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Finally, an article that discusses LBYM
Old 03-29-2007, 08:42 AM   #1
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Finally, an article that discusses LBYM

This article correctly identifies the failure to LBYM as the source of almost all money problems.

http://articles.moneycentral.msn.com...lt.aspx?page=1
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 09:01 AM   #2
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Re: Finally, an article that discusses LBYM

It's all true. Short, on-target, and the folks who need it most won't read it.




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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 09:09 AM   #3
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Re: Finally, an article that discusses LBYM

I'd love to post that on my company website employee section, they ALL need to read it but I know they won't and if they did they would take offence.
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 09:13 AM   #4
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Re: Finally, an article that discusses LBYM

While almost everyone in financial trouble can trace their problems back to spending too much. However, it is not always as simple as that...

Consider someone who needs some medical attention. Just how long could you go without a paycheck racking up major medical bills. You don't really understand your insurance plan until you really need it.

The credit card companies (and other lenders) have changed such that they are now lending money to people with only marginal capacity to pay the money back. They are more interested in collecting high interest and late fees than in seeing someone pay off their bill. There will always be a segment of the population that is vulnerable to these predatory lendors. In my opinion we should pass some legislation to help people cope when they are at risk. Outlawing universal default rules would be a good start. Still we have to be careful to not legislate away credit access to those that need it. I don't think that it may ever be possible to save someone from themselves if they are hellbent on taking on massive debt.
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 09:38 AM   #5
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Re: Finally, an article that discusses LBYM

I agree that sometimes people experience hardships in their life that are beyond their control which lead to financial problems. I am especially sympathetic if this happens to someone in the first half of their working life, while they are struggling to save and get ahead. Obvious examples are medical issues, serious injuries, or other unforseen catastrophic events. It is certainly much easier to be financially successful if you are fortunate enough to avoid such potentially catastrophic events.

However, it seems to me that in most cases, these events are rare, and the more common scenario which leads to financial trouble is simply someone who lives above their means. Unfortunately, people who live above their means usually get by as long as they don't experience any setbacks, and as soon as a setback comes along (such as a job loss, illness, injury, divorce, death of a family member, etc), they are pushed over the edge and then they blame the setback as the cause and claim that they are a victim of their circumstances, while ignoring the fact that they were living above their means and living on the edge and making themselves vulnerable to financial ruin in the process. What these people don't understand or refuse to accept is that if you LBYM and you experience a setback or acatastrophic event, you are much more likely to avoid financial ruin by proper planning and savings and insurance.
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 09:40 AM   #6
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Re: Finally, an article that discusses LBYM

Quote:
Originally Posted by samclem
It's all true. Short, on-target, and the folks who need it most won't read it.
Including the Pres. Bush
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 10:41 AM   #7
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Re: Finally, an article that discusses LBYM

Interestingly, most of the posted comments also agree with the article. Even the individuals who have been stung by their poor judgement all profess to have learned their lesson.

If folks who are spending too much or don't have a safety net are reading this article, they are not acknowedging their position or justifying it.
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 10:51 AM   #8
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Re: Finally, an article that discusses LBYM

Sandy:

If you were refering to my post then you've got me all wrong and missed my point entirely.

Quite the opposite - I have never been in financial trouble and could endure pretty much any financial setback.

What I do recognize is that to some relatively unsophisticated people, if they aren't careful then the credit industry will swallow them whole. It is my impression that perhaps some legislation could help with the worst practices.

- your position is somewhat smug
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 11:57 AM   #9
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Re: Finally, an article that discusses LBYM

From the article:

"My credit card company jacked up the rate/changed my terms/piled on fees." Were you carrying a balance? Then you left yourself open for all manner of abuse from your credit card company.

You might try the defense that you didn't know any better. But in all my years of writing about personal finance, I've yet to come across someone who didn't know, at the core, that carrying a credit card balance was a bad idea.



I think the writer is pretty shallow. The entire credit industry is built on the concept of carrying a balance. If someone uses a CC to handle a major debt (e.g. the medical bill that someone posited) intending to pay it off over time, they can suddenly find their great interest rate jacked up because of some other unrelated problem - e.g. a rent check got delayed in the mail. How is that right?
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 12:32 PM   #10
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Re: Finally, an article that discusses LBYM

Simple concept: Spend less than you make and save the rest always.

Easier concept: Spend all you make and more, then whine, look for bailouts and if all else fails file BK.

Personal accountability is the key to the delimma.

This is not absolute I know that. Yes there are the catastophic issues in life. Out of all the folks I know who have financial issues though, not one of them is because of illness or death. You can get insurance to assist with disastrous health issues. You can not get insurance to protect you from poor daily choices like "LATTES", "TOYS", "VACATIONS", "SHOPPING" and keeping up with the neighbors.

Those of us here tend to know that by our taking care of the pennies and nickels we have allowed the dollars to take care of themselves.
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 12:59 PM   #11
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Re: Finally, an article that discusses LBYM

Anyone notice this little line?

"Median incomes have stagnated, globalization and technology are wiping out whole industries, wealth is increasingly concentrated in fewer hands, and too many people -- 44.8 million, by the Census Bureau's most recent account -- have no health insurance."

I don't know about you, but I'd bet a significant part of that concentration of wealth is occurring in people who LBYM. So why is it that the author sees that as a NEGATIVE?
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 04:41 PM   #12
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Re: Finally, an article that discusses LBYM

Quote:
Originally Posted by teejayevans
Including the Pres. Bush
And all of the republicans and democrats in the senate and congress. They all spend like drunken sailors in order to buy as many votes and campaign contributions as possible. We get the government we deserve.
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 04:45 PM   #13
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Re: Finally, an article that discusses LBYM

Quote:
They all spend like drunken sailors in order to buy as many votes and campaign contributions as possible.
... so are you saying we've got the best gov't money can buy?
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Re: Finally, an article that discusses LBYM
Old 03-29-2007, 08:43 PM   #14
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Re: Finally, an article that discusses LBYM

Quote:
Originally Posted by Jay_Gatsby

I don't know about you, but I'd bet a significant part of that concentration of wealth is occurring in people who LBYM. So why is it that the author sees that as a NEGATIVE?
well, I suppose anyone who is increasing their wealth, technically, is living below their means by definition.

