Credit Crunch

[Ron Musgraves]

No NO NO NO NO

Has your business been affected by the credit crunch?

Here's what's happened to us:

Shelly's Business-
Credit score Oct. 07 - 721
Main business credit card - $40k limit (paid off every month) DISCLAIMER for JIM GAMBLE - ----she uses this for short term LOANS for her customers - that's not her income!)
Other business credit cards - $8k (paid off every month)

My Business
Credit score Oct. 07 - 730
98k in equipment loans
$20k in business credit cards - (paid off every month)
$320k HELOC with about 100k available

NOW OCT 08
Nothing has changed. Only one small 8k loan added. Never a day late on any payments.
Credit scores - Shelly 620 , Me 660
Shelly's $40k card reduced by credit card company to $4k, useless - she just closed the account. Other credit cards unaffected
Mine - 320k HELOC reduced to the amount borrowed and closed- (230k or so)
Business cards reduced by credit card company (1) from $20k to 8k. (YESTERDAY I got a GE capital letter in the mail CLOSING an 8k card BECAUSE I HAVEN'T USED IT IN SIX MONTHS!!!, that was my high-interest emergency card!!)
Now it looks like (according to the credit report) we are maxxed out on all our credit and up to our necks in loans. BUT NOTHING CHANGED! Except the banks reduced our credit.
Now, for the past 5 months Shelly has taken out $40-60k signature 30 day loans from the bank for her customers. Two weeks ago the bank told us no more signature loans. WE PAID THEM ALL OFF EVERY TIME BEFORE THEY WERE DUE!!! Shelly had to change the way she does business and p**sed off a lot of her customers she has had for over 8 years!

1 out of 74 homes here is RIGHT NOW IN FORECLOSURE. Not just late, actually in FORECLOSURE. If we have an emergency we may join that club since we have very little buffer zone now.

Is anyone else going through this or is it limited to the Las Vegas area?

 

[KGILL]

We had two GE money accounts, one at the Landa dealer and one at the Honda dealership (that we used previously for generators) They were both paid off and hadn't carried a balance in about 10 months and they closed one and reduced one from 10k to 2k with no explanation except we hadn't carried a balance in over six months.

We're switching everything over to cash now. It's difficult, but business is picking up a LOT.

Earlier in the thread you said you could not survive without credit. Your latest post (although from 2009) says you are switching everything to cash. Is it because of increased business you are switching to cash, or a change in your thoughts/beliefs about cash vs credit?

Are you still operating on cash basis in 2012?

I want to grow my business cash only. No financing equipment, no loans or credit cards at all. As it is, I owe nobody anything for my equipment so if business slows to a crawl I will not have to worry about someone dinging my credit or taking equipment back. I am pretty firm in my belief, but sometimes it is hard when I see I can get bigger and better equipment for what amounts to a driveway cleaning a month. I listen to Dave Ramsey and everytime I think about saying screw it and financing better equipment I think about all the people I have heard on his show with good intentions who end up getting dinged up pretty bad due to emergency expenses, or work slowing, etc....

If you do not want to answer I understand as it is personal but I am really interested in hearing your thoughts and experiences going from credit to cash.

 

[Tony Shelton]

No NO NO NO NO

We made it through this Ron. Throughout this entire ordeal of a near complete collapse of the Las Vegas economy if the banks had just worked with us we would have eventually come through the entire ordeal unscathed.

But since they wouldn't work with us they are now going to reap the benefits of losing a customer who used to pay them thousands per month in interest.

We have refinanced our home at 2% with a permanent 3% cap. Our end payment, including the second mortgage went from $4551 to $1560 per month. We had to sell the boat, BMW, camper, motorcycles, and some other junk we accumulated to get there, but we are down to less than $30k in debt, excluding the house and that will be paid off in the next six months if not sooner.

We own all our trucks and equipment outright and have around half a million in filter inventory that is debt free.

Thank you, Ron, for all your advice throughout this. Thanks to you, not only have I learned and benefited, but Chris and Jill have no debt, own all their vehicles and trailers and will be buying their own home in May, possibly a cash deal.

I know there are situations like a sudden huge deal, like Scott has, that require debt. But even at the million level, Scott has most of it paid off in one year. But it's time to understand these snake bankers for what they are and escape the stranglehold they have on us.

No, I don't have a boat or camper sitting in the yard anymore, but we have traveled to 28 states in the last 18 months. No I don't have a boat anymore but we have been everywhere from Florida to Texas, to New York tithe San Francisco Bay on the water in the past 18 months. I don't have a plane anymore, but have flown over city skylines with my family. No more motorcycles, but have ridden dunes on the Oregon coast and Pismo beach with the family this year. All while incurring zero debt and zero amounts of junk to clog up the yard and suck resources. And the bankers didn't get a dime of cut out of any of it

Thanks for the advice Ron. You have made our lives much richer.

Sent from my DROID RAZR using Tapatalk 2

 

[Scott Stone]

Our business is operated on mostly a cash basis. You can ask any of my vendors, I pay them immediately by Credit Card, and the bill is paid off the first of the month. The only thing that we have financed recently was our recent explosive growth. I am pretty sure that there are not too many contractors that can bankroll 16 new trucks and 30 new employees all at once for three months before the first check comes in. Fortunately, we have paid down all of the operating loans to a zero balance.
I think that anyone that can bankroll a cash operation is running their business in a prudent manner. You can't say that is the only way you are going to operate, because you just might get an opportunity to take your business over the top and experience explosive growth. Because of that, it is always advisable to make the effort to have some sort of credit line that you can raw on, and a credit rating that allows you to get capital when you need it, because of a sudden opportunity.

 

[KGILL]

We made it through this Ron. Throughout this entire ordeal of a near complete collapse of the Las Vegas economy if the banks had just worked with us we would have eventually come through the entire ordeal unscathed.

But since they wouldn't work with us they are now going to reap the benefits of losing a customer who used to pay them thousands per month in interest.

We have refinanced our home at 2% with a permanent 3% cap. Our end payment, including the second mortgage went from $4551 to $1560 per month. We had to sell the boat, BMW, camper, motorcycles, and some other junk we accumulated to get there, but we are down to less than $30k in debt, excluding the house and that will be paid off in the next six months if not sooner.

We own all our trucks and equipment outright and have around half a million in filter inventory that is debt free.

Thank you, Ron, for all your advice throughout this. Thanks to you, not only have I learned and benefited, but Chris and Jill have no debt, own all their vehicles and trailers and will be buying their own home in May, possibly a cash deal.

I know there are situations like a sudden huge deal, like Scott has, that require debt. But even at the million level, Scott has most of it paid off in one year. But it's time to understand these snake bankers for what they are and escape the stranglehold they have on us.

No, I don't have a boat or camper sitting in the yard anymore, but we have traveled to 28 states in the last 18 months. No I don't have a boat anymore but we have been everywhere from Florida to Texas, to New York tithe San Francisco Bay on the water in the past 18 months. I don't have a plane anymore, but have flown over city skylines with my family. No more motorcycles, but have ridden dunes on the Oregon coast and Pismo beach with the family this year. All while incurring zero debt and zero amounts of junk to clog up the yard and suck resources. And the bankers didn't get a dime of cut out of any of it

Thanks for the advice Ron. You have made our lives much richer.

Sent from my DROID RAZR using Tapatalk 2

That is awesome. Congrats.