Friday, December 15, 2017

Them that's got, shall get (God bless the child that's got his own)


Them that's got, shall get
Them that's not, shall lose
So the Bible said, and it still is news
Mama may have, and papa may have
God bless' the child,
That's got his own
That's got his own
Yes the strong seem to get more
While the weak ones fade
Empty pockets don't
Ever make the grade
As mama may have
And papa may have
God bless' the child
That's got his own
That's got his own.
Billie Holiday said it best - them that's got, shall get.   In the mail today a letter from Capital One.  I have a credit card with them - actually two, one for Mark and one for myself.  It has a low interest rate of 8.15% and no "perks" other than if you travel overseas (or even to Canada) they don't charge a currency conversion fee, unlike Bank of America.
But the pitch today was for a "Money Market 360" account with a paltry 1.3% interest rate (annual yield).  Not very exciting, but if you deposit $10,000 by the end of the year, they will give you a $200 bonus, after 60 days.  No need to maintain a balance after that.   $200 for parking $10,000 for 60 days - that works out to an annualized rate of 12%.  Of course, you can only sign up once for this deal - but hey, I don't plan on using that money for 60 days, so sure, give me $200.  The money was sitting in a non-interest-bearing account anyway.
This is not a bad deal, provided you have $10,000 laying around.   I have $10,000 laying around, now that I am off the money train.
These types of deals are nice and all.  It is like when Merrill Edge offered $600 if I moved some IRA accounts to their platform.   This didn't cost me anything, and in fact, saved me money, as I was paying $9.99 a trade with eTrade at the time - and Merrill has free trades.
If you have money, you can make money.   If you don't have money (which means you need a deal like this more than I do!) then go fuck yourself.  Not only will you not get cash bonuses and preferred interest rates and so forth and so on, odds are you will be socked with banking fees, late fees, bounced check fees, and so forth.
The snowball effect works in both directions.   Once you start saving up money and "own money" and acquire wealth, the best deals in the world are offered to you.   Once you start circling the drain, however, they accelerate the process of your demise in every way imaginable.
And I've been on both ends of this deal, and can tell you it is better to be on the upside.   Once you start missing payments, your credit is shot and you get the worst offers and highest interest rates.   Late fees accumulate, bounced check fees occur.  If you are late on your taxes (payroll, personal, property, whatever) penalties and interest accrue.  If you have a commercial loan, your banker may call it and run you out of business.  Circling the drain sucks.
And for some folks, it is not a matter of choice.  According to a recent CBS article, 1/3 of Americans are delinquent on their debts, and 1/5 have medical debt in collections.  Now in many cases, these folks are not "at fault" for their situation.   In other cases, well, they decided buying a new motorcycle was a better bet than buying health insurance.   Hard to feel sorry for that group - particularly when the rest of us end up paying their medical bills.

But in other situations - such as mine, and maybe yours - my debts were not a result of some unforeseen circumstance or string of bad "luck" but rather just the plain old boring spending more than I made.  I bought a lot of "stuff" that I thought I could afford, and over time, my income went down (thanks to the recession and a general decline in the business).  But the debt load remained the same.

And that is the problem with debt - and something I wish someone explained to me when I was younger.   When you sign papers obligating yourself to a string of debt payments for 5, 10, 20, 30 years or a lifetime, you create this constant drag on your finances that simply will not go away until paid off or you declare bankruptcy.   In the case of student loan debt, even bankruptcy isn't always an option.

It is sad that the system works this way.   If you think about it, in a just world, it would work the other way - the rich would pay the highest rates and the highest fees, while the poor would be offered all sorts of decent bargains.   But alas, the world isn't that way, and probably for very good reasons - we want to encourage thrift and savings and discourage poor financial practices.

But "fair" or not, it is how the world works.   You can rail against it, or work with it.   I found the latter to be far more profitable in the long run.

UPDATE:  I told Mark about this offer, and his reaction was, "Cool, can I do one, too?"  Smart man!

UPDATE:  January 4, 2018.   I log into the Capital one accounts and find that the $200 bonus has already been credited and that there is $4.50 in interest credited, just for the few days in December.   This is a far cry from the pennies that Bank of America gives in its savings account - for the same amount of money!

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