Blaming (Some of the American People--The Economy

[Contrary Mary]

The US economy is in the news and there is a current thread going on about Obama's plan and so on.

As an American---but this does apply to other countries also--I'd like to make a point.

It is not ENTIRELY the government's fault. I know several people who have at least five or six credit cards. All of these cards are almost maxed out. The persons make only the minimum payments. So, when the economy takes a downturn, they are in BIG trouble.

There is an aspect of greed here. Some people DO live beyond their means. Just because the banks , fomerly, made it easy to get five or six credit cards, was no reason to accept five or six credit cards.

I can see having two cards--one kept for emergencies and one to use on a regular basis. I know people in my family who have eight or nine cards--not six.

The government does need to look into bank policies--but people need to leanr to budget; and need to learn that you can't always go first class on a moderate income.

[BookStop]

Originally Posted by Contrary Mary

The government does need to look into bank policies--but people need to leanr to budget; and need to learn that you can't always go first class on a moderate income.

This is true, Mary, but people have had no incentive to do so. Let's face it, spending willy-nilly is fun, and not until the trouble hits do most people take notice of how much debt they are actually in. Americans specifically love to live paycheck by paycheck. I do wonder what folks in other countries do.

Maybe education needs to lookled at to help kids learn about budgeting -- step in where the parents aren't up to it -- but then again, schools can't be held responsible for everything either.

[daisybee]

I think the irony here is that you need credit to get credit-and I guess its an easy trap to fall into thinking well my credit rating will look good etc.

Plus a lot of people with existing credit are those that are pre-aproved for more-and you can see the temptation to sopread your borrowing if possible.

Banks love the minimum payment lenders, over the long run they get a heck a lot of cash from you in that way-and a culture of living on borrowed cash can only be created by those lending it out.

I have no credit, I like cash-if I haven't got it, I don't spend it. I don't have kids or a house though, and it takes one financial wound to cripple a family-time off work through illness etc, an unexpected bill/crisis-hiked rates etc.

I do believe that an age limit should be stipulated in regard to credit-at 18, a credit card is a recipe for disaster, but many students have to live off credit it seems these days, and whilst I don't agree with what some people spend their cash on, as long as they pay it back its no biggie.

I also think living large is a global thing-well in western society at least. We are seduced by labels and brands that essentially mean nothing but extra noughts on a price tag. But that is how so many businesses have made their money-by getting us to spend what we don't have.

[dustinzgirl]

We created an economy in America based on money that does not exist other than in the imagination. We then spent that imaginary money by using a sequence of numbers given to us by the government and tracked by people who track imaginary money. Now there is no more imaginary money.

Credit is bad. We lived off our credit cards for more than a year when we were both out of work and unemployment ran out. Rent, utilities, food, gas, ect ect ect all went on credit cards. We didn't buy crap or splurge and we still don't because that's not my nature. Now I have an enormous amount of debt that I will likely never repay while I am alive because I used too much imaginary money.

[Contrary Mary]

Unfortunately when the economy is very bad, those who used credit wisely and those who lived beyond their means are both going to have difficulty. Regrettably, in these tough economic times, there will be suffering for almost everyone except the very, very rich.

Unfortunately, I also do not know the answers. To rent a car, get a plane ticket or check into most hotels, you need a credit card for ID, even if you are paying cash. I would love to see our society get away from credit cards entirely--but I do not see it happening.

[dustinzgirl]

Originally Posted by Contrary Mary

Unfortunately when the economy is very bad, those who used credit wisely and those who lived beyond their means are both going to have difficulty. Regrettably, in these tough economic times, there will be suffering for almost everyone except the very, very rich.

Unfortunately, I also do not know the answers. To rent a car, get a plane ticket or check into most hotels, you need a credit card for ID, even if you are paying cash. I would love to see our society get away from credit cards entirely--but I do not see it happening.

Three years ago I could have bought anything on credit. At that time I owned everything though and never used credit.

Then add in job losses, a 9-12% unemployment rate in my county, a broke down car....kids without health insurance who still needed shots, check ups, dental care, ect ect ect

Yeah, now I couldn't buy a stick of bubble gum with my credit.

Unfortunately what happened is we got in a bad situation, used credit to survive, and now making more money we have to pay the credit through garnishments, and are only going to survive. We'll never get anywhere in life or own anything ever again.

[Clansman]

Originally Posted by dustinzgirl

Unfortunately what happened is we got in a bad situation, used credit to survive, and now making more money we have to pay the credit through garnishments, and are only going to survive. We'll never get anywhere in life or own anything ever again.

Have you thought about making a proposal to your creditors, or even a bankruptcy? If you are that far behind the eight ball, that is what those things are for. There are also some great courses on financial responsibility, that teach you how to repay your debt, save for retirement, create a 3-6 month emergency fund, and save for large purchases, even if you can't increase your income. We don't get taught this stuff unless our parents teach us. Credit card companies have done a great job taking advantage of our ignorance, and of selling us their snake oil, which many of us (me included) have guzzled with abandon.

Dave Ramsey is a financial "evangelical" crusader, whose advice is to never use credit cards at all, ever, for anything, and that debt acquired for anything that decreases in value (e.g. a car loan) is a horrible idea. Debt for home purchase makes sense, but even that needs to be circumscribed. One must always live within their means (fire the pizza guy, get rid of the expensive car payment, fire the cable company, and other drains on your finances until your debts are repaid), and even take short term second jobs to get rid of some of your debt. Save and use cash for all purchases (you end up spending less, because it hurts more to lay down actual cash, and you get better deals for buying with cash), and budget for regular expenses like groceries. But the advice, though simple in its basic foundations, has a lot of details that one needs education on, and it requires application and some tough discipline. The cost of the course is about $100.00 for 13 sessions, including your materials, but that is much less expensive than the fees paid to a trustee in bankruptcy (and he won't accept payment by credit card!), and the long consequences coming from that, which you might be able to avoid. Ramsey appeared on 60 Minutes (Leslie Stahl was the interviewer) a couple of years ago, and my wife and I are going through the course right now. As we engage in that discipline, and remain accountable to each other, then our finances will be completely turned around in under five years, with only our mortgage to pay off, savings well under way, and an emergency fund tucked away so that a loss of employment would not hit so hard, like it did to you.

His course is usually taught through churches, but has been taught in businesses and through the military. There is a definite Christian flavour to the contents (stuff from Proverbs and so on), so if you are not Christian, you need to look past that to get anything out of the course. However, the contents are very hard to argue with, and the bits taken from the Bible do not proseletyze, about God or Jesus Christ, rather, they underscore the importance of not being a slave to debt, whether you got there by personal tragedy like yourselves, or by irresponsibility, like I did.

Worth a look, anyway. But the big thing is that we all have to change the way we live, and the way we look at using (or not using) credit. I did not post a link here, as I am not trying to sell this guy, but rather encourage you to look around for yourself and do some investigation. I am not his salesperson (he is making money off this thing, after all, though it appears to be justified, and is a reasonable expense), so take a look off of a Google search. I find his style a little low-brow, but then, he is trying to speak to many people of different levels, not just to me.