Time to pay the Piper?

[UncleHoney]

Looks like things are getting a little dicey for those who owe.

American's credit card defaults seen surging - Dec. 23, 2007

[runnerr]

Which means it might get a little dicey for those who have also. If the money is in the market and the credit card debt influences the economy, it might be more than dicey.

[W2R]

Right now, I feel so fortunate to have neither a mortgage, nor credit card debt, due to my own version of LBYM and preparing for ER in a couple of years. The difficulty people are having in paying their mortgages and credit cards is certainly an unanticipated turn of events. Well, at least I didn't anticipate it.

[runnerr]

About twenty years ago, I started thinking, “what is going to happen when all these people in credit card debt have to pay up.” When that happens what will be the consequences to those of us who have sacrificed to gain the position we are in? To tell you the truth I am a little scared.

[dex]

We must be at the bottom - this is the third posting about this.

http://www.early-retirement.org/foru...tml#post592663

[poboy]

Get what you want, pay the minimum each month and then......when that gets in the way of important things, like the power bill or food.

[Hamlet]

Did anyone else read this as good news? If defaults are under a billion after the recent uptick, I'm not going to be worried yet.

I would expect things to get worse after Christmas, as people who charged their way through the holidays have to cope with the bills.

This report doesn't seem terrible though.

Everyone's been talking about the complete collapse of our credit system, but this doesn't feel like the end of the world.

[audreyh1]

Folks on CNBC this morning were talking about the next credit crisis being auto loans, and how there is a whole lotta bad auto paper floating around out there....

But at least auto loans don't have adjustable rates (or did I miss that?), and the payments are a LOT smaller than a house payment....

Gosh, still shaking my head at all the investment houses that took on all this risky commercial paper!

And how can the banks get away with hiding this stuff "off the books"? Huh?

Audrey

[OAG]

Many Auto Loans over the past 3-5 years HAVE been interest only loans with Balloon Payments coming at the end of the IO period, usually at the end of the loan term. The thing is with these types of loans your down payment may have been 0 and the collateral (the car) is now 3-5 years old and if you have one of these you are "up-side-down" on the deal. The numbers are not that big but if you are a lending institution with a lot of these you may have a bit of a fire sale on used cars coming your way.

[audreyh1]

Oh boy, here we go again!

Audrey

[REWahoo]

Quote:

Originally Posted by R Wood ... if you are a lending institution with a lot of these you may have a bit of a fire sale on used cars coming your way.

http://www.early-retirement.org/foru...omy-32048.html

[mickeyd]

After all of my stash is spent and I am 102 years old, my final financial move will probably be to max out all of my CCs and, when I die, all of this unsecured debt will have to be written off by the CC companies. Blaze of glory....

[Alan]

Quote:

Originally Posted by mickeyd After all of my stash is spent and I am 102 years old, my final financial move will probably be to max out all of my CCs and, when I die, all of this unsecured debt will have to be written off by the CC companies. Blaze of glory....

13 years back when my mom had cancer, Dad kept telling about all the stuff she was buying from catalogues on the 'never never'. He managed to intercept some but most he couldn't return. I was living in the USA while they were in England so it was difficult to help. She died within 6 months and when I went over for a couple of weeks to help sort out finances etc I was dreading the worst. I had written a will for each of them some years earlier - they have simple affairs.

Turned out mom was smarter than we imagined under all that morphine. For all her purchases she had signed for insurance which added a small percentage to to the cost of the goods, so we simply sent copies of the will to the catalogue companies and the debt was cleared immediately, no comeback at all. Turns out there was no check to stop folks with terminal cancer who had excellent credit from running up big accounts backed with this extra 'term insurance'

[Walt34]

Quote:

Originally Posted by runnerr About twenty years ago, I started thinking, “what is going to happen when all these people in credit card debt have to pay up.” When that happens what will be the consequences to those of us who have sacrificed to gain the position we are in? To tell you the truth I am a little scared.

Why? If a bunch of other people lived beyond their means and now have to pay the piper, why is that your concern? I see lots of garage sales, except we don't need any more "stuff".

Maybe I'm missing something....

[Walt34]

Quote:

Originally Posted by mickeyd After all of my stash is spent and I am 102 years old, my final financial move will probably be to max out all of my CCs and, when I die, all of this unsecured debt will have to be written off by the CC companies. Blaze of glory....

Yeah, I like that idea, but only if wife goes first.

[jazz4cash]

Another thing that strikes me is the HUGE margin many are paying on CC debt like 18% or more plus the merchant fee collected at time of sale. When I had a new card stolen from my PO Box and $3000 in unauthorized charges run up, the credit union was extremely quick to write it off and get me a new card no questions asked.

[kombat]

Quote:

Originally Posted by Walt34 Quote: Originally Posted by runnerr what will be the consequences to those of us who have sacrificed to gain the position we are in? To tell you the truth I am a little scared. Why? If a bunch of other people lived beyond their means and now have to pay the piper, why is that your concern? Maybe I'm missing something....

I think perhaps he's apprehensive after witnessing the sympathy and aid being extended to homeowners who signed up for mortgages they couldn't afford. The aid being offered in that case will eventually be funded by those who were otherwise responsible with their mortgage, yet will end up paying part of the price anyway, to bail out the irresponsible ones. Maybe he's afraid a similar "let's-all-chip-in" mentality will prevail to help save these peoples' boats and cars the way we're saving their homes.

[Walt34]

Quote:

Originally Posted by kombat The aid being offered in that case will eventually be funded by those who were otherwise responsible with their mortgage, yet will end up paying part of the price anyway, to bail out the irresponsible ones. Maybe he's afraid a similar "let's-all-chip-in" mentality will prevail to help save these peoples' boats and cars the way we're saving their homes.

That is a concern and I've already written my congresscritters about not bailing out idiots who can't use a $5 calculator. That's about all I can do about it.

"Overdrawn? I can't be. I still have checks left."

[Wags]

Quote:

Originally Posted by Want2retire Right now, I feel so fortunate to have neither a mortgage, nor credit card debt, due to my own version of LBYM and preparing for ER in a couple of years. The difficulty people are having in paying their mortgages and credit cards is certainly an unanticipated turn of events. Well, at least I didn't anticipate it.

Now with the barrel of oil hitting $100 - I do beleive that people will have a harder time paying their bills, mortgages, for gas & heating oil, putting food on the table, etc..., etc...

One can only hope that our poor and our elderly who live on limited incomes survive.

GOD BLESS

[W2R]

Quote:

Originally Posted by Wags Now with the barrel of oil hitting $100 - I do beleive that people will have a harder time paying their bills, mortgages, for gas & heating oil, putting food on the table, etc..., etc... One can only hope that our poor and our elderly who live on limited incomes survive. GOD BLESS

I know -- I hope things get better soon!

Again I seem to have the luck of the Irish (even though my ancestry is Scottish), because I only buy about 150 gallons of gas a year. Even if it went up another $10/gallon, which it won't, I could manage. But what about those in places like California who have 60 mile commutes each way, in order to find housing they can (barely) manage to pay for? It's going to be rough on them. And we don't really need very much heat in New Orleans. But as you point out, the poor and elderly will have a rough time, especially heating their homes in colder climates.