Maxed Out
July 22, 2007 4:28 PM Subscribe
Maxed out, a great documentary about credit is on Google video.
I've still got $5000 with Citibank Mastercard @ 3% earning 5% at HSBC. Carry trade on Citibank . . . go figure.
Basically this whole credit-availability thing is why I'm not a vanilla libertarian . . . this is a preview of how the Invisible Hand in service of Wealth will work without democratic (ie non-market) counterbalances.
Lol @ 24:00 . . . WF hit me with a $10/mo for not maintaining a $1000 balance on my 0.1% interest account.
posted by Heywood Mogroot at 5:34 PM on July 22, 2007
Basically this whole credit-availability thing is why I'm not a vanilla libertarian . . . this is a preview of how the Invisible Hand in service of Wealth will work without democratic (ie non-market) counterbalances.
Lol @ 24:00 . . . WF hit me with a $10/mo for not maintaining a $1000 balance on my 0.1% interest account.
posted by Heywood Mogroot at 5:34 PM on July 22, 2007
this is tragic
posted by growabrain at 6:11 PM on July 22, 2007
posted by growabrain at 6:11 PM on July 22, 2007
Hey, Does anybody remember the ending of Fight Club?
...yeah.
posted by Zero Gravitas at 6:13 PM on July 22, 2007
...yeah.
posted by Zero Gravitas at 6:13 PM on July 22, 2007
Please, Zero Gravitas... that's what we have Business Continuity and Disaster Recovery services for. Maybe in 1999 it would have worked, but today, it would merely put a dent in their earnings. Large financial companies often mirror their SAN environments to recovery sites (hotsites), so that they don't even have any downtime if their office is bombed. Realistically, it would probably cause some havoc, but they are ready for it.
On the subject of the documentary, I found it pretty good; it's sad to see people ensnared by debt when they are driven to it at need, but the ones who just spent themselves into it, I have less sympathy for. I.e., the college students. I can certainly understand being caught by student loan debt, which is (arguably) necessary, but the unnecessary spending doesn't evoke pity to my mind.
posted by synaesthetichaze at 6:25 PM on July 22, 2007
On the subject of the documentary, I found it pretty good; it's sad to see people ensnared by debt when they are driven to it at need, but the ones who just spent themselves into it, I have less sympathy for. I.e., the college students. I can certainly understand being caught by student loan debt, which is (arguably) necessary, but the unnecessary spending doesn't evoke pity to my mind.
posted by synaesthetichaze at 6:25 PM on July 22, 2007
The major companies are also making a ton on late fees, a lot of them on bills that aren’t even late. A few years ago, I started seeing a late fee on an account of mine every two months or so for bills that I paid on time. I would call and get them credited back, then someone else would do it. First USA just randomly started refusing the online payments I made from my checking account and charged me $29 each time. Then I opened a new Old Navy account (for the 15% discount) and there was a late fee on my first bill. The credit card company refused to investigate, kept charging me late fees on the late fees (illegally), and I went nuts filing complaints with them, the FDIC, the attorney general’s office of the state I’m in, and the better business bureau of the state they were chartered in. The fees went as high as $150 before I got them down to $50 and paid. Most of the people I talk to say they just pay them, because “what are you going to do?” I quit using credit cards at all, (except for Amex, who doesn’t seem to do this) but someone who is already deeply in debt probably doesn’t think they have this choice.
posted by found dog one eye at 6:29 PM on July 22, 2007
posted by found dog one eye at 6:29 PM on July 22, 2007
Jesus. Suddenly I'm not so much looking forward to buying a house next year.
Anyone know if Canada is this fucked up?
posted by jacquilynne at 6:40 PM on July 22, 2007
Anyone know if Canada is this fucked up?
posted by jacquilynne at 6:40 PM on July 22, 2007
Great link. Half way thru, and it makes me glad I have no credit cards or other debt. I want to keep it that way!
posted by The Deej at 6:41 PM on July 22, 2007
posted by The Deej at 6:41 PM on July 22, 2007
but the ones who just spent themselves into it, I have less sympathy for.
i found myself thinking the same thing through most of it. but at the same time the whole opening speaks to this though. with so much pressure placed on people in order to keep up an appearance of affluence, just to be accepted as a human being, it's not solely stupidity to blame. our culture is all about finding a sense of well being by what you own. it's like blaming a victim of brainwashing for being a sucker. still, i don't have that much sympathy, i guess. like those folks getting credit cards after declaring bankruptcy.
posted by andywolf at 6:53 PM on July 22, 2007
i found myself thinking the same thing through most of it. but at the same time the whole opening speaks to this though. with so much pressure placed on people in order to keep up an appearance of affluence, just to be accepted as a human being, it's not solely stupidity to blame. our culture is all about finding a sense of well being by what you own. it's like blaming a victim of brainwashing for being a sucker. still, i don't have that much sympathy, i guess. like those folks getting credit cards after declaring bankruptcy.
posted by andywolf at 6:53 PM on July 22, 2007
but the unnecessary spending doesn't evoke pity to my mind.