However, one possible answer to your question is that many people consider it a negative when a very very few hold the vast majority of wealth. Not only does it create political instability, but when institiutionalized, tends to be viewed as a form of nobility and as anti-democratic. To some of us, that is NEGATIVE.

Personally, I don't believe that the cause of wealth becoming concentrated revolves around those who LBYM and those who don't. I am far more inclined to believe that it is because those with the $$ have managed to influence the tax and business structure to benefit them, at the expense of others.
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Re: Finally, an article that discusses LBYM
Old 03-30-2007, 09:41 AM   #15
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Re: Finally, an article that discusses LBYM

Quote:
Originally Posted by donheff
From the article:
I think the writer is pretty shallow. The entire credit industry is built on the concept of carrying a balance. If someone uses a CC to handle a major debt (e.g. the medical bill that someone posited) intending to pay it off over time, they can suddenly find their great interest rate jacked up because of some other unrelated problem - e.g. a rent check got delayed in the mail. How is that right?
You have to remember that credit card debt is an UNSECURE loan. The borrower could use the entire value on the loan to buy booze or pay hookers. So, I think the credit card company should be entitled to raise interest rates if that borrower all of a sudden (due to unrelated issues) begins to represent a higher level of risk of default.
Also remember that anyone who applied for the credit card AGREED to these terms.
Are the CC companies "good guys"? Not by any stretch, but I also think that people need to take some responsability for their actions. Don't like their policies? Very simple: Don't use the card. I don;t have a card and I know several people who do not have one either and yet we are able to not only live, but prosper. I am not that special. If I cna live without a CC, so can other people.
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Re: Finally, an article that discusses LBYM
Old 03-30-2007, 10:10 AM   #16
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Re: Finally, an article that discusses LBYM

Quote:
Originally Posted by camberiu
Also remember that anyone who applied for the credit card AGREED to these terms.
Are the CC companies "good guys"? Not by any stretch, but I also think that people need to take some responsability for their actions. Don't like their policies? Very simple: Don't use the card. I don;t have a card and I know several people who do not have one either and yet we are able to not only live, but prosper. I am not that special. If I cna live without a CC, so can other people.
I'm in between your opinion on this and the person you responded to. I agree that we all sign up for what's in our cards...so we have some accountability. However, the card companies stack the deck against people by 1) making cardholder agreements overly complex, full of legalese and jargon 2) Market their products (as does any good marketing person) by telling you all the GOOD things it can do for you (take that vacation you want or remodel your bathroom) withouth exposing all the downsides (fees, how much you end up paying for a $1000 vacation if you only pay the minimum each month, etc.).

I have 2 cards and pay the balance in full each month. I actually use them all I can because I get the float on the money I spend. If I buy a 1,000 item on March 1st and my billing cycle ended on February 28th, then I will get about 6 weeks before I have to pay. 1000 x 6 weeks / 52 weeks in a year x .054 (what I earn in my Countrywide account) = $6.20 that I saved on that item. Not a lot...but it adds up.

By the way, Congress is having hearings soon with some of the credit card companies...as there have been many complaints about predatory lending and misleading cardholder agreements.

Dave
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Re: Finally, an article that discusses LBYM
Old 03-30-2007, 05:36 PM   #17
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Re: Finally, an article that discusses LBYM

If you fail to plan then you plan to fail.
I think people are being set up for failure because they are not being taught about money.
Not sure what the answer is but the credit cards companies are not really worry about people defaulting. Otherwise why give college kids and various animals credit cards. The business plans on people failing and making additional money by charging high fees.
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Re: Finally, an article that discusses LBYM
Old 03-31-2007, 09:27 PM   #18
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Re: Finally, an article that discusses LBYM

Quote:
Originally Posted by Sandy
Interestingly, most of the posted comments also agree with the article. Even the individuals who have been stung by their poor judgement all profess to have learned their lesson.

If folks who are spending too much or don't have a safety net are reading this article, they are not acknowedging their position or justifying it.
I think thats because the folks that need this advice are much more likely to click on the link at the bottom of the webpage for "debt consolidation loans" than to actually read that article. It IS a good article, tho and if only a a few souls are "saved" by heeding this advice, its quite worthwhile.
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Re: Finally, an article that discusses LBYM
Old 04-01-2007, 05:29 AM   #19
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Re: Finally, an article that discusses LBYM

Even with a LBYM approach one can be wasteful and/or wind up with alot of discretionary spending that does not add to ones well being... It is called lifestyle creep.

We have experienced lifestyle creep over the last 10 - 15 years. Buying a larger house than we need. Filling it with new furniture that is in rooms that we do not use. Cellphones plus a home phone. High speed internet, Digital Cable TV with DVR. Eating out in fine restaurants (we trimmed this one back except for special occasions), DVD rentals.

However... We have the car thing under control (drive the wheels off of them).


You know that you are experienceing some changes when your expenses in electronics costs exceed your utility bill.

I think our cable TV/internet/phones cost/DVD rental is close to our average electricity/gas/water expense.


But we still spend only about 40% of what we earn and 10% of that 40% is on the Mortgage (which has about another 8 years to go @ 5.25%). After paying off the house, we probably spend about 1/3 of our gross wages... with the existing lifestyle creep.
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