"If I were assured of your eventual destruction I would, in the interests of the public, cheerfully accept my own."

So said Sherlock Holmes to his nemesis Moriarty in "The Final Problem." Fortunately, destroying our Moriarty did not require anybody's destruction. It did require us to finally receive some money we have been waiting for. Using some of that money to work on getting debt free was a priority.

In fact, Moriarty is more than dead. It was overpaid by $15 due to a miscommunication with the company. And here is the evidence of his demise from my bank's website.



Goodbye, Moriarty! We won't miss you!

Here's what you could do with $700,000,000,000 (from jbreazeale, from dihard):

• Give every person in the US $2,300 or give every household $6,200. (Think about it another way: this will cost each person in the US $2,300.)
  
• Pay the income taxes of every American who makes $500,000 or less a year.
• Fully fund the Defense, Treasure, Education, State Veterans Affairs and Interior departments next year, as well as NASA.
• Buy gasoline for every car in the US for 16 months.
• Buy every NFL, NBA, and MLB team and build each one a new stadium - and pay your players $191 million each for a year
• Create the 17th largest economy in the world - roughly equal to that of the Netherlands.
• Or you could pay off just 7% of the $9.8 trillion national debt

But to hear about half of Washington D.C. and most of the people I've heard on the radio talk, instead we MUST buy a bunch of bad debt with it RIGHT NOW OR THE SKY WILL FALL IN ON OUR HEADS!

I wonder what you think of Dave Ramsey's so-called "Common Sense Fix"? It certainly sounds like a better idea than what was defeated in the House yesterday.

The Road to Black won a silver medal at this week's Carnival of Debt Reduction! Check out the carnival to view other great posts on reducing your debt.

Of our debt villains, Moriarty and Saruman are with the same bank. I called to try to see if I could combine them and lower our interest rate or our total monthly payment (so we can focus on another debt, probably Vader, with intensity). No dice.

Opening a credit card is something I am philosophically opposed to, even one with 0% interest or a bonus for balance transfers. However, in this situation I am tempted. I would not be using it to make any purchases, and I would actually be reducing our credit card count to one (though the total amount owed would stay the same). What would you do in this situation?

The August 2008 issue of Reader's Digest features an article called "7 Rip-Off Tip Offs." One of the rip-offs listed? Rent-to-own merchandise.

The advantage to rent-to-own merchandise

When you rent furniture or appliances, you can have the item immediately. You don't need to have the money available to purchase it outright — and you don't go into debt. You get instant gratification for a low price and no obligation.

The rent-to-own disadvantage

The savvy reader will notice the short length the paragraph above. I can only think of that one advantage: easy, instant gratification. And there is a very ugly disadvantage: You pay a very, very high price for the merchandise. Reader's Digest calculated the equivalent APR (annual percentage rate) of most rent-to-own items as between 75% and 350%. (And I thought 20% credit card rates were high!) At the end of that time, your very expensive sofa is out of style and your pricey flat-screen TV is obsolete. Since you were renting, you could have exchanged them periodically for newer models... but then you would have lost all the money you "invested."

It can make sense in certain situations to rent merchandise. That's just "rent," without the "...to own" part. Take a hint from the fact that Rent-A-Center and similar operations locate their retail outlets mainly in poorer neighborhoods.

Rip-off tip off words

Take a look again at the short "advantage" paragraph above. It contains red flag words: "no obligation" and "instant gratification." These terms are signals that the subject being discussed is a bad idea, financially speaking. Another red flag term, which certainly applies to rent-to-own schemes, is "no money down."

Don't borrow money to buy things for your house. But don't jump out of the debt frying pan and into the fire by renting to own!

Credit cards are ubiquitous in America. Buying things with other people's money is a societal norm, and achieving a high "credit score" literally requires one to have a lot of debt.

But it is my contention that credit cards should always be avoided. Here are a few reasons:

1. Universal default

With a few exceptions, the credit card contracts offered by banks have a provision called universal default. The bank monitors your credit history, and if you fail to pay (default) on any loan, your rate is raised to the default rate (the highest possible) — even if you never paid late on the credit card in question.

2. Increased spending

According to Dave Ramsey, when you make a purchase with a credit card, you spend 12-18% more than you would have if you had used cash. Swiping a credit card is painless; there is no sense of money actually leaving you. And with small purchases, there may be internal pressure to spend more "to make it worth it," since it seems silly to run a credit card for only a dollar or two. There is often external pressure as well: many businesses have a minimum purchase for credit cards, which offsets the fee that banks charge merchants to accept credit card payments.

3. Lack of privacy

Your credit card statement records where and how much you spend. Think nobody's paying attention? CompuCredit, which issues a subprime Visa card, makes decisions about its customers' credit-worthiness based on where they use their card, according to Businessweek. Their attorney says, "These scoring models are commonplace across the industry."

What do you think?

Do you think credit cards should always be avoided? Or is it OK — even wise — to use them in some cases? Leave a comment with the pros and/or cons of credit cards.

In our household, there is a lot of debt. This makes us normal.

I don't want to be normal, at least not in this way. So I have done an eccentric thing: I named all our debts after villains. Shoestringing the budget to get out of debt is not especially fun, but killing bad guys is!

Here is the rogue gallery, in order from the petty to the truly depraved:

1. Moriarty, a credit card debt.
2. Vader, a vehicle loan.
3. Saruman, an unsecured line of credit (basically, a credit card without the plastic).
   
4. Sylar, an enormous student loan.

Not included is our mortage. Already slain is Voldemort, which was the name both of a house we just couldn't get rid of and the mortgage attached to it. It finally sold early this year, but at a price less than what we bought it for, which made it a painful demon to slay.

Stay tuned for a chronicle of our battles with these villains!