I wanted to respond to that too--many of these college students are snared into credit card venus fly traps by aggressive solicitation on campuses, and get in fairly deep before they ever really have time to learn anything about credit and fiscal responsibility (which, in my experience, they learn almost nothing about at home).
The truth is that most Americans are pretty stupid about money, and banks and associated financial service companies exploit that fact maliciously and ruthlessly. I would love to see a mandatory, one-semester personal finance class for all high school seniors.
This is an eye-opening documentary.
posted by LooseFilter at 8:01 PM on July 22, 2007
I wanted to respond to that too--many of these college students are snared into credit card venus fly traps by aggressive solicitation on campuses, and get in fairly deep before they ever really have time to learn anything about credit and fiscal responsibility (which, in my experience, they learn almost nothing about at home).
The truth is that most Americans are pretty stupid about money, and banks and associated financial service companies exploit that fact maliciously and ruthlessly. I would love to see a mandatory, one-semester personal finance class for all high school seniors.
This is an eye-opening documentary.
posted by LooseFilter at 8:01 PM on July 22, 2007
it's sad to see people ensnared by debt when they are driven to it at need, but the ones who just spent themselves into it, I have less sympathy for. I.e., the college students.
I thought the documentary made it pretty clear that these are marketed in a near-predatory to often clearly predatory way to more typically naive or at least financially inexperienced college students. Even in the late '80s and early '90s, it was very hard to get so much as an American Express card (which helped me get a VISA card later) as a college student. The reason? You didn't have a job, or anything remotely resembling a credit history or promise of being able to pay money back. Congressional legislation, if I remember correctly (the film discusses this) changed that.
posted by raysmj at 8:27 PM on July 22, 2007
I thought the documentary made it pretty clear that these are marketed in a near-predatory to often clearly predatory way to more typically naive or at least financially inexperienced college students. Even in the late '80s and early '90s, it was very hard to get so much as an American Express card (which helped me get a VISA card later) as a college student. The reason? You didn't have a job, or anything remotely resembling a credit history or promise of being able to pay money back. Congressional legislation, if I remember correctly (the film discusses this) changed that.
posted by raysmj at 8:27 PM on July 22, 2007
I'm already afraid of credit, so this was sort of like watching a horror movie. I completely understand how people get caught with credit cards; very easy to use and its easy to rack up some serious debt that seems impossible to pay off.
jacquilynne: mortgages are very different from credit card debt. You pay a relatively low interest rate on a mortgage, and you actually have an appreciable asset to bargain with. Having a mortgage is a good thing rather than a bad thing; they're not easy to get (the lender will call your employer, check through your credit history and the last three months of recorded activity on your accounts, etc. etc.), and other institutions seem to treat you better once you've got a mortgage, too. Mortgages are good. It's credit cards that kill you.
I've done what my mother (40 years in the banking industry) told me to do: get one relatively low-limit credit card and a relatively low-limit credit line for emergencies. Clear off the credit card every month, and keep any necessary outstanding debt on the credit line, which has a much lower interest rate, and then dutifully pay it down.
One credit card is good. Don't accept 30K in credit unless you could easily pay off 30K in a year. More than one credit card is a terrible idea.
posted by Hildegarde at 8:43 PM on July 22, 2007
jacquilynne: mortgages are very different from credit card debt. You pay a relatively low interest rate on a mortgage, and you actually have an appreciable asset to bargain with. Having a mortgage is a good thing rather than a bad thing; they're not easy to get (the lender will call your employer, check through your credit history and the last three months of recorded activity on your accounts, etc. etc.), and other institutions seem to treat you better once you've got a mortgage, too. Mortgages are good. It's credit cards that kill you.
I've done what my mother (40 years in the banking industry) told me to do: get one relatively low-limit credit card and a relatively low-limit credit line for emergencies. Clear off the credit card every month, and keep any necessary outstanding debt on the credit line, which has a much lower interest rate, and then dutifully pay it down.
One credit card is good. Don't accept 30K in credit unless you could easily pay off 30K in a year. More than one credit card is a terrible idea.
posted by Hildegarde at 8:43 PM on July 22, 2007
the ones who just spent themselves into it, I have less sympathy for. I.e., the college students.
