in need of consolidation here. Having 11 different cards vying for your attention sounds like a nightmare to manage. I also concur that it is a bad idea to cash out your retirement accounts to deal with this. I know it's frustrating to have the debt hanging over your head (I have student loans I'm personally working on) but getting a loan to consolidate that level of noise sounds like a much smarter move that can help greatly if you have high interest cards (most likely the case here). Since you mentioned that you are not interested in selling the house, have you considered a home equity loan to consolidate this? Best of luck to you.
"There is a substantial likelihood over the next several years that the US Dollar will experience inflation. (You may have heard terms like ""Quantitative Easing."") With inflation, the value of each dollar you have will go down. This also means that the value of each dollar you owe will go down as well.  So, taking out a loan / issuing a bond at a very good rate, converting it into an asset that's a better way to store value (possibly including stock in a big stable company like MSFT) and then watching inflation reduce the (real) value of the loan faster than the interest piles up... that's like getting free money. Combine that with the tax-shelter games alluded to by everyone else, and it starts to look like a very profitable endeavour."
What does this do? 1, 2 and 5 alter history to make the debt never have existed in the first place. To do this, it must formally answer the question of why the heck would you pay a debt that isn't real and you don't owe: out of sheer practicality; it's cheaper than Rogaine. This is your ""get out of jail free"" card both with the credit bureaus and the IRS. Of course, 3 gives the creditor motivation to go along with it. 6 says they can't burn your credit. 7 says it again and they're agreeing you can sue for cash money. 8 lets you pick the court. The collector won't get hung up on any of these since he can easily remove the bad mark. (don't be mad that they won't do it ""for free"", that's what 3 is for.) The key to getting them to take a settlement is to be reasonable and fair. Make sure the agreement works for them too. 6 says you can't badmouth them on social media. 4 and 5 says it can't be used against them. 8 throws them a bone by letting them sue in their home court for the bill they just settled (a right they already had). If it's medical, add ""HIPAA does not apply to this document"" to save them a ton of paperwork. Make it easy for them. You want the collector to take it to his boss and say ""this is pretty good. Do it."" Don't send the money until their signed copy is in your hands. Then send promptly with an SASE for the receipt. Make it easy for them. This is on you. As far as ""getting them to send you an offer"", creditors are reluctant to mail things especially to people they don't think will pay, because it costs them money to write and send. So you may need to be proactive about running them down with your offer. Like I say, it's a funhouse mirror."
I feel this is best. Credit card is an immediate debt and you has the finds to wipe it out. the Student loans are a longer term debt and you have the money to pay it all off. So yes, pay cc, and keep loan on scheduled payments. Plus it helps your credit
Here is my personal opinion.  Please take what I say with a grain of salt.  I've been in your position before so I had to rewire myself.    With that said, all your poor decisions were made in the past.  Certainly, today, there are consequences that you are facing for the decisions you made, but still, they were in the past.  So, you CAN eat and you CAN live.  Perhaps, not to your liking but this is a rare opportunity.  You see, (I am assuming your American), we Americans often feel that more in life means more happiness.  But being in debt like you can show you that there is another path.  Just having enough.    Things like, enjoying every bite of the meal you just ate, or enjoying every moment while you're not thinking about the poor decisions you've made in the past will help you greatly in the future.  I found that because of my debt problems living in the present moment was the only way I could stop myself from loosing all sanity.  In fact, because of that I started to not focus on how to get out of debt, but how to live with debt.  It became much easier once I was able to naturally accept that there is debt, and it will be paid someday, but this is how life is and it doesn't bother me.  I found that by letting it go, eventually not only the mental problem, but the debt began to solve itself.    I know it sounds like mumbo-jumbo, but doing everything as a small step, for example, when you get in the shower today, feel the hot water.  I mean like, REALLY FEEL IT.  You have HOT RUNNING WATER.  Think about the hot water and how good it is.  This is the moment.  Maybe tomorrow you won't have hot running water, but that's ok because IT'S NOT TOMORROW, it's today.  Doing it like that, with everything, saved me from most likely something horrible.  Hth you a bit.
"From the card issuer's point of view, the purpose of balance transfers is very simple. A credit card company wants you to owe them more money, so they will make more profit getting more interest payments from you. To do that, they will offer an (apparently) good deal to transfer the debt that you owe to other companies onto their card. The deal may superficially look good to you, because it offers a low interest rate for a limited time period, etc. But never forget that its real purpose is to be a good deal for the card company, not for you. Of course, credit card companies target these deals at their ""typical"" customers. They have to tolerate a few ""smart"" customers who actually make them no money at all, by always paying off their card balance before any interest is due, never using their card to draw cash from an ATM (which has no interest-free loan period), never using their card for overseas transactions that incur fees and/or poor currency exchange rates, etc.  Your financial objective should be to make yourself one of the customers the card company doesn't want - but ""only paying off the minimum balance every month"" is exactly the wrong way to do that!"
