[fathyb]

> The loan industry really enables a life of debt.

It really does, and I've seen so many people fall into it, especially at the beginning of their career. Financial responsibility should be something taught early on at schools. With cryptos today, maybe even with the risks behind investing.

That said, I'm glad I live in the majority of countries where someone more privileged than me cannot judge my financial decisions to give me access to housing. I consider myself financially responsible, and credit scores aren't a thing here anyway, but I find it very disturbing.

[josephcsible]

What happens in your country if you move into a house and then just stop paying?

[into_infinity]

It is pretty unusual in most parts of the world for landlords to get access to one's credit records. Credit reporting is a pretty US-specific phenomenon, even if you're applying for a bank loan or a credit card.

You usually present proof of earnings and possibly references from previous landlords. And if you get unlucky - well, same as in the US, in many of the nicest markets, you're facing an uphill battle to evict people.

[oezi]

I guess it depends per country. In Germany it has become common that the landlord will require a credit score (called Schufa) plus the things you mentioned (3 months of pay slips, references of balances paid from past landlord).

Strong data protection rules have made it that there is now a credit score report which is only giving you a pass/fail so that landlords don't know too many details.

[wink]

AFAICT Schufa is not like a US credit score. It's just OK/NOT OK, or a list of "infractions".

Which means if you always paid your stuff on time, a virtual +1 is the same as a +1000, and the visible result will just be "OK" and after a while the entries will age out if it was a "NOT OK"

[dazc]

In the UK you invariably rent through an agent who has access to credit reporting, the cost of which is passed on to both you and the landlord. If you're self employed or a company director then there are a few other things you have to pay for, £45 to look at your balance sheet, for example, which is freely available to anyone else.

I know a few landlords and despite the efforts they take to find the perfect tenant, they all have tales to tell of people who passed all the tests with flying colours but soon turned out to be a costly disaster.

[EVa5I7bHFq9mnYK]

US has very strict non-discrimination laws in housing. Requesting credit reports is a way to circumvent those laws.

[sadpasture]

Standard practice in Germany, although the credit system here is a bit better than the US since it works by "demerits" rather than "building credit". Meaning you start out high, and only lose credit if you fail to make payments on a loan.

Also I think landlords can only see a high level summary and final score, not the details of your financial situation.

[pcthrowaway]

Completely normal in Canada also

[tpxl]

One of three things happens in my country:

* A mafioso comes for a chat with the tenant and they move out. This rarely happens.

* The case is presented to court and they'll evict the tenant in about 2 months. This usually happens.

* The tenant has small children and is poor. The owner is fucked as the court won't do anything - the tenants children have a basic human right to a roof over their head. This also rarely happens, but when it does, the damages are huge. My great aunt lost 1-2 years of rent and about 10k in damages due to neglect this way.

Because of this, there are interviews for tenants. Mostly just a chat, but rarely you need to prove you're employed and provide bank statements.

[walkhour]

What happens in most cases is that rents go up, because landlords have to factor in this uncertainty. And the debt of the non paying tenants is collectivized.

[yakak]

Rental prices are based on the rental market price and then affect house prices. A landlord deciding they aren't going to make enough for their risk at the market rate and selling doesn't change much as whoever buys either stops renting or is going to rent it out.

[FrontierPsych]

>Financial responsibility should be something taught early on at schools.

100% guarantee that this does not matter one iota.

I've tried and tried to help so many people with their financial picture. You would have more luck talking to a brick wall.

People don't care. They just simply do not care.

This is because most people - maybe 95% - are ruled by their emotions rather than rationality. Or to put it more precisely, people make decisions based on emotions and then use their rational mind after they make their decision to rationalize their purchase.

Also, becoming financially responsible is just about the simplest thing to do, at least at the beginning stages. All it requires is addition and subtraction, mostly, which we learn in second grade or whenever it is. Second grade.

I remember opening my first savings and checking account when I was 15 years old (when you could do it yourself without parent's permission). The person who helped my took about 10 minutes to help me understand, that's all you need.

The internet is inundated with videos and classes on basic financial knowledge. I'm sure that I could go to Udemy and find 500 courses on basic financial training and pay $15 for it....hmmm, let me go check right now...ok, typed "personal finance" in the search and it came back with "6,496 results for “personal finance”"

People don't take those classes because they don't want to take them. Probably personal finance is one of the topics that is #1 for total courses available.