There is more and more research out there showing that your brain is still developing its higher faculties through your 20s. Many of your "college students" are only in their late teens, when risk taking is common (or to put it another way, they are still stupid).
If you start with poor money skills, add bad judgment, and then throw in peer pressure and marketing, it's no surprise a lot of them fall for it - and I'm sorry for them. If you are 19, you are more likely to be a sucker and in a way that's not your fault.
posted by i_am_joe's_spleen at 9:20 PM on July 22, 2007
There is more and more research out there showing that your brain is still developing its higher faculties through your 20s. Many of your "college students" are only in their late teens, when risk taking is common (or to put it another way, they are still stupid).
If you start with poor money skills, add bad judgment, and then throw in peer pressure and marketing, it's no surprise a lot of them fall for it - and I'm sorry for them. If you are 19, you are more likely to be a sucker and in a way that's not your fault.
posted by i_am_joe's_spleen at 9:20 PM on July 22, 2007
Fantastic. I found the most insightful bit at the very end, while the credits were rolling, when the pawnbroker said the following:
"I was somewhere about a year ago. It was definitely a blue-collar environment - machinists of some sort. And they go,'we don't want to pay extra money and have more taxes for people who can't afford their health insurance and just don't make enough money.'
And I'm going, 'that's you guys; that's you!' And they don't get it, they just don't get it."
This really encapsulates the dilemma at the heart of American politics today: after years of being demonized by Republicans, people are absolutely loathe to fund social safety nets, because they think of them as programs that are used by "somebody else." But then, when those same people do need those safety nets, they are not available, so they often have to rely upon private debt.
posted by googly at 9:33 PM on July 22, 2007
"I was somewhere about a year ago. It was definitely a blue-collar environment - machinists of some sort. And they go,'we don't want to pay extra money and have more taxes for people who can't afford their health insurance and just don't make enough money.'
And I'm going, 'that's you guys; that's you!' And they don't get it, they just don't get it."
This really encapsulates the dilemma at the heart of American politics today: after years of being demonized by Republicans, people are absolutely loathe to fund social safety nets, because they think of them as programs that are used by "somebody else." But then, when those same people do need those safety nets, they are not available, so they often have to rely upon private debt.
posted by googly at 9:33 PM on July 22, 2007
i_am_joe's_spleen - If you are 19, you are more likely to be a sucker and in a way that's not your fault.
I'm 29 (cringe) and I've/'d moved back into and am stuck (vis "family/confucian virtues") at my parents' home first as a MSc student and subsequently as a PhD candidate (when I figured that the MSc lab was bunk and would lead nowhere) after going away to college (rent in Iowa was cheap, and I had "real" job where I could afford rent in 'couver before going back for a MSc). I'm seriously considering getting debt, although I had previously steeled myself against it, so I can afford to rent someplace. $20k doesn't go very far in Vancouver, BC.
I'm really really conflicted between taking on non-equity debt and getting the fuck away from my parents and having some place of my own (if only temporary) again and regain a possibility of being laid again instead of the almost dead certainty against.
If only I was attractive enough to be a catamite or a gigalo.
- goes off to blow a few bucks on state lotteries.
posted by porpoise at 9:47 PM on July 22, 2007 [2 favorites]
I'm 29 (cringe) and I've/'d moved back into and am stuck (vis "family/confucian virtues") at my parents' home first as a MSc student and subsequently as a PhD candidate (when I figured that the MSc lab was bunk and would lead nowhere) after going away to college (rent in Iowa was cheap, and I had "real" job where I could afford rent in 'couver before going back for a MSc). I'm seriously considering getting debt, although I had previously steeled myself against it, so I can afford to rent someplace. $20k doesn't go very far in Vancouver, BC.
I'm really really conflicted between taking on non-equity debt and getting the fuck away from my parents and having some place of my own (if only temporary) again and regain a possibility of being laid again instead of the almost dead certainty against.
If only I was attractive enough to be a catamite or a gigalo.
- goes off to blow a few bucks on state lotteries.
posted by porpoise at 9:47 PM on July 22, 2007 [2 favorites]
The missus and I saw this in the theater (paid for with plastic, natch (by her, thx!)) and were impressed. We make money with our credit cards due to never carrying an interest-accruing balance and getting to hold onto our mortgage payments for 6 to 7 weeks after the credit card company has sent the money to the mortgage bank. Plus the cash back on retail action, so we've got that going for us, which is nice.
