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Author Topic: Lochness Socialism?  (Read 9774 times)

Offline undo11

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Re: Lochness Socialism?
« Reply #75 on: October 19, 2014, 04:47:32 am »
Another use of Other Peoples' Money....

Now THIS one is actually really cool  and can help people get out of the hole and rebuild good credit.

It requires TWO things to work

1) A small steady income

2) A strong will!   8)

If you do not have #2 you can use a friend or relative to be your will


I am going to use 10 for the demo, because it is easy to work with and easier to track for the beginner

Sure this will NOT work if you do not have #1  It's not a magic cure  :P  But for those who can meet condition #1 and # 2 this CAN make a huge difference

It works like this...

You need $500.00   You need to be able to put aside about $120 a month. You will NOT lose this money, you only need to be able to put it aside for about 12 months

Step One:  Get a credit card!!!   8)

Okay not just ANY credit card... You need to find one that has NO ANNUAL FEE... there are hundreds available

When you get this credit card... you will GIVE THEM the $500.00 to hold as a secured payment on that card.  They will then issue you a card that has a $500.00 credit limit (many will issue you one that has a $750 limit but if your credit is in the toilet expect only the $500.00)

There will be NO approvals, qualifications, checks etc needed because your card is a SECURED card. It is secured by your own cash

Step 2:   

Take that credit card to a bank machine and withdraw a cash advance of $500.00  (You may need to add a few bucks here depending on the transaction fees etc but that is only a few dollars)

So at this point you have

1) One secured credit card with a $500 limit
2) One bank account with $500 cash in it (but you cannot withdraw that yet)
3) $500 cash from the ATM

Effectively you have 1500.00 (1000.00 of which is other peoples money)

Step 3:

Go get a second secured credit card, then repeat Step 2

At this point you now have..

1) TWO secured credit cards with a limit of $500 each ($1000)
2) TWO bank accounts each with $500 ($1000) (you CANNOT withdraw this yet)
3) $500 cash from the 2nd ATM

At this point your initial $500 (give or take a few bucks for fees) has become $2500 of CREDIT VALUE

At this point it has not cost you any interest and you still have your initial $500 in your pocket

At this point if you did nothing, you would lose NOTHING.

Do this until you have TEN secured cards.

Then take those 10 cards and either lock them in a safe, cut them up or give them to a friend to hold on to for you. (this is the 'strong will' part


Now at the end of the month you will get 10 bills for the minimum payment on each card... This is were the small income comes in.  You MUST pay that minimum amount (it will usually be $5-15 depending on the terms of the card. You can shop around for the best cards if you want)

So what is the purpose of this? What is the benefit?

Well EFFECTIVELY it is a forced saving plan :D AND it INSTANTLY fixes your credit score because IF you make those small minimum payments on time you will have 10 secured cards showing A+ credit reports. Trust me your score will LEAP up as soon as you make that 1st payment

At the end of 12 months of making those small payments something magic happens.You will find that the banks will now consider you a non risk and no longer require the cards to be secured. They will also automatically DOUBLE the credit limit

So at the end of 12 months you will have;

1) 10 credit cards with a limit of $1000 each ($10,000)
2) 10 bank accounts with $500 each ($5,000)
3) A very good credit rating with 20 accounts in good standing

Yes you can now withdraw that money, after all it is YOURS because you paid off the card debt to YOU.

 8)


Now I learned this from a real estate broker...  he took this method to a higher level

What he did is he had 200 of these cards. He would find a property that was cheap... make an offer on it with a deposit (this gives you 90 days to come up with financing. If you don't come up with financing the offer comes off but you lose $1000)

So he would find the right property, use the ATM to withdraw the down payment from his shoebox full of cards... and make the deal

He would then find a buyer (usually he had some waiting)

So before he had to make the first payment on those cards he would have already sold it to another buyer.

He was never greedy but would flip them for 10-30K profit, pay off those cards and be all set to do it again

THAT is using Other People's Money.

It is LEGAL. Everyone wins and THAT is how the rich get richer  :P

so something like this could be used to help thor save his house? but who can buy it, if no one knows who has the title?  would suck to buy a house and then be told you had no legal right to own it because the title didn't belong to the seller 
« Last Edit: October 19, 2014, 04:51:47 am by undo11 »
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Offline zorgon

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Re: Lochness Socialism?
« Reply #76 on: October 19, 2014, 11:23:57 am »
so something like this could be used to help thor save his house?

In theory yes... but it may be too late now  His battle has been going on for a long time. I did point this out to him some time ago

Quote
but who can buy it, if no one knows who has the title?  would suck to buy a house and then be told you had no legal right to own it because the title didn't belong to the seller

THAT is a problem. If you cannot establish clear title, I have no idea what can be done


My friend across the street fell off a ladder (he is(was) a sign installer) This put him in the hospital for 6 months and his legs are still not up to snuff.

Well that started a cascade of events...

