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Manage credit
My dad taught me about handling money—what little I had. He always said: “If you want to buy something, save up your money and pay cash. Then you don’t owe anybody anything.”
It may be a Campbell thing, but we never leave a debt unpaid, and we always pay for work and things supplied.
As a farmer, Dad found out that he needed to buy a tractor. Even if you know nothing about farming, tractors are not something you can buy by reaching in your pocket and rolling out a big wad of cash.
When Dad went to the bank to get a loan for the tractor, he was turned down. Why? Because he had no credit history. Why? Because he always paid his debts, without ever borrowing from a bank.
He worked it out, but came back to me and said, “Do you have $500?” Yes. “Go to the bank and take a loan for $500, and then pay it off.” Apparently, having money does not really count, unless you have a ‘credit history’. This was a lesson well-learned.
FIGHTING THE BANK
When I left the Gazette and started my own printshop, I needed a press. I went to my bank, BMO at the time, to get a $5,000 loan. The guy I dealt with was a jerk, and I can prove it. First he said I needed my dad to co-sign the loan, (apparently Dad was now Golden!), but I said no. I was the business owner, and I stand on my own merrit. I pointed out that my wife had a steady job, while I was building a new business. I swear to you, this is what happened next. He said, “Wives have a habit of getting pregnant, so we can’t use her income.”
I blew up. I said, “My wife is not a hamster, she is my partner, and I am starting a business so we can build a family.”
I stormed out, and banged as many doors as I could on the way out. (I was a lot hotter then than now.) Surprisingly, I got a call back, and had been approved for a $10,000 loan!
So I called. “What the hell? You wouldn’t give me $5K because I couldn’t possibly pay it back, and now you want to give me $10,000?”
And he said, “Well, $5,000 is not worth processing the paperwork, but with $10,000, we’ll make sure you pay.”
So I was done with that bank. I don’t fault the bank, but I do fault banks who hire jerks. Have no idea where that jerk was posted to, but I hope he is now serving fries somewhere.
THE THING ABOUT CREDIT
If you get a credit card, you have passed a test: A test which says, “You are apparently human, and have a billing address.” The rest is up to them. I have a couple of cards, some of which have been compromised. In one case, a guy paid with my credit card for a $12 coffee at a Tim Hortons in North Bay. Fortunately, Visa determined I would not likely drive to a Tim Hortons in Northern Ontario to buy a coffee. I don’t even buy one in Picton, because the traffic lights are just a nightmare.
WHAT DOES CREDIT MEAN TO US?
OK, let’s go deep now. I pay my credit card bills every month. Not everyone does. I see “Pay minimum amount of $10.” This is a trap. Credit is easy money. Pay your 10 bucks and keep on spending, while hidden interest adds up. But this is a road to hell. An anecdote from my time teaching at Loyalist College: I was a member of both Unions, as a teacher and a tech, The teachers went on strike, though they were quite happy with what they had, but were told to support the ‘brotherhood’. One man stood up and cried. He had a wife and two kids, two cars, a cottage in the north, and a boat and a plane. He cried because he had spent money he never had, hoping for the pay increase he would receive in the next term, and several terms after that. He said he could not last a month on strike pay.
That was a lesson for me. Other people, who were not me counting pennies, spent money they did not have, but hoped to have. This is not the real world to me, but very real to others.
Spending money I don’t have is not in my genes. But I see how it happens. I have a number of credit cards for different purposes. I use my Mastercard to buy rum at the LCBO. This is my personal card, which does not run through the business, because if Revenue Canada found out how much rum I consume, they would not believe it was a business expense.
DOWN TO THE POINT
One more important thing. If you pay your bills on time, your credit company will offer you a HUGE increase in your card limit. I turn them down, because I don’t need $50,000 on my plastic card. I don’t walk onto a Ferrari lot and say, “I’m paying with Visa!” I’ve had my card compromised twice. I don’t need the Visa call that says: “Mr. Campbell, have you purchased a Ferrari recently?”
HANDLING CREDIT
Gather all the information you’ve just read, and consider this:
I was County Magazine. Wasn’t much then, but strong now. I now have borrowing power. Do I use it? Not unless I can back it up. I don’t spend more than I can cover.
And that brings us to Council. Lots of big money flying around there. Can we back it? If Guido and the boys with the black shirts and white ties come to collect, do they need to break all the councillors’ knees?
Point is, you can borrow money. Other point: Don’t borrow more than you can pay back. Or the money you pay back will go to the interest you owe on the money you borrow, without a penny going toward the actual debt. So you still owe.
Cross your heart and hope to die before you need to pay off your debt. Is that how Council runs things? Rack up a couple of million on our County Platinum card, and pass the payments to the next Council? If this were the case, I would buy a Ferrari and, upon my death, my kids would say, “What? Dad had a Ferrari? And we owe what?! And why? The speed limit is 40 to 80 kph in the County, and the odds of Dad picking up chicks—even with a Ferrari—are virtually nil!”
This is about everything I know about economics. Council scrapes around for money from Papa and Mama government, but ‘matching funds’ does not cut it, since we need to come up with the money to match. I don’t pretend to know the inner workings of the County’s money-handling. But I see lots of money going out, with no promise of money coming in.
If the County has a Platinum Visa card, I doubt they get a message: “Hi, this is Visa. We would like to increase your Visa limit from $5 million to $150 million. Click the box below to accept.”
Eventually someone pays. Maybe them. Maybe us. Maybe my grandchildren. But someone always pays. In short, for us humble citizens who run our borrowing power out of control, friendly advisors tell us to cut our credit cards in half and trash them. If you don’t know to use it, lose it.
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