The movie's vision of two Americas with one permanently enslaved in revolving debt is fucking scary. Don't be that guy, porpoise! Just go to her place; the cats aren't that bad!
In the mid nineties, I got one credit card with a laughable limit while having $0 in income as a college student. Graduation and first career-type job comes along and I need a serious wardrobe upgrade for work, but now that my earned income had risen from $0 to infinitely more than 28000 times that amount, it was like pulling teeth when I called to ask for an increase. WTF, GE credit? Then they announce they're going to assess a fee on their previously no annual fee accounts if you don't carry a balance. Ha, fuck you! This is you being kicked to the curb, GE. See ya!
posted by NortonDC at 10:08 PM on July 22, 2007
The movie's vision of two Americas with one permanently enslaved in revolving debt is fucking scary. Don't be that guy, porpoise! Just go to her place; the cats aren't that bad!
In the mid nineties, I got one credit card with a laughable limit while having $0 in income as a college student. Graduation and first career-type job comes along and I need a serious wardrobe upgrade for work, but now that my earned income had risen from $0 to infinitely more than 28000 times that amount, it was like pulling teeth when I called to ask for an increase. WTF, GE credit? Then they announce they're going to assess a fee on their previously no annual fee accounts if you don't carry a balance. Ha, fuck you! This is you being kicked to the curb, GE. See ya!
posted by NortonDC at 10:08 PM on July 22, 2007
There was a pretty good PBS Frontline episode on this topic, "The Secret History of the Credit Card."
posted by j-urb at 10:17 PM on July 22, 2007
posted by j-urb at 10:17 PM on July 22, 2007
Oh please synaesthetichaze, you've obviously never seen Alias. If they can take down the entire SD network, I'm sure they can take on a few bean-counters and their abacuses.
posted by oxford blue at 10:23 PM on July 22, 2007
posted by oxford blue at 10:23 PM on July 22, 2007
Andywolf, thanks for posting this.
That Ramsey guy is a fucking piece of work. I love how he slams bankruptcy. Donald Trump went bankrupt. So do lots of companies. It's a strategy like any other. Yet somehow, it's okay for Trump but not okay for a woman whose husband is contemplating suicide? Fuck Ramsey.
I've read Ehrenrich's book. Frightening. I can say too that one of the major causes of bankruptcy is medical costs. For example see this story from 2005. Yet politicians are still debating universal healthcare.
Googly: so true. It's foolish for leftists to continue to characterize folks like the machinists as helpless victims who need help from the big mommy party. Come on. That's going no where. Look what the neocons did in the 1960s. They started telling people, look,, you're a sucker. All your taxes go to a bunch of dirty hippie kids. You've been conned by these liberal ivory tower intellectuals. And so on.
The rhetoric coming from leftists should sound something like this "you've been lied to. The people you trusted looked at you like fools and have passed laws to make sure you can never pay your debts back. And it's not your fault-- you trusted them because they had suits, and invoked Jesus, the flag and American pie. But it's not too late for you to make it right. Remember who Jesus drove out of the temple in a fit of anger-- the money changers. Do something today. Don't let them keep sneering at you because that's what they're doing. Now all you need to do is [insert whatever it is we need to do to get out of this shit]"
THAT is what the talking point should sound like. Damn it.
posted by wuwei at 11:33 PM on July 22, 2007 [1 favorite]
That Ramsey guy is a fucking piece of work. I love how he slams bankruptcy. Donald Trump went bankrupt. So do lots of companies. It's a strategy like any other. Yet somehow, it's okay for Trump but not okay for a woman whose husband is contemplating suicide? Fuck Ramsey.
I've read Ehrenrich's book. Frightening. I can say too that one of the major causes of bankruptcy is medical costs. For example see this story from 2005. Yet politicians are still debating universal healthcare.
Googly: so true. It's foolish for leftists to continue to characterize folks like the machinists as helpless victims who need help from the big mommy party. Come on. That's going no where. Look what the neocons did in the 1960s. They started telling people, look,, you're a sucker. All your taxes go to a bunch of dirty hippie kids. You've been conned by these liberal ivory tower intellectuals. And so on.
The rhetoric coming from leftists should sound something like this "you've been lied to. The people you trusted looked at you like fools and have passed laws to make sure you can never pay your debts back. And it's not your fault-- you trusted them because they had suits, and invoked Jesus, the flag and American pie. But it's not too late for you to make it right. Remember who Jesus drove out of the temple in a fit of anger-- the money changers. Do something today. Don't let them keep sneering at you because that's what they're doing. Now all you need to do is [insert whatever it is we need to do to get out of this shit]"
THAT is what the talking point should sound like. Damn it.
posted by wuwei at 11:33 PM on July 22, 2007 [1 favorite]
after years of being demonized by Republicans, people are absolutely loathe to fund social safety nets, because they think of them as programs that are used by "somebody else." But then, when those same people do need those safety nets, they are not available
It shouldn't be terribly surprising for students of history: this country was established by people so uptight about their work ethic that they were kicked out of Europe.
