Whoa, have vs. have-not {money geek talk}

[wludavid]

Originally posted by Nathans_Dad
I fail to see how an individual's decision to not save money and run up credit card bills is a national concern...

Because we're not talking about an individual, we're talking about an aggregate choice of many individuals who run up credit card bills and don't save. THAT trend is dangerous for the middle class, and by extension, our society.

[Nathans_Dad]

So, are you proposing that we somehow get the government involved to regulate the personal financial decisions of the US populace?

P.S. We are talking about individuals. People do not make their financial decisions as a collective. Just because there are multiple individuals making the same bad decision does not make it a group choice.

[wludavid]

I have proposed nothing.

We already "regulate" personal finance decisions for nearly every person in this country. The tax code is probably the most influential piece of law written, and it encourages people to buy a house, have kids, save for college, save for retirement, acquire student debt if necessary, etc.

P.S. -- aggregate: A total considered with reference to its constituent parts; a gross amount.

I made no reference to a group choice.

[MRM]

It is important because the government writes policy to encourage or discourage certain behavior. For istance, the tax code encourages homeownership and charitable deductions.

The tax code inadvertently encourages taking out home equity lines of credit to pay for things people buy with credit cards. It encourages buying individual stocks because they appreciate tax-defered and you pay only capital gains on theprofits when you sell. The code discourages savings because you have to save with after-tax dollars and then pay tax on the interest or dividends that come from the savings.

Societal trends don't exist in a vacuum. They happen because there's something driving them. Sometimes something bad happens long enough that the government should take a look at changing a policy in response. Perhaps this is one of those times, perhaps not. That's what the debate is about. But we should probably have that debate before the only available policy change is bankruptcy reform.

[Nathans_Dad]

Wludavid:

So, you are saying we should be concerned about this as a nation but do nothing about it?

Or are you suggesting tax breaks for those who do not have credit card debt? I'm confused.

What other carrot do we need? If you run up credit card bills, you end up in debt, unable to gain credit, living paycheck to paycheck and never get anywhere financially.

On the other hand, if you manage your finances responsibly you can move up the ladder in this country, buy a house, invest in the market and retire.

Sounds like a no brainer to me.

Why does our country feel the need to regulate the poor individual choices of others?

P.S. Savings accounts are a horrible investment vehicle. They should be used for emergency funds only. The market is much more efficient and profitable if you have a reasonable time horizon (i.e. not 5 years from retirement).

[tobster1911]

Originally posted by Nathans_Dad
I fail to see how an individual's decision to not save money and run up credit card bills is a national concern...

Because it is now not acceptable to allow someone else to fail and society (read you and me) are expected to pick up the bill.

once that person running up the credit card meets the end of the road and can't dish out the min payment to keep the wolves away, what do they do? Favorite tactic was go bankrupt. You really think that the credit card co's (or any business) willingly eat that unpaid dept? Not a chance. They pass it right on to those that have good ethics to pay for in any way they can. If they can't get it from us, they go looking to the gov for coverage.

In the end, it does effect all the rest of us.

[Nathans_Dad]

Sounds like the problem is the idea that we are not allowed to have people reap the results of their personal choices. Is the answer really more government regulation?

[tobster1911]

Originally posted by on-ramp
fintstone is right.

I just wanted to point out that the world is about to end. I personally am taking the rest of the day off, buying a lottery ticket, and going to kiss my wife.....

That is all.

[tobster1911]

Originally posted by Nathans_Dad
Sounds like the problem is the idea that we are not allowed to have people reap the results of their personal choices. Is the answer really more government regulation?

Exactly so. I agree completely. We need LESS ways for people to get out of their own messes.

[Moneyguy1]

Less government involvement and more education about finance included in secondary schooling.

[Nathans_Dad]

Moneyguy has the one solution I would support here. Educate kids in high school about personal finance and how to avoid debt.

[Hugh R]

Some of you guys throw around the term "assets" when talking about rich and poor. Are you using the definition correctly? Assets=Liability + Equity. Equity = Net Worth. Assets are what you owe and what you own. But your still right, the top 10% control a huge amount of the country's wealth. The top 10% also pay most of the income taxes. Poor people don't even pay enough taxes to support the schools, police, fire, trash collection, etc. that they avail themselves off. In fact, the middle class, for the most part, doesn't pay their "fair share" either.

