Maxed out credit

[9elf]

Are there any comments on this series (movies) from the board? It is quite startling and somewhat fear inducing.

Does anyone here feel it is a true reflection of the current state of American households? Or is it scaremongering?

[widgeon13]

My concern is that we are there and just don't want to acknowledge it because it's the next shoe to drop.

[nostatic]

master planned communities are evil...

Is Mr. Money banging Judy?

[gprsh924]

The chick talking at the beginning of the video is everything that is wrong with the idiots in this country. "If my adjustable rate goes up I won't be able to afford it." Then you can't ******* afford it the first place. I'm so tired of it, I hope everyone who was stupid and bought something they couldn't afford ends up on the damn street.

[M.D. Holloway]

$9200 a year in CCs for the ave American? Nope - I gotta challenge that one. I read in WSJ that the average is more like $28,000 for middle income ($25,000 to 60,000/yr income).

[Tobra]

I still don't understand how you get in the hole like that on credit cards. If I can't afford it, I don't buy it, which I suppose is sort of an "Unamerican" attitude to have.

[bell]

michelle and i combined bring in a little over 70k a year, we have one car payment (her "new" 06' jetta) and 2 credit cards with a combined balance of about $500, that's it for debt.......i'd say even though we don't make 100k+ we are WAY ahead of the game

[KFC911]

My parent's instilled "living within your means" upon me at an early age (by example) and I simply can't relate to any of that stuff. I'm certainly not wealthy, and that's never been an aspiration for me, but I don't try to live like I am either. However, I am debt free, and wouldn't change a thing. I personally have never paid a penny in credit card interest...it's the "financial herion" of the masses imo.

[Rich76_911s]

Good news, I recently read this:

Growth in consumer borrowing slows
April 7, 2008 3:16 PM ET

WASHINGTON (AP) - Consumers, battered by a credit crunch and prolonged housing slump, significantly slowed their pace of borrowing in February.
The Federal Reserve reported Tuesday that consumer borrowing rose at an annual rate of 2.4 percent in February, just half of the 4.9 percent increase in January.
The slowdown reflected much weaker demand for auto loans and other type of non-revolving credit, which rose at a rate of 0.4 percent in February, much lower than the 3.6 percent growth rate in January. Credit card debt rose at a 5.9 percent rate.
Consumers have been moving to put more of their purchases on their credit cards as banks have tightened up on lending standards for home equity loans in response to the deepening credit crisis. The price of homes has fallen sharply in many parts of the country.
The 2.4 percent overall rate of increase was the slowest since debt growth had slowed to a 1 percent rate in December.
The overall increase in credit of $5.16 billion, which was slightly below expectations, pushed total consumer credit to a record $2.539 trillion.
The Fed's measure of consumer borrowing does not include any debt secured by real estate such as mortgages or home equity loans.

[KFC911]

Yes you are Bell...

[VincentVega]

I have a friend in similar debt from CC's. Starting in college she spent like there was no tomorrow. I guess she figured she would be rolling in Benjamin's when she graduated. She's 30 now, living at home w/ her folks, still in debt and working a low paying job. I just dont get it.

For some reason a large # of people think they can beat the system, some how live a 'better' lifestyle than their income allows.

[HardDrive]

I feel very torn about the credit card issue.

My wife and I are responsible with our credit. Our only outstanding loans are our primary mortagage (We did an 80/20 split to buy our house, and payed off the 20 in less than 5 years) and our cars (Wifes will be payed off in August and we will drive it for another 10 years). It makes me EXTREMELY angry that people act irresponsibly, and then blame others.

But that being said, credit cards are basically a loan. The CC companys, in their lust for bigger profits, have raised peoples credit limits who really are not credit worthy. So if push comes to shove, I say f*ck the credit card companys. Sorry. You made bad loans. You lose. Thats how business works. Of course, that won't happen. We will have politicans lining up to dump money from the public coffers into their greedy hands.