These were people who, at the close of every day, would document each and every single act they did in painstaking detail as a kind of testament to their devotion and conviction that they were in God's graces. Their action-packed journals are great little snapshots of the days in the lives of the average colonist. Well, great for historians. Not exactly riveting reading for the layman, however. "4:00 - Got up, prayed. 4:30 - Took cold bath, prayed. 5:00 - milked cows, prayed. 5:30 - Breakfast. More prayer. 6:00 - etc., etc."
Three hundred years later, and our success or failure at life has evolved from being proof that you're in God's Good Graces with proof that you're a Good American Citizen. See, those folks who don't take handouts, those folks that work five jobs...? Those folks are good Americans. It's the lazy, indigent people that sponge off the hard work of everyone else. Don't worry, though, they're all going to hell.
You want to know why we're the most fucked up country on the planet? Because we are our parents. Every hundred years or so there's a big religious revival (1730-40s, 1810-30s, 1980-90's). And it's always followed by a giant flip-flop to reason (1760-70s, 1860-70s, 1960s) followed shortly thereafter by a "shaking off" of reason by turning to childish adolescence and frivolty (1920's, 1980's) that, in turn, is the cause of religious revivalism. Wash, rinse, repeat.
posted by Civil_Disobedient at 1:59 AM on July 23, 2007 [3 favorites]
It shouldn't be terribly surprising for students of history: this country was established by people so uptight about their work ethic that they were kicked out of Europe.
These were people who, at the close of every day, would document each and every single act they did in painstaking detail as a kind of testament to their devotion and conviction that they were in God's graces. Their action-packed journals are great little snapshots of the days in the lives of the average colonist. Well, great for historians. Not exactly riveting reading for the layman, however. "4:00 - Got up, prayed. 4:30 - Took cold bath, prayed. 5:00 - milked cows, prayed. 5:30 - Breakfast. More prayer. 6:00 - etc., etc."
Three hundred years later, and our success or failure at life has evolved from being proof that you're in God's Good Graces with proof that you're a Good American Citizen. See, those folks who don't take handouts, those folks that work five jobs...? Those folks are good Americans. It's the lazy, indigent people that sponge off the hard work of everyone else. Don't worry, though, they're all going to hell.
You want to know why we're the most fucked up country on the planet? Because we are our parents. Every hundred years or so there's a big religious revival (1730-40s, 1810-30s, 1980-90's). And it's always followed by a giant flip-flop to reason (1760-70s, 1860-70s, 1960s) followed shortly thereafter by a "shaking off" of reason by turning to childish adolescence and frivolty (1920's, 1980's) that, in turn, is the cause of religious revivalism. Wash, rinse, repeat.
posted by Civil_Disobedient at 1:59 AM on July 23, 2007 [3 favorites]
Civil_Disobedient: Certainly you know better than to paint the entire of the colonies with Puritan colors?
posted by absalom at 4:07 AM on July 23, 2007
posted by absalom at 4:07 AM on July 23, 2007
Sorry, absalom, it was early and I didn't have my coffee yet.
If there's one true constant in history, it's that historians like to speak in sweeping generalizations far too often.
posted by Civil_Disobedient at 4:21 AM on July 23, 2007
If there's one true constant in history, it's that historians like to speak in sweeping generalizations far too often.
posted by Civil_Disobedient at 4:21 AM on July 23, 2007
One of the talking heads in "Maxed Out," Elizabeth Warren, does some compelling research. In another GV, she discusses her book The Two Income Trap.
posted by O Blitiri at 7:45 AM on July 23, 2007
posted by O Blitiri at 7:45 AM on July 23, 2007
It's sad how the pawn shop owner comes across as the least sleazy guy in the credit industry. Damn.
posted by reformedjerk at 9:08 AM on July 23, 2007
posted by reformedjerk at 9:08 AM on July 23, 2007
Fear not! PinkSuperhero's dollar is still on the table, kids.