To what end would you want to break the law? Why would you think it is beneficial to you in any way? The reason for these limitations is to protect people who have no financial reserves and are not sophisticated investors from making dangerous and risky investments with the little money they have to invest. You need to remember that there's no guarantee of principal with these loans and the rate of default is pretty high. From my own personal experience with Lending Club (and I've only invested in A and some B-rated loans) - rate of default is about 10%. This may be a nice exercise in microlending - but if you want to put all your savings into this, you're taking a huge risk. Risk which is completely unjustified since not only the returns are pretty low (again - from my aforementioned experience: <6% APR, you take higher rate loans - you get higher rate of defaults), but they're also taxed as ordinary gains. Why would you not, instead, invest in a more conservative bond or bond/stock mix fund which will pay you dividends that will get preferential tax treatment and appreciation would be subject to capital gains tax? No reason. And the limitation on who can invest in Lending Club is there for exactly this purpose - to weed out people like you who have no idea of what they're doing.
"While I certainly agree with the principle of paying down debt, there is some value in having a healthy cash cushion.  If an emergency expense were to come up, and your credit has been cut-off or reduced to the point where you have no excess credit, then having real cash on hand is critical. I would perform the following thought-experiment:  What if my available credit had been cut off?  How much would I need in cash to survive for 1 month, 3 months, 5 months, etc.?  Consider what time period you'd be comfortable with, and set that amount as your minimum desired cash on hand. While it may seem extreme to not have access to credit at all, during the credit crisis many banks and lenders ""tightened"" their lending: reducing credit limits, closing lines of credit, calling loans, raising rates, etc. Suze Orman recommends cash savings equivalent to 8 months living expenses. That doesn't mean 8 months salary, but 8 months of what it would take to live on.  At one point, in the midst of the economic crisis, I thought that made sense. The Simple Dollar blog considers Suze's recommendation and the idea of emergency fund vs. debt repayment.  Worth reading: Is Suze Right? Do Emergency Funds Now Trump Debt Repayment?."
Sprinkle in just a few cases of ""Yeah, I couldn't pay my cell phone bill so I just let them cut it off, but the collections agency started calling and mailing me every day and I had to pay twice what I owed in the first place to make it stop"", which filters through the collective psyche of the masses, and all of a sudden if and when they do offer a deal on a debt you fell behind on, you jump on it. Now, to the question at the end of your post. It's always better for your credit to pay than to not pay. An open collections account on your credit score will always be a bigger ding than a closed one. But, open or closed, that collections activity remains part of your history unless the collections agency agrees to retract it. Even then, you may have to go around to the big three credit bureaus and get the account removed, using documentation which the agency must provide stating something to the effect of ""we agree that this never happened"". If the agency refuses to remove this black mark, how black it will be depends on the terms by which the account was settled. The reporting agencies will be told the face value of the debt that was sent to collections, and they will be told the amount paid to settle it. If the debt was settled for face value, that tells people reading your report that, well, you were very late and only paid under duress, but at least you did make good on the debt in full. If you settle for less than the face value, that says something different entirely; not only could you not pay the original creditor, you had to negotiate to reduce the amount to pay the debt collector. That makes extending you credit very risky; not only are you a proven risk for being late to pay, not only are you a proven risk for them having to write off the debt, but if and when they sell it to a collections agency, the agency will see that a past debt was settled for less than face value and assume they'll get the same treatment, and so will offer less to buy the debt.
Incredible article, tons of data. Thank you!   It does answer the above posters question if you're willing to read through. It provides data with and without 'revolving debt'.  Side note; interesting to see how age and income trend. Debt increasing during the family-middle aged years, and during the peak income earning years.  I'd say you want these credit card debt lower overall and on average; but with the distribution it may be sustainable.
Long term, student loan debt is a huge damper on the economy overall. When a generation is paying the equivalent of 50-100% of rent or a mortgage on debt, you can't get around it. At best, it will delay things like homeownership (which is what we're seeing), but at worst, it will be crippling for an entire generation of Americans (which we might also be seeing, but it still has to play out).  I think the biggest problem with debt is how it changes your risk tolerance. Meaning, we Millennials are well-trained and well-positioned to be employees. Not inventors or entrepreneurs. As cheesy as it's sounds because of pandering politicians, small businesses are— or were— huge drivers of innovation, jobs and growth. Not the growth that only impacts the 1%, but the growth that boosts wages and creates good jobs for everyone. On one hand, it's an inefficiency, but a good inefficiency. Meaning, if you have 100 small business, they all need sales guys, accountants, payroll, stock guys, cashiers. They all use dozens and dozens of suppliers, and are more likely to use local, domestic labor. Consolidated industries and reliance more on larger businesses means those 100x accountants and sales guys are replaced by a fraction. Fewer jobs, fewer opportunities, smaller salary growth, less domestic labor used. This, to me, is the real danger in not only student loan debt, but even uncertain retirement conditions. Our money is paying debt and dumping into 401ks, not starting businesses and generating meaningful economic activity.
