Loans and Debts

[Pegasus]

Discussion around loans (banks etc) and debts.

This will have to be considered around GF'ing and new loans. No pc starts with debts in the new starter packs.

link to a bank thread here.

[Rakvald]

Brainstorming here a bit:

-Instead of owing a certain amount to debt, limit their upper spending limit.
-Garnish their wealth points they earn every season/cycle until the debt is paid.
-Abolish all debt!!!??
-Or do the same we do with grandfathered property, except each 500 increment of debt gets counted against their wealth points, instead of 1000 for grandfathered property.

[Kesindir]

So, the conversion of wealth points to nel is 1,000gn is equal to 1 wealth point. You can read about that in the wiki.

No debts with the new starter system is a good thing, considering how we are moving forward with the wealth system in general. That being said, people currently have debts. My thought was that if we round everyone's debts to the nearest thousands, and then deduct that many wealth points. So a PC with 4,000gn in debt will lose 4 wealth points. If it knocks them down a tier it isn't that big of a deal really, as it's basically showing a change in lifestyle because of the debt. It won't hurt a lot of people really. Unless they have no possessions, but even then...if you don't have possessions and you have debt? Yeah you probably should be down a tier or two.

Just my thoughts.

[Cirrina]

In terms of banking, considering how quickly points can accrue I'd maybe make it like, .5 of a WP each season, so one extra wp a Cycle if they make a withdrawal. 1wp a season if they make no withdrawals for the season, so 2 total for the cycle. Then if its a whole arc they get 5wp, so long as the meet the same stipulations of deporting, which could be determined based off their tier and seasonal wp, then they'd get the bonus. The numbers can be changed, and I'm not sure if we do 1/2 points but it might work?

And for debt, Kes' plan seems to make sense, but how would it be worked in terms of debt under 1000gn, it wouldn't be fair to take a whole point away from someone with 200 debt the same as someone with 1000gn debt.

[Kesindir]

And for debt, Kes' plan seems to make sense, but how would it be worked in terms of debt under 1000gn, it wouldn't be fair to take a whole point away from someone with 200 debt the same as someone with 1000gn debt.

Is why I said to round to the closest thousands. If it's 200, you are rounding to 0 really. Is anyone really going to be hurt over a 200gn debt being erased when we move to this new system?

Yes, this might cause backlash from those that have 5,000gn debts or higher, but like, those impact your lifestyle. A brand new PC, even in stingy Quacia, can earn 2gn a day. Within an a cycle, maybe two tops, you should be able to pay off a tiny 200gn debt. 5,000gn takes a bit more work, thus should stick around and affect their over all wealth moving forward.

Again just my two cents, and the easiest way I see handling debt during the grandfathering transition.

[Quio]

So just to be clear, things we've got to figure out are:
1.) How to grandfather in current personal debts, which I think Kesindir has pretty much laid out fairly. Rounding to the closest thousand seems about right.

For example, someone with a 3001gn debt would round down to 3wp. Someone with a 3500gn debt would round up to 4wp.

EDIT: When converting over, we need to remember to include the interest they would have needed to pay. Interest based on the new system would not additionally be applied.

However, I think there should be an exception for people who owe less than 500gn. I think they should still have to pay 1wp. In the scheme of things, unless you're really, really poor, 1wp isn't going to make a huge difference. Most current players are likely going to grandfather in at above tier 1 and 2. I don't think it will really hurt the majority of players with small debts to have to pay 1wp. And I don't know if it's fair for them not to have to pay anything.

Also, upon grandfathering in each player is being given extra wp to account for their possessions, and the wp that is being given is generous (1wp for tier 1, 2wp for tier 2, etc). So, most players may be able to use some of that extra wp to help pay off loans.

2.) How much it costs to open an account.

In my opinion, since it only costed like 10gn to open an account before, players should be able to open accounts for free in the new system. 10gn is certainly a negligible amount.

3.) Rates of interest for savings accounts.

Looking at the link Pegasus provided, this has been based on percentages before. I don't see why we can't use the same or similar percentages, and round up to the nearest wp. (Or should we round down, when it comes to savings percentages?)

If someone has 80wp in the bank for a season, the interest as is is 3% (if withdrawals have been made). So 3% of 80wp would be 2.4wp rounded up to 3wp. The next season, 3% of 83wp would be 2.49wp rounded up again to 3wp. And so on.

If we were rounding down using the same numbers, 80wp at 3% would earn 2wp. 82wp at 3% would earn an additional 2wp (82wp x 0.03 = 2.46wp). And so on.

This only doesn't work well if someone has such a small amount of money in the bank that they are making less than 1wp in interest seasonally. In that case, I might suggest that interest not be applied until they can make 1wp seasonally. Doing that math, that would mean that anyone with less than 34wp in their savings wouldn't be making interest (33wp x 0.03 = 0.99wp). We can adjust the interest percentages to alter that number if we wish. For example, if interest were 5% instead of 3% seasonally, anyone with less than 20wp in savings wouldn't be making interest (19wp x 0.05 = 0.95wp).