Haaaaa!
posted by ThePinkSuperhero at 9:33 AM on July 23, 2007 [1 favorite]
Haaaaa!
posted by ThePinkSuperhero at 9:33 AM on July 23, 2007 [1 favorite]
The basic concept that's missing from lending industry is the idea of responsible underwriting: that you should make a good faith effort to determine whether the person you are lending money to will be able to pay you back before you make the loan. In theory, the lender should have an incentive to do this, because the lender will lose money when the loan is not paid back. In practice, we see in various industries that the people making credit decisions are not being penalized and are even often making more money when they make bad credit decisions. Subprime mortgage lenders get paid for originations and sell off the loans (or in cases of predatory refinancing strip tons of equity off at the front with fees etc); credit card lenders make more money on fees and penalties than on interest; payday lenders charge such high interest so frequently that it doesn't matter to the lender whether the original principal is repaid. This is the kind of thing that can only be fixed with regulation.
There's a group called Americans for Fairness in Lending that has good information and some action steps on this stuff.
And a GAO report from last fall outlines a lot of the ugly credit card stuff - card issuers changing the terms on your card because you missed a payment on a different card; people owing 5 times their original purchase amounts because of fees; the percentage of cardholders who actually understand the terms of their cards; etc.
posted by yarrow at 10:46 AM on July 23, 2007
There's a group called Americans for Fairness in Lending that has good information and some action steps on this stuff.
And a GAO report from last fall outlines a lot of the ugly credit card stuff - card issuers changing the terms on your card because you missed a payment on a different card; people owing 5 times their original purchase amounts because of fees; the percentage of cardholders who actually understand the terms of their cards; etc.
posted by yarrow at 10:46 AM on July 23, 2007
@LooseFilter
I think you've hit the proverbial nail on the head. How is it that most of us get out school, even years of college, and really have no clue how money works? I had Economics classes, sure, but they didn't teach me anything about how to balance a checkbook or investing or compound interest. It took me years of real life, and getting into real financial trouble (and out, and then in again), to even begin to have a clue about these matters.
Call me weird, but I don't even like money. I wish I didn't have to think about it. Problem is, the system seems to be set up to favor those who simply love money and can't get enough of it.
posted by tritisan at 12:22 PM on July 23, 2007
I think you've hit the proverbial nail on the head. How is it that most of us get out school, even years of college, and really have no clue how money works? I had Economics classes, sure, but they didn't teach me anything about how to balance a checkbook or investing or compound interest. It took me years of real life, and getting into real financial trouble (and out, and then in again), to even begin to have a clue about these matters.
Call me weird, but I don't even like money. I wish I didn't have to think about it. Problem is, the system seems to be set up to favor those who simply love money and can't get enough of it.
posted by tritisan at 12:22 PM on July 23, 2007
Oh, and I forgot to mention that I watched Maxed Out (via NetFlix) last week and found it informative but depressing. There is little or no hope to be found in a situation where the cards are stacked against us (us being the non-rich). We are witnessing the birth of a new era in America: Indentured servitude for the vast majority of citizens to the Elite (i.e., the Prez, most of Congress, the Banks, etc..). A kind of techno-feudalism.
And for those of you inclined to smugly declare that "I've been financially responsible and stayed out of debt", well congrats to you. But have you, really? If you have a mortgage on your home, will you ever actually pay it off? (And did you know mortgage means "death pledge"?) Or do you have one of those wonderful interest-only loans, where the bank makes all the money while you incur most of the risk (what if you're property value does not appreciate as anticipated? what happens if you miss a couple payments?) And if you rent, you are just paying off your landlord's mortgage, but getting nothing back in return.
I do think it's possible to live simply and cheaply, but it actually takes extraordinary self-discipline and even sefl-denial to pull that off in this hyper-consuptive environment.
Anybody have anything cheery to add?
posted by tritisan at 12:37 PM on July 23, 2007
And for those of you inclined to smugly declare that "I've been financially responsible and stayed out of debt", well congrats to you. But have you, really? If you have a mortgage on your home, will you ever actually pay it off? (And did you know mortgage means "death pledge"?) Or do you have one of those wonderful interest-only loans, where the bank makes all the money while you incur most of the risk (what if you're property value does not appreciate as anticipated? what happens if you miss a couple payments?) And if you rent, you are just paying off your landlord's mortgage, but getting nothing back in return.
I do think it's possible to live simply and cheaply, but it actually takes extraordinary self-discipline and even sefl-denial to pull that off in this hyper-consuptive environment.