I maintain a strong bias against taking on any debt, of any sort, and I feel it serves me well.  This is not to say I would never take on a debt, like a car loan, mortgage, or educational loan.  It's just that there is a built in bias against it.   The reason that bias is good is that, in my view, taking on (unforced) debt presents the following problems: Therefore, the standing no-debt bias. That said, if there is a very compelling reason to take on unforced debt, it could override the bias.  The best example I know is that my mother bought a house with a mortgage when she had the cash, because CDs at that time were paying far more than the mortgage interest rate (this was back around the 80s when CDs hit an absurd 18%!).  To not take on that debt would be refusing free money!  But that's a rare case.  Today, CDs and other guaranteed interest streams are at historical lows, so this factor is really not in play.
Well, actually in your brother's case it's quite a good idea. Not as a savings method, but as what it is - insurance. As long as he's alive and well he can pay his own debts, they're his problem and it's his responsibility. Once something, god forbid, happens to him - the debts become the problem of his survivors (you, if he doesn't have kids, for example). His life insurance should provide the means to pay off the inherited debts. So the point of life insurance as insurance is to make sure those who survive you have enough of what they need to continue living as they were with you. Some policies take into account injuries and work disability, so that not only when you die there are benefits, but also when you had an accident and can no longer work. Some policies are basically a combination of savings and insurance - that's the policies discussed in the investing threads. edit as clarified in the comments, debts cannot be inherited per se, they will be paid off from the estate before disbursement of such. What it means though is, if the deceased had accrued significant debt, all his assets may go to the creditors leaving survivors with nothing, which may also mean homeless. That was the kind of a problem I was talking about.
If it were cheaper and easier to learn a new trade, it'd be easier to enter lucrative fields. College costs in particular are ridiculous. When you take college classes, you're basically getting a reading list, a very few limited slots to ask questions, and a set of predefined tasks plus some grading. That can be done far less-expensively than it is provided today. I personally have high hopes for online courses as a start here, though I'm sure that there will be stumbling blocks. Ditto for things like Wikipedia; using hypertext means that I can skip over things I already know and focus on what I don't understand, and electronic, automatic distribution means that it can be done far less-expensively than having some guy with a PhD stand up in front of a room and read some lecture notes aloud. Instead of answering questions generation after generation, *those* people should be polishing databases of *answers* to questions so that every subsequent human being can quickly and easily refer to their answer, and so that we can direct people to the best explanation easily. It's possible to adopt some measures that would reduce debt service by reducing public debt, but the public debt has been growing for a long time, and it seems very clear that people are much more willing to take out debt than to cut into *their* favorite concern (low taxes or lots of services) in the immediate future. As for reducing debt service via reducing private debt, most of the policy and technological factors that drive private debt seem unlikely to change to me. Maybe if we see some sort of cultural change, an aversion to taking out debt with a negative ROI, but all of the information I'm giving here has been public for a long time and people haven't changed, so I doubt that we'll see any kind of a reversal or social movement against taking out lots of debt. You'd have to have the equivalent of a [Great Awakening](https://en.wikipedia.org/wiki/Great_awakening) with respect to debt...and given that attempts to excite interest in the matter have generally not gone anywhere thus far, I suspect that this is human nature and doubt that things will change. You can always change *your* personal debt decisions, but society as a whole?
Seems like a good deal to me. You are paying less interest over the lifetime of the loan. And what I would do is take the difference between the new payments and the old, put it into a savings account each month, and when the savings account exceeds the balance of the loan pay it off.
"Very good Ben, in a more simplistic form:  If debt was about math only, we would not have payday lenders, 21% + credit cards, or sub-prime car loans.  Yet these things are prevalent. Debt reduction is often about behavior modification.  As such small wins are necessary to keep going much like a 12 step program; or, gamification as Ben pointed out.   The funny thing is that if a person becomes and stays intense on a debt reduction program, interest rate ""inefficiency"" is dwarfed by extra income or increased austerity."
Yes, I think this is the general idea. We're going through a deleveraging. On the one hand, this isn't entirely a bad thing because the financial crisis showed some people were lending irresponsibly. A lot of bad loans were made and bad loans that don't get repaid cause a lot of havoc.  One the down side, like the original poster said this makes it seem like money is drying up. This has been a bigger problem in some places than other. A lot would argue, myself included, that the US has deleveraged relatively--and key word is relatively--smoothly. Other places, like Europe have not been so lucky.
"A car loan might be considered ""good"" debt, if the following circumstances apply: If, on the other hand, you only qualify for a subprime loan, or you're borrowing to buy a needlessly expensive car, that's probably not a good idea."
"Hence why keeping the capital gains tax rate down is not such a bad idea. Sure, it may benefit ""rich"" people, but it will also allow RESPONSIBLE low and middle class income families to reinvest their capital gains and accumulate more wealth."