I can't tell you how many times the wife and I have discussed moving to other countrys if it all goes tits up here. We are not typically alarmists , but the underlying financials are getting increasingly troublesome. We simply don't see realistic end games for this ending well.

[VaSteve]

Originally Posted by LubeMaster77

$9200 a year in CCs for the ave American? Nope - I gotta challenge that one. I read in WSJ that the average is more like $28,000 for middle income ($25,000 to 60,000/yr income).

WTF are people buying for that money?

[johncj8989]

I think we are headed for a very eye opening and humbling awakening in this country.

I see clients everyday that are so far in credit card debt they will never find a way out. I see duel wage earner couples making 45,000/yr with 80,000 in CC debt. They pay credit cards with credit cards and when the credit runs dry......shazzam!

We used to be a nation of producers......now we are nation of consumers.

It's all about to come to a head.

[Dueller]

In my divorce practice I get to see the ugly underbelly of many folks personal finances. I live in the deep south so the nmbers may seem small to you left coasties.

Example...the yuppie couple

H and W both educated. He works in sales and is making $100K. She's a nurse making $60K. After tax they're clearing about $9K/month. They have 2 kids in grade school. Live in a $325K house (3000 s.f. in a planned community) they've got 100% financing interest only. They lease upscale car and a suburban. $35-50K in credit card debt. Eat out a lot since they're so busy. Kids in private schools. Belong to the country club. Take vacation in spring to ski and in fall/winter to the beach. Dress impeccably.

So Whaddya got?

House payment and taxes/ins.........$3000.00
Utilities......................................... ........500.00
Private school.....................................1500.00
Day Care.............................................. .600.00
Lease payments on cars......................1200.00
Insurance/gas/oil..................................700.00
Country club..........................................400. 00
Min payment on CC...............................1000.00

Total............................................. .....$8900.00/month

Hey we got $100 left over....OOOOOPS.....we left out food. Getta another credit card.

And they don't have a dime in savings. They're one spouse loosing their job from bankruptcy.

I have to tell them they can't afford a divorce.

[LeeH]

I saw Maxed Out a few months ago. I always wondered how the real estate agent at the beginning is doing now.

[MT930]

This type of spending is starting to nip at the heals of many. We see it every day, it is now really effecting the the future of our economy. I fear we have not seen anything yet.

[onewhippedpuppy]

Scary stuff. I've always felt that teaching personal finance in high school should be an absolute requirement. Not doing so is a disservice to our kids. Funny that I had to take home economics, but didn't ever learn how to balance a checkbook. Unless you are fortunate enough to learn from your parents, kids just don't learn about the joys (and evils) of compound interest, credit, credit cards, stocks and mutual funds, bonds, retirement, etc. Instead, you get kids who turn 18, accept every credit card they are offered, then max them out at Best Buy (which a roommate of mine did). It's just pathetic, and the poor kids don't know any better.

I'm proud of the fact that I didn't even have a CC until I met my wife. She then put my name on her one card. We've never carried a balance, and don't ever plan to. If we can't use our debit card or pay it off when the CC bill comes due, we don't buy it. We still have a mortgage (20 year fixed) and my student loans, so we have plenty of room for improvement.

[Porsche-O-Phile]

I agree with you 100% and don't mean to drag this off on another tangent, but who ever said that the educational system in this country is about "doing service to the kids" in the first place?

Education today is about (1) providing breeders with free day care, (2) test scores in order to secure more funding, (3) training kids to be good obedient little consumerist lemmings and (4) to hopefully keep them out of gangs so we don't have to waste resources rounding them up and prosecuting them.

Just another example of how our society is being brought down by our "educational" system.

[peppy]

It is not just credit card debt that is eating people, it is the whole have it now pay for it later attitude.

My nephew is starting college in the fall, and was considering borrowing 80% of the money to go. He would have been lucky to graduate in four years, and would have owed 144K in student loans. When he got out of school and got a job making say 40K a year he would have been living at home with his mother trying to pay the loans down. He has since decided to goto a state supported school and will not have any or very little student loans.