Anybody have anything cheery to add?
posted by tritisan at 12:37 PM on July 23, 2007
I thought this was a very informative piece, although the personal montages made me want to stick my finger down my throat. The way the movie establishes a contrast between the "big bad companies" and the "innocent little man" - I mean, come on, these people are digging their own graves. Two scenes come to mind. The "I'm going to stand by this river and wonder whether my mom drove into it because her last credit card charge was seven bucks" scene is one of them; the other is "nobody should have to clear up the fact that they aren't dead in front of eight lawyers and a county clerk". In this sense, the movie exploits a more broad sense of alienation that people experience in this world on a daily basis, in turn making the credit card company out to be the boogeyman. Which begs the question, why the fuck are you borrowing money from strangers anyway?
So, thanks.
posted by phaedon at 2:52 PM on July 23, 2007
So, thanks.
posted by phaedon at 2:52 PM on July 23, 2007
The truth is that most Americans are pretty stupid about money
True enough, and probably true across the world. I blame the schools. Money being one of the fundaments of modern life, not teaching how banks, stocks, mortgages, and most of all, compound interest work is insane. It's easy enough to see conspiracy here, suits keeping the proles in ignorance, but more likely it's simple inertia on the curriculum development committees.
Now sex ed....
posted by IndigoJones at 5:07 PM on July 23, 2007
True enough, and probably true across the world. I blame the schools. Money being one of the fundaments of modern life, not teaching how banks, stocks, mortgages, and most of all, compound interest work is insane. It's easy enough to see conspiracy here, suits keeping the proles in ignorance, but more likely it's simple inertia on the curriculum development committees.
Now sex ed....
posted by IndigoJones at 5:07 PM on July 23, 2007
And if you rent, you are just paying off your landlord's mortgage, but getting nothing back in return.
You are exchanging the rent payment for a place to live and the associated maintenance, which really isn't "nothing back in return."
I'm not trying to be nit-picky, as I am sure you meant something along the lines of "nothing to show for it." (Equity, etc.)
I have owned 5 homes, including rental properties. Right now I rent, and have rented for the last 2 years. I have to say, I am LOVING renting. It suits my lifestyle wonderfully. I probably don't pay much more in rent than I paid in just upkeep for some of my houses. True, I have no equity. But I also have no maintenance expenses, landscaping work or fees, etc. Instead of equity, I have time.
In the same way that renting is not for everyone, neither is home ownership. I may own a home again in the future, but for now this is great, and I am as happy as I have ever been with where I live.
On the plus side, I have zero debt. No loans. The trade-off is, my car is older and I don't buy whatever I want on plastic on a whim.
As you pointed out, discipline is important. But I think a more valuable trait than discipline is contentment. You have to know it's ok to not have everything you want. A lyric that often comes to mind when I am contemplating an extraneous purchase: What you don't have, you don't need it now.
posted by The Deej at 5:23 PM on July 23, 2007
You are exchanging the rent payment for a place to live and the associated maintenance, which really isn't "nothing back in return."
I'm not trying to be nit-picky, as I am sure you meant something along the lines of "nothing to show for it." (Equity, etc.)
I have owned 5 homes, including rental properties. Right now I rent, and have rented for the last 2 years. I have to say, I am LOVING renting. It suits my lifestyle wonderfully. I probably don't pay much more in rent than I paid in just upkeep for some of my houses. True, I have no equity. But I also have no maintenance expenses, landscaping work or fees, etc. Instead of equity, I have time.
In the same way that renting is not for everyone, neither is home ownership. I may own a home again in the future, but for now this is great, and I am as happy as I have ever been with where I live.
On the plus side, I have zero debt. No loans. The trade-off is, my car is older and I don't buy whatever I want on plastic on a whim.
As you pointed out, discipline is important. But I think a more valuable trait than discipline is contentment. You have to know it's ok to not have everything you want. A lyric that often comes to mind when I am contemplating an extraneous purchase: What you don't have, you don't need it now.
posted by The Deej at 5:23 PM on July 23, 2007
I find myself somewhat horrified by this. What the heck is wrong with that society that this sort of thing is widespread?
I'm from a (lower) middle-class background. My parents nearly went bankrupt when I was a kid (recession + 14% interest rates on houses + partner embezzeling enough to kill the business); we lost everything, and relied on the charity of relatives to keep a roof over our heads for a couple of years. It sucked.
My parents got their first credit card about 8 years after that mess, and as far as I know, have never paid more than about 100$ of interest in the decade since.
I guess, in a way, I got lucky. I am, as an adult, positively frightened of debt. I have a credit card, which gets paid off every month. We're taking out a car loan shortly - and I won't sleep well at night until it's gone. I am terrified of getting a mortgage, which is making it interesting when contemplating home ownership.
