THE COST OF GOOD CREDIT .........by Bob Smith 
Saturday, June 5, 2010, 12:54 AM
Posted by Administrator
This morning, I hiked up North a few miles from my cabin to the exact spot where Wyoming meets up with the Southern edge of Alberta, Canada. Marking this part of the border is a small stream and, a few hunred yards upstream, a family of beavers was building a dam. As I watched their damming, I thought to myself "Just what IS the cost of good credit?"

This is what I came up with........

AMOUNT OWED ON CREDIT CARDS AND PERSONAL LOANS AND THINGS LIKE THAT MULTIPLIED TIMES THE WEIGHTED AVERAGE OF THE INTEREST RATES YOU ARE PAYING = THE COST OF GOOD CREDIT.

Paying ...on time, every time...keeps your credit good. Paying late or not at all craps up your credit. Certainly, if you can make your payments with reasonable ease, you should.

But, if you can't........... Well, here is an example:

You owe $20,000 in credit cards and, on average, you pay 15% interest. The yearly cost of good credit is $20,000 X 15%=$3,000. That is about $250 per month. $250 per month could buy you a few nice meals at a good restaurant; a $500 airplane ride to San Francisco (6 times a year); $250 worth of clothes and toys for the kids every month; two gigantic TVs.

Good credit is a great thing to have (okay, I'm getting carried away...good credit is a good thing to have----your own jet plane; a beach house in Hawaii; a starring role in a hit TV show---these are things that would be GREAT to have).

Frequently, the only bad thing about filing bankruptcy is that it is bad for your credit for a few years (not 10 years----a bankruptcy can be reported for 10 years but, typically, if you have decent income you will get credit in a few years or sooner).

I am not saying that you should file bankruptcy (heck, I don't even know who you are) or that you even could file bankruptcy. (Maybe you should just not pay and try to make a deal with your creditors a few months..or years from now. I don't know.) Really, THIS IS THE INTERNET...DON'T BELIEVE ANYTHING YOU READ HERE OR ANYWHERE ELSE ON THE INTERNET.

On the other hand, if you are having trouble making payments...your kids come first...or your wife...or your mother. Credit card companies come last. They will survive without you.

So, if you can't sleep at night, see a lawyer.

Or see 5 lawyers and take a weighted average of what they all say. (Note: I am kidding about this. Note: I am serious about a starring role in a hit TV show being a great thing to have---call me if you can help.)

I'm hiking back now to watch the beavers.

Editor's Note: Bob Smith is a retired South Florida lawyer who writes for the blog from his cabin in Northern Wyoming. Bob can be reached at bobsmithlegalbagel@hotmail.com.

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