First he had no income so house payments were not being made. Then his lady left him because there was no more money.  On top of that his boss, already considering retiring, used this as an excuse to close the business and he moved to Arizona

Now just before the accident, my friend had taken out a loan against the equity to buy a new truck.  At the time property values were high...   but shortly after the economy crashed and house values dropped drastically...

Now he too made a deal with the banks trying to keep the house...  but they sold it out from under him while saying they were still working it out. The first he knew it was sold was when the new owner came to look at it expecting it to be empty

He fought it and got some extra time to move out... but in the end he did have to leave or lose all his stuff. Fortunately the new owner did not want any trouble so it worked out okay.

Thing was that by this time he had not made ANY payments for 18 months.

Well  I got him into the Teamster convention business. Took a bit of doing because hiring was slow at that time...  (he basically replaced me as I was leaving due to my legs)

I talked with him for a long time on this. It is not easy to convince someone that they are better off leaving the house and starting over.

But in this case the NUMBERS won out

He basically owed 185 K on the house. He had taken out a loan of 45 K to pay for the truck.   At the time of the take over the property was values at only 85 K

So to make up 18 months of payments and try to save an over inflated property when you are just getting back on your feet made no sense. Since he was now single anyway it would be better to 'cut and run'


So after several weeks of discussion, he realized that if he let the bank take it, THEY would lose the 100K value anyway and HE would be clear of all responsibility and debt... a true fresh start

So in the end he did walk away.

He found a new place that was being rented by an old couple.  It was a large property with a huge truck garage. They told him he could rent to buy...

So end result... He walked away from all that debt,  he walked away from a property he owed twice what it was worth AND he had a brand new truck paid for in cash (effectively the bank bought it for him :P )

Since he now was starting that new Teamster job ($22.00 an hour to start)  had a new place to stay that he could purchase over time, and had a paid for truck... he now had an instant new start

Sometimes walking away iand finding a new place is the best solution

Twice before in my life I have walked away from a property because the property devalued. Most people expect property to INCREASE in value but that doesn't always happen

The first one was in Winnepeg.... I then moved back to Toronto.  The second one was in Oshawa ( just outside Toronto)  The GM plant closed doors and that killed the town... We were hoping to sell and have the money to move to the US but we ended up having to walk because the property value dropped from 140 K to 50K over night...

We did move to the US but it took all our savings and we had to rent an apartment in a low rent district till we got a new start


This house we currently own.... we paid 142 K in 2000.  We had moved to the US in 1993   It took that long to recover enough to get a down payment and clear bad debt.

When the boom hit the value went to 325 K  I probably should have sold but you still need a place to live so nothing gained

Then the crash came. Our house, like my friend's, dropped in value to 85K as well (maybe a little more as we have a corner lot) but we still owed 135K on it at the time)

Now today finally the pendulum is swinging back... Got a real estate broker saying he has  buyers that are looking and we could get 185 K again and we only owe 111K now.  I am hoping this stays stable for a while. I don't want to have to walk a third time  I am too old to start over  :P

Offline zorgon

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Re: Lochness Socialism?
« Reply #77 on: October 19, 2014, 11:37:04 am »
A word on refinancing....


We get a lot of offers to refinance at a lower rate. We are told that thanks to Obama there is NO FEE for refinancing.

Now we are currently at 6.9% interest.  They are offering 3.5% but it usually will end up at 4.5%ish anyway.

What they DON'T TELL YOU is that if you refinance you are going to start all over again paying mostly interest.

In my case we are almost at 15 years of a 30 year mortgage... so at this point 50% of the monthly payment is going to the principal and we can see a  significant monthly drop in what we owe

Now when they offer refinancing they say our monthly payments will drop  (1,000 now will drop to $5-600)   Well of course it will drop  because you are spreading it out over another extra 15 years and those fees they are not charging? Well you will be paying mostly interest again and your principal will not drop

They also recommend you drop the FHA coverage to drop your monthly rate...

Well no thanks.  At this time I will continue with the FHA coverage as it does protect you and you do bank a large amount of it.

IF you are in danger of loosing your home  and a 50% reduction in monthly expense will make the difference of you keeping or losing your home  then YES by all means refinance.  You need a place to live after all and longer payments are no different from paying rent  at least you can stay put. But if you can continue the same payment  then do not refinance... you will lose a lot in new interest.

When I reach 65 and collect social security that will be the time I drop the FHA and cash in on that  FHA bank and apply it to the house.  Because at that point the SS will be enough to cover the mortgage and dropping the FHA will drop it to about 800.00

But that is 3 years away and things are tight right now. May have to rent out a room again for awhile   8)

Offline undo11

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Re: Lochness Socialism?
« Reply #78 on: October 19, 2014, 01:15:53 pm »
well they are saying the housing market grinded to a halt when the 50 states and their attorney generals were expecting the banks to come up with titles for the houses they were foreclosing on, and they couldn't, because they had already sold them (several times over) to mortgage backed securities, in big bundles, for investors on wall street. 

so dunno if buyers should be buying houses right now as they might be forced to come up with title, themselves, and won't be able to because the title is lost in some globalist labyrinth
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