Honestly, personal finance is so easy. It is just about the easiest thing to do. Sure if you get into complicated stuff, if you have $200 million in the bank/assets/whatever, maybe it is hard. But for the general person, no, it is simple. And the part that someone doesn't get, there are a ton of videos and articles on that, too.

I have gotten exceptionally angry at some people because they were so broke and asked me for help. There I was, spending countless hours with them, doing what you said and educating them, and they go out and blow a HUGE chunk of their feeble savings on the stupidest shit. I got angry because I knew these people and got emotionally invested in helping them (I don't regret getting emotionally invested).

I don't help people anymore. It's an exercise in frustration and futility. People simply do notwant to be financially responsible...well, maybe in the 20/80 law, 20% are financially responsible. The other 80%...don't waste time on them.

Kind of a rant, but it still burns deep in my soul, because the people I tried to help are good people.

You can lead a horse to water, but you can't make it drink. Pearls before swine.

[jjav]

> All it requires is addition and subtraction, mostly, which we learn in second grade or whenever it is.

To be fair that's not quite true. For example credit cards go out of the way to make their interest and penalties algorithm obscure in order to try to lock people into paying interest forever.

[FrontierPsych]

I understand what you're saying. However, I pretty much learned all there was to learn about them in 15 minutes when I got my first one. I read about them. I'm not the smartest person in the world, by far. If I can easily learn now, then anyone can learn this stuff on their own, in 15 minutes. It is NOT complicated.

Getting information is exceptionally easy, and a LOT easier than when I got my first one. I knew from when I got my first credit card that I had to pay off the balance in full, every month. That using a credit card should be the exact same as using cash. You never buy anything unless you actually have the cash first. Then you can use the credit card and pay it off at the end of the month. It's so easy to understand. It doesn't matter about credit cards companies and their obfuscation. I didn't learn it from credit card companies. I just learned it because it was easy to learn. How difficult is it? Don't use a credit care unless you have the cash first. You pay it off in full and you don't pay interest, whatever level it is - .01% or 40% - it does not matter what the interest rates are, unless you don't pay on time.

And the problem is that people don't care. They think emotionally, and don't give a crap about future ramifications.

This is my favorite video that explains it all: https://www.youtube.com/watch?v=R3ZJKN_5M44

[jjav]

> It's so easy to understand.

But difficult to find. Do you know how to get out of paying interest on credit cards if you happen to be late for a payment once? Unless you've researched it, probably not. And it's unintuitive to have to research it because you'd think the answer is obvious (just pay it off) but it's not. Credit card companies count on people not noticing and then keep paying interest forever.

I know plenty smart people who just pay their credit card bill on autopay and don't examine every line item of the monthly statement. That seems crazy to me but it happens.

[RyanHamilton]

I would suggest it's not the ease of access to data nor the ability to understand it. It's the constant bombardment of advertising.

42% of Americanas are overweight, do you think it's because we don't have the data or it's not available? No, it's that within this capitilistic society its more profitable for companies to sell sugar with a high markup and copyright protection, than a piece of fruit. If a banana was the most profitable food item to sell, there would be less obesity. At what % obesity or taking out loans or addiction do we shift from blaming individuals to blaming the scenario and the players creating that scenario often for profit?

[gloryjulio]

If u treat ur credit card just like debit card u will never need to be end up in the situation in the first place. Don't spend what u didn't earn. And I use autopsy when I got my first credit card when I was still in school by just asking the bank for this service from instinct. I got plenty of discount and never needed paid interest once.

If u didn't earn it, it's not ur money. Don't spend what's not urs. I don't think that's hard to understand

[boppo1]

What about just paying the balance every month? 'Don't spend money that isn't in your pocket' seems pretty simple.

[P5fRxh5kUvp2th]

Then just use cash.

[FrontierPsych]

That is perfectly acceptable and the way to go.

There are reasons to use a credit card - you get purchase protection, for one. You also can build up credit if you want to buy a house. You need one to rent a car.

But really, while there might be other reasons, the only reason to get a good credit rating is to be able to buy a house. Everything else can be paid for in cash (check, online payment from your checking account, etc)

When you use a credit card, you should treat it exactly like cash. You should have cash in the bank before you purchase anything with a credit card, and then pay the entire credit card balance each and every month.

If someone has a problem with this and just can't do it, then they should not get a credit card at all. Credit cards are very dangerous technology if one can't control it. Just like fire - if you are not careful with it, you can set your house on fire.

