More Slowing State Economies
I'm starting to feel like Chicken Little. It looks like reports of slowing sales tax receipts from California and Georgia were the tip of the ice berg. The San Diego Union Tribune is reporting that half of the states (unlisted) are showing slowing collections.
About half of all U.S. states are collecting less from their sales taxes than expected, which could signal a recession lies ahead as the home market fades.The receding housing boom could then reveal the underlying economic weakness it had camouflaged, according to Philippa Dunne, a co-editor with the New York-based Liscio Report, published by an economic research firm.
The big gotcha from this report is that it appears to use August sales tax numbers. States like Georgia and California didn't jump off the cliff until September. Some states cited in the article include Florida and Michigan.
While this looks like a nation-wide trend, this could just be a financial hiccup in response to all the mortgage craziness. So, what's a person to do? I'll keep monitoring economic indicators to see how things are going. Until things swing back, I'm tightening my lending criteria to avoid the marginal borrower and those who may be tempted to drop the loan. My tightened criteria:
- Only lend to incomes above $50k
- No current or delinquencies in the last 7 years
- No public records
- Debt-to-income limit set to 40% from 50%
3 comments:
My credit went into the tank several years ago (extended uninsured illness) and while I am working again, I can't get my credit out of the tank on my minimum wage income. (I have two public records which won't go away unless resolved, and I can't resolve them on my income.) I have no prospects for a better jobv and would like to start a small home business. How am I supposed to get out of the tank?
Taking your post at face value (as opposed to assuming that you're trolling), I have no clue. If you're looking for answers to that question, I'd try the following blogs:
Get Rich Slowly
The Simple Dollar
Free Money Finance
If you're asking why I'm being so heartless as to not lend an unknown amount of money to someone making ~$12k / year (full-time minimum wage), it's because I'd like to eventually get the money back and I think the odds are poor that it'll happen if the economies in several states are slowing down. I am cold hearted like that in my financial investments. Sorry.
That being said, I'm but one person, and there are another 13 thousand active lenders on Prosper who may see things differently. If you can clearly explain why a loan will help you, you'll probably find someone willing to do it.
In my case, my Experian score was actually 620 last I checked six months ago (no subsequent activity other than payments toward a charged off account, but I don't think that's even being reported, so I expect I have had no reported activity), so I could list a loan and even get a D rating. I would argue that considering my pathetic income, I've lived far more frugally than the average bear, and shouldn't that be worth something in the credit market? But I'm thinking generally of the person in a similar (or worse) position who wouldn't even be able to list a loan. What proportion of Prosper borrowers never get loans funded? Without checking out the details, I've seen how-did-that-get-funded loans as well as why-won't-people-fund-this-one loans, so there seems to be some mystery to it.
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