I might suggest making seasonal interest 5%. And perhaps arc'ly interest 15% (calculated on the last day of the last season of the year, or 93rd Zi'da).

Also, I don't think it's necessary to change an account's seasonal interest based on whether they made withdrawals. I think a flat 5% interest is good either way.

As for a yearly bonus for not making withdrawals... perhaps that should be something like 10wp.

4.) Rates of interest for taking out a debt.

I feel the same can be applied here. I don't see much issue in using the percentages that were being used before. I feel that it's good enough to make minor changes to the percentages used if we think it's necessary (perhaps something like 5, 10, 15 percent interest per season, cycle, arc).

Either way, in my opinion the rates for savings and debts should probably be about the same. So if it's 5% interest seasonally for savings, it should be 5% interest seasonally for debts. And the same goes for arc'ly interest.
extra line here

Let me know if I'm forgetting anything. I don't know much about banking on ST since none of my characters have ever had an account.

Just as a note I think it should be up to players to apply for their seasonal / arc'ly interest, if they currently don't.

[Quio]

Also, just another thought:
I don't really forsee players being in so much debt that the tier system can't handle it, but if say someone grandfathers in at tier 1 or 2 and owes more wp than they can pay out of pocket, an extension on their payment should be offered (perhaps a cycle or two) to allow them time to earn wp and pay their debt without defaulting.

[Kesindir]

Thanks for the feedback there Quio!

However, I think there should be an exception for people who owe less than 500gn. I think they should still have to pay 1wp. In the scheme of things, unless you're really, really poor, 1wp isn't going to make a huge difference. Most current players are likely going to grandfather in at above tier 1 and 2. I don't think it will really hurt the majority of players with small debts to have to pay 1wp. And I don't know if it's fair for them not to have to pay anything.

This seems completely fair. Like you said, for most players, 1wp will not break the bank so to speak for clearing up their debt.

2) Agreed here as well. 10gn is completely negligible and should be waived with the new system.

3)I think a flat 5% is good here. It gives enough back that it feels worthwhile to actually have a savings account, and it'll also lower the floor for those eligible to open one up and start earning interest.

This only doesn't work well if someone has such a small amount of money in the bank that they are making less than 1wp in interest seasonally. In that case, I might suggest that interest not be applied until they can make 1wp seasonally. Doing that math, that would mean that anyone with less than 34wp in their savings wouldn't be making interest (33wp x 0.03 = 0.99wp). We can adjust the interest percentages to alter that number if we wish. For example, if interest were 5% instead of 3% seasonally, anyone with less than 20wp in savings wouldn't be making interest (19wp x 0.05 = 0.95wp).

Much like you laid out here. 5% seems a more well rounded number as far as the actual math goes, and there not being that large of a gap before early/new players can open a savings, should they choose

4) Agreed here as well. The savings interest and debt interest should be calculated with the same percentage just to keep things easy and smooth. 5% here feels like a good solid number as well. It isn't overly punishing, but it does add that extra bit of "If I pay it off this much faster, I can save XX" kind of vibe. I like it.

Also, just another thought:
I don't really forsee players being in so much debt that the tier system can't handle it, but if say someone grandfathers in at tier 1 or 2 and owes more wp than they can pay out of pocket, an extension on their payment should be offered (perhaps a cycle or two) to allow them time to earn wp and pay their debt without defaulting.

Yes, absolutely. Players should definitely not be penalized for not being able to pay off the debt once we switch over. I think 1-2 cycles seems like a fair extension, and something that can be notated in the prophet notes for those specific players.

Thanks, as always Quio, for the wonderful and well constructed thoughts here! Now we wait for the great winged one to grace us with her thoughts!

[Faith Augustin]

The "great winged one" is blown away at you guys. Truly.

I agree 100% here.

1. Yes, all debts have to pay at least 1 WP.
2. Yeah, drop that.
3. So, every 20WP in the bank, you get 1WP x season. So, 10WP in gets 1WP x cycle. I just put it that way so that we're more easily working on whole WP. Rather than.. (shudders) percentages and decimals.
4. Would we have it that, therefore, your loan of 20WP grows by 1WP x season and you have to pay that off first? Would the interest be on how much you CURRENTLY owe, or how much you started with? (that's always confused me, tbh)
5. Yep. Loan extensions. But - if a loan is outstanding and not paid off at the end of a loan period then the pc MUST use their wealth thread to pay it off?

Awesome. Ok. So over the next day or two I'll get businessses and banks up on the wiki and get a mock up of a bank write up (unless there's a volunteer?). FYI renown is next... wowzer, it's a job of work, this innit?!

[Kesindir]

4. Would we have it that, therefore, your loan of 20WP grows by 1WP x season and you have to pay that off first? Would the interest be on how much you CURRENTLY owe, or how much you started with? (that's always confused me, tbh)

Compound interest I think is what the term is, where the interest builds on what is currently owed, but would make sense here I think, unless some feel it too punishing as it could potentially start snowballing. (which is why we should always pay off our debts!)