[P5fRxh5kUvp2th]

Lets be clear here, by credit card I meant an actual credit card, not a debit card backed by a bank account, that is effectively cash.

You can do everything you listed without an actual CC, including rent a vehicle (I know, because I do it).

https://www.fool.com/the-ascent/mortgages/how-to-buy-house-n...

And that's kind of the silliness of credit score, you can game it by never actually using credit.

[candiodari]

It's only that simple before you actually own any resources. Even just having a tenant will make things more complicated than that.

[djbebs]

You don't need to use credit cards.

[glandium]

I don't know how it is in the US, but in Japan, it's bonkers to the point that you can regularly hear/see ads on radio/TV for multiple lawyer offices that will help you recover money credit card companies have extorted you over the years.

[wizofaus]

"This is because most people - maybe 95% - are ruled by their emotions rather than rationality. Or to put it more precisely, people make decisions based on emotions and then use their rational mind after they make their decision to rationalize their purchase"

I thought there was pretty solid evidence it was 100% of us who acted like this. Just that for some our "emotional" decisions (or at least, our subconscious decision making processes) are better informed.

FWIW, I'm pretty sure one's financial sense is more guided by upbringing than genetics - though supposedly there's a lack of strong evidence that, for instance, whether you give your kids pocket money and encourage them to manage their own finances makes all that much difference, which always surprised me (and I did it anyway - kid's now got his own job and seems to manage money pretty well so far).

[deterministic]

I couldn’t agree more. And you are right that it has nothing to do with peoples intelligence or education.

I also have given up helping people. It is a waste of time. Most people simply don’t think further ahead than today or tomorrow. And then they turn around and blame their financial difficulties on the system, politicians, greedy rich people, immigrants, white people etc. Anybody but themselves. consistently refusing to take responsibility for their own actions.

[FrontierPsych]

>And then they turn around and blame their financial difficulties on the system, politicians, greedy rich people, immigrants, white people etc. Anybody but themselves. consistently refusing to take responsibility for their own actions.

I didn't write this, but could have. 100% agree with what you are saying. The whole thing about "my school didn't teach it, that's why" just makes me so mad. It's just simply not that difficult.

[EVa5I7bHFq9mnYK]

You don't know all their circumstances. Maybe they have a rich dad who will die soon and cover all their debts.

[FrontierPsych]

I'm not covering all the exceptions, because exceptions = exceptions.

But even for wealthy people, stupid financial decisions will sink their ship. Mike Tyson won $300 million (a third of a billion dollars) and blew it all. Johnny Depp made $500 million (half a billion) and almost went broke with profligate spending and poor financial decisions.

There's a well-known saying - Poor to rich to poor in 3 generations. This means someone comes to America without a penny and they put their kid through school and that child makes hundreds of millions, but that child's child grows up with no respect for money and is fritters it away, and they end up poor.

This is why people who win the lottery or pro athletes go broke after 3 years of winning the lottery or out of the sport - they blow money.

Saying something like "Maybe they have a rich dad who will die soon and cover all their debts" shows a complete and total lack of respect for money. Anyone who thinks this way has a great chance of blowing all the money, unless they change their thinking. Why would making crappy financial decisions just because you have a rich dad make any sort of logic at all? It makes no sense. Why would one make poor financial decisions, just because they are going to come into some money? All it means is that this same person is going to continue to make poor decisions when their rich dad dies, run out of money and then complain about it when they are broke. Happens all the time.

[EVa5I7bHFq9mnYK]

Inheritance is not an exception. Quick Bing search shows that "68% of millennials expect an inheritance". So that might be the reason behind their behavior that you are not aware of.

[koliber]

Your comment blew my mind, and I just realized something. Thank you.

If 68% of the millennials expect an inheritance, how much do they expect to get? Are they making their financial decision based on getting mom and dad's house? Have they considered that this house might be used to pay for mom's and dad's care in their last years? Did they think about the fact that they might get the money only once they at 40 or 50 year's old? What if they end up with $2300 and a dinnerware set after a lifetime of poor financial decisions--I imagine most inheritances are not 7 figure affairs.

I'm worried if this is truly the case.

[EVa5I7bHFq9mnYK]

Don't think anyone really makes cold calculations decades ahead, it's just some warm fuzzy feeling in the back of their minds that mommy and daddy will eventually straight the things up, as they always did)

[FrontierPsych]

It's like...you read my first sentence and didn't read anything after that. Good job, well done.