[lendaddy]

Originally posted by Hugh R
Some of you guys throw around the term "assets" when talking about rich and poor. Are you using the definition correctly? Assets=Liability + Equity. Equity = Net Worth. Assets are what you owe and what you own. But your still right, the top 10% control a huge amount of the country's wealth. The top 10% also pay most of the income taxes. Poor people don't even pay enough taxes to support the schools, police, fire, trash collection, etc. that they avail themselves off. In fact, the middle class, for the most part, doesn't pay their "fair share" either.

Hugh is absolutely correct. Though I make a lot less than most of you guys, I'm not poor....but.....I don't pay any income tax to speak of either. Two kids, a home office and a bunch of mortgage interest and I'm out the door for a couple percent or less.

Tax cuts for the rich indeed The rich are the only ones paying any tax.

[the]

I think modern marketing and media have much to do with it.

That are just TOO effective.

Causes people to buy a bunch of crap they don't need, then updated crap to replace the previous crap.

I don't think it's as much an income problem as an expenditure problem.

[artplumber]

Originally posted by Nathans_Dad
So, are you proposing that we somehow get the government involved to regulate the personal financial decisions of the US populace?

P.S. We are talking about individuals. People do not make their financial decisions as a collective. Just because there are multiple individuals making the same bad decision does not make it a group choice.

Rick,
I don't think that these are individual decisions. The pervasive nature of advertising is where to lay the blame. Instead of a nation of producers, the US has become a nation of consumers, which is great for companies, but not for the nation. People have become conditioned to think that they should own huge homes, drive cars that are not less than 2 years old and buy the latest gadgets. It is high school (look I'm in the "in" group) to the Nth degree. Because of the frenetic attempts by the majority of this population to out-buy their neighbors, eventually the economy will come crashing down. Why? Look at the trade deficit and how much is owed to China. They don't care if you didn't buy much on credit. When they call in the debt your US dollars won't be worth the paper they are printed on.

[artplumber]

Originally posted by tobster1911


I just wanted to point out that the world is about to end. I personally am taking the rest of the day off, buying a lottery ticket, and going to kiss my wife.....

That is all.

Haha

I went back and looked, by golly you're right.

the, you got there faster than I oculd tpey without correction

[the]

I remember the 80s and the Conspicuous Consumption and consumerism then. In the 90s we looked back and thought it was crazy.

The last few year, though, make the 80s look like Amish living.

[gprsh924]

Originally posted by the
I think modern marketing and media have much to do with it.

That are just TOO effective.

Causes people to buy a bunch of crap they don't need, then updated crap to replace the previous crap.

I don't think it's as much an income problem as an expenditure problem.

that just means that people are too stupid for their own good. I thought that the dorito's commercial was pretty funny last night. I do not think that if i eat doritos, a really hot girl is going to like me. Using common sense and delaying gratification til you can afford it will keep you out of debt.

[slakjaw]

I am a have-not.

[the]

I guess I'd never really argue that people aren't too stupid for their own good, but in semi-defense of people, I think we are in a time where media has advanced a bit faster than people can keep up.

Technology has allowed media to be everywhere. Everyone has 100 commercial TV stations. There are TV screen with ads at the gas pumps. Everywhere.

And, marketing techniques have become more sophisticated and effective, too.

Also, a lot has to do with trends and fashion. The 80s were about designer labels, glamour and conspicuous consumption. By the 90's, people grew tired of that, the pendulum swung the other way and it was about grunge and "anti-labels." No 25-40 y.o (prime demographic) would have been caught dead wearing huge black sunglasses with giant gold designer labels down the side in 1993.

By the 2000s, it swung the other way again, and here in 2007, I think the pendulum is at a peak and getting ready to start swinging back the other way. People do get "consumer fatigue," which leads to a change in trends. Plus, there are a lot of things in the economy that will force the change, too (like the negative savings rate the last few years, the end of the "Home as ATM," etc.)