Why isn't money taught at the home or at school?
posted by ysabet at 7:03 PM on July 23, 2007
I'm from a (lower) middle-class background. My parents nearly went bankrupt when I was a kid (recession + 14% interest rates on houses + partner embezzeling enough to kill the business); we lost everything, and relied on the charity of relatives to keep a roof over our heads for a couple of years. It sucked.
My parents got their first credit card about 8 years after that mess, and as far as I know, have never paid more than about 100$ of interest in the decade since.
I guess, in a way, I got lucky. I am, as an adult, positively frightened of debt. I have a credit card, which gets paid off every month. We're taking out a car loan shortly - and I won't sleep well at night until it's gone. I am terrified of getting a mortgage, which is making it interesting when contemplating home ownership.
Why isn't money taught at the home or at school?
posted by ysabet at 7:03 PM on July 23, 2007
Also, my checking account had a forged check against it and I called Chase to tell them about the situation. They told me that 1) they couldn't do anything about the bounced check they were going to receive because they haven't received it yet (although I told them it would bounce - I closed the old account) and that 2) they would charge me the $39 returned check fee regardless of me letting them know about it ahead of time. This is what happens when you try to do the right thing with the credit card companies.
posted by ajpresto at 7:36 PM on July 23, 2007
posted by ajpresto at 7:36 PM on July 23, 2007
I thought the comedian in the movie was hilarious. "It costs you $15 to have only $20!!!"
posted by The Deej at 8:11 PM on July 23, 2007
posted by The Deej at 8:11 PM on July 23, 2007
pokermonk, thanks for the First Person link. Fantastic!
posted by The Deej at 8:39 PM on July 23, 2007
posted by The Deej at 8:39 PM on July 23, 2007
I just wanted to take my dismissive remarks back. Sad. Very sad.
posted by phaedon at 2:23 AM on July 24, 2007
posted by phaedon at 2:23 AM on July 24, 2007
In public school they made a half-assed attempt to teach us about checking accounts, credit, etc but it was pretty poor. My parents did a great job, which is why I managed to avoid the worst problems. It's not hard for kids to learn this (I was taught all this in like, middle school...), if they're told it's important and taught properly... but many parents don't know the answers themselves, which is why school should do a better job. (This is the idea behind that "Rich Dad, Poor Dad" book... never read it, but the idea is sound - one of the fundamental advantages that you have coming from an upper-middle or above background is you get a good idea how to handle money and wealth).
All that aside, debt is not bad. It's about what risks are good and bad. If you buy a car @5% interest, and have investments making 8% interest, you're better off than if you paid cash (assuming the money you would have put into the car is in those investments). This is why houses can be such a good deal, with the right mortgage you're better off buying a house over time than all at once.
This is important, because you will find almost no rich people who don't have debt. Taking small risks like that is an important part of building wealth, and never taking out loans is not necessarily a good idea.
However, the problem here has to do with people going way over what they could afford to pay off, and what that money is put towards. These people aren't taking out loans for investments, they're taking out loans to live their daily lives, which means they will never catch up unless they cut their spending or increase their income... and it's very hard for most people to cut spending. Those who have the discipline to do so easily usually never get there in the first place.
It's unlikely we'll see any fundamental legislative/government intervention here, because the system benefits too many people, especially those with money & power. But really it can benefit a lot of people, if they use it wisely, which is why the only real solution is going to be education based.
posted by wildcrdj at 6:41 PM on July 24, 2007
All that aside, debt is not bad. It's about what risks are good and bad. If you buy a car @5% interest, and have investments making 8% interest, you're better off than if you paid cash (assuming the money you would have put into the car is in those investments). This is why houses can be such a good deal, with the right mortgage you're better off buying a house over time than all at once.
This is important, because you will find almost no rich people who don't have debt. Taking small risks like that is an important part of building wealth, and never taking out loans is not necessarily a good idea.
However, the problem here has to do with people going way over what they could afford to pay off, and what that money is put towards. These people aren't taking out loans for investments, they're taking out loans to live their daily lives, which means they will never catch up unless they cut their spending or increase their income... and it's very hard for most people to cut spending. Those who have the discipline to do so easily usually never get there in the first place.
It's unlikely we'll see any fundamental legislative/government intervention here, because the system benefits too many people, especially those with money & power. But really it can benefit a lot of people, if they use it wisely, which is why the only real solution is going to be education based.
posted by wildcrdj at 6:41 PM on July 24, 2007
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On the subject of debt documentaries, Errol Morris' episode of First Person w/ the debt attorney was a pretty captivating and in some ways eye-opening piece on the subject (plus it's under a half hour):
In three parts (1) (2) (3)
posted by pokermonk at 5:08 PM on July 22, 2007 [2 favorites]