Saturday, February 16, 2013, 10:54 PM
Posted by Administrator
For years, I have believed that the decision whether or not to file bankruptcy...for people with good credit but lots of debt....revolved around the price of their good credit. The price of good credit (for those who've got it) is easy to figure: monthly interest on debt X 12 months. For example, if you owe $20,000 in credit card debt and the average interest rate is 18% then you are paying $3,600 per year...$300 per month to keep your credit cards from going in the hole. This amount is exclusive of the amount you've got to send each month to pay down the debt. And paying down debt has become more important in the past year or two as how much you owe (relative to your credit limit) has become a more important part of your credit rating.

So, is it worth $300++ per month to keep good credit. Or, would you be better off spending $4,000 every year on a trip to Hawaii. Pay the money, keep your credit but forgo the trip. The Hawaii trip (for those who like far off middle-of-the-Pacific islands) is the cost of keeping good credit. Alternatively, (assuming you can) file bankruptcy, wreck your credit, but surf the giants. (Editor's Note: The blog does not suggest...regardless of your credit...that the only giants to be surfed are in Hawaii. The blog notes, for example, Mavericks...which is somewhere off the coast of Northern California, South of S.F.).

There are costs to everything good in life. Credit, cars, trucks, jewelry...even honesty. But, until today...when I sold my silver 2007 Vespa LX150 motor scooter to a kid from Venezuela, I had never quantified the cost of honesty. Here's what happened.

After the kid tried to beat me down on the price ("I've only got $2,400."), then took a $100 bill out of his wallet when I refused to back off $2,500... and after the paperwork was done, the kid started with the usual song and dance of buyers facing sales tax at the Tax Collector's Office when they go Monday morning to register their new/used car, truck, boat, scooter. "Just sign the title and leave it blank.", he said. "Make the mileage lower then it actually is." (I never understood the idea with this one). "I'll write in the amount I paid." I told him the tax people will check. "They don't check with scooters.", he said.

I sell things from time to time and I never understand why buyers want to involve me in their conspiracy to defraud the tax people but they always do. I handed him the title. I'd written in $2,500 for the price...which is what it was.

But, a few minutes later, when I handed him the key, I gave him $40. Why I felt obliged to give him money to make up for his unhappiness at having to pay the actual sales tax due, I do not know. But, on the other hand, at least I discovered the price of honesty.

It's forty bucks.
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