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Yet another stupid debtor and retirement account raider!
Old 07-21-2008, 04:14 PM   #1
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Yet another stupid debtor and retirement account raider!

Given a Shovel, Americans Dig Deeper Into Debt - NYTimes.com#

The part I love is where she racks up $19,000 credit card debt after raiding her retirement account AND having to put the penalty on a credit card.

Evidently this woman, earning $48K a year did not know how to say "NO".
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Old 07-21-2008, 04:42 PM   #2
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The parts of the article referring to the woman's personal susceptibility to over-extending herself financially were a bore......same old....same old. But the parts which explained why lenders find it so profitable to make loans to folks unlikely to be able to pay was interesting.
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Old 07-21-2008, 05:16 PM   #3
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Stories like these give me a stomach ache (although the subjects don't usually seem too worried). I am impressed from the photo that she can still afford to buy cigarettes....
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Old 07-21-2008, 05:33 PM   #4
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Sigh.... the slant in that article towards the "poor person" caught up in a slick sales pitch thing is just revolting. I am just waiting for people to come forward and start claiming that lack of financial responsibility is in fact a disease... and that these people were "sick" and therefore not responsible for what they did. Just wait... I can hear it coming....
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Old 07-21-2008, 05:55 PM   #5
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Stories like these give me a stomach ache (although the subjects don't usually seem too worried). I am impressed from the photo that she can still afford to buy cigarettes....

"back-to-back medical emergencies helped push her over the edge."

...and wonder how much her smoking had to do with her health problems or, at $5.00+ /pack, her financial problems- at 2 packs/day (just a guess, might be more or less than that, but 1. she was stressed out, so it probably was more- and 2. causual smokers would be less likely to have thier photo taken with a cigarette.) She was probably spending $3500-$4000/year- about 10% of her income- after taxes- on her smoking.
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Old 07-21-2008, 05:57 PM   #6
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My biggest fear is that there are more people like the woman featured in this article than people like us in this forum.

Armor99: A lot of people will claim that this is a disease that they are stricken with for sure. Just sit and watch some of Oprah Winfrey's shows and you will see some of these "poor person" types. I say let them fall and fail...let them live on the streets and eat out of garbage cans....harsh? Perhaps it is harsh, but I believe that tough love is the best route to reality.
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Old 07-21-2008, 06:04 PM   #7
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A little kindness please. I know that most here are financially sophisticated and thus would never fallen into some of the financial pits that the people in the NYT and other article have.

We here have educated ourselves on financial matters. Some have done it sooner, some later but we got there and it has paid off. Most of us continue to learn (one of the benefits of posting here).

I find a consistent thread in the stories like the one in the Times. These are good people, honest people, hard working, average people. These folks are just trying to live their lives, taking care of their families. They are trying to do the right thing. These are not bums or crooks. Sure they are not money savvy, most know this, however they had faith that their government and financial and business institutions would not leave them hanging out to dry. They did not expect to have to run a gauntlet just to get a loan to live in a decent home, buy a car or the pay bills. They expected to be treated fairly. I do not think that is to much to expect.

But you had the smart guys on Wall Street, in Board rooms and in Government who saw them as roobs to be fleeced. Their laughing all the way to the bank and we, John Q. Public, will be stuck paying the tab. They're likely laughing at that too.

I do not know when the world got so mean spirited that we now look upon the misfortunes of others and call names. These folks were doing the best they could with what they had to work with. The world has changed and they are paying the price for their ignorance. No need to pile on.

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Old 07-21-2008, 06:15 PM   #8
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Bailouts area bad idea as they destroy responsibility and incentives to be careful. Bailouts for entire industries are the worst, but bailing out individuals has its problems too.

Yet Cattusbabe is correct, these type of people don't really have the mind set to be able to figure all these things out. It may even be largely genetic. So I think there should be better prior regulation, so that one doesn't have to be financially sophisticated or consumer savvy to get along well enough in the world.

The very sharp, miserly paranoid approach to living may work well enough, but many people don't find it or its practitioners very attractive.

Ha
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Old 07-21-2008, 06:38 PM   #9
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I keep thinking about her excuse for shopping- sitting in bed[undoubtedly smoking} watching QVC with a credit card.

I don't have any of those stupid shopping channels programmed into my TV. I really detest them. At the time she was doing all this self-pity shopping, she knew she was in deep financial trouble. It would not have been difficult to remove QVC and all those other shopping traps from her TV, and to remove Ebay from her computer.

She wasn't forced into this.
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Old 07-21-2008, 09:32 PM   #10
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So she was probably walking close to the edge already... I don't feel bad for her on that, but she does say it was her own fault, so I applaud her for at least owning up to being responsible.

And some medical emergencies pushed her over the edge. I don't envy being in that situation.... but it was probably the former living that got her into the latter... still, I'm in no position to judge how someone in that situation got there.

looking at the interest on her cards though... man. I wonder if that was at the end or the beginning. If she was paying that at the beginning, then she willfully said 'hey, I'm obviously a credit risk but I'm going to go and buy x and pay 27% interest because I can still make my monthly payment'... If it was at the end, well, miss one payment and you end up in pretty negative territory fast.
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Old 07-22-2008, 01:08 AM   #11
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http://www.nytimes.com/2008/07/22/op...in&oref=slogin
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Old 07-22-2008, 02:09 AM   #12
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Cattusbabe, are you willing to be dragged into the pit by people like this woman? Her continually irresponsible behavior , encouraged by greedy American business, has caused an economic dislocation we're all going to be paying for years to come.

Read through the posts on this site. Even this group of well-to-do Pollyannas is catching on to the fact that times are going to get quite rough.

Would you be willing to take this woman in and support her until she gets back on her feet? She's not going to be alone. She has tens of millions of brothers and sisters in the same predicament.

And what the are inappropriate emails?
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Old 07-22-2008, 06:28 AM   #13
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I understand that many people are not educated in living simply, investing, andmaking do with what they have. We can only blame the banks, Madison Ave., too many commercials, and the credit card companies for so long! If we keep co-signing their bs and join their pity party.....how are we helping them?
And for her to keep charging and ruin her son's credit in the midst of this.....that is just pure crap!
I was in a lot of debt when I was younger and I got myself out of it by eliminating everything that was not a need and sticking to a payment plan. I took the responsibility of learning about my finances, talking to others, reading the fine print, and asking questions. I hate this mentality that the mass public has that SOMEONE is going to take care of them, and they don't need to do anything for their future!
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Old 07-22-2008, 06:42 AM   #14
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American Express made $653 million, or 56 cents per share, for the quarter, down from the year-ago $1.06 billion, or 88 cents per share. Analysts surveyed by Thomson Financial were looking for an 82-cent profit. American Express said the latest quarter reflected a $374 million addition to its credit loss reserves, as the effect of falling house prices and rising unemployment "was evident even among our longer term, superprime cardmembers."

Economic slowdown slams American Express - Jul. 21, 2008

I don't think the big boys are going to let this go on much longer before they start closing the tap. Looks like even the SUV drivin', McMansion dwellin', superprime card totin' crowd is falling behind.

Wont' be long before credit is only available to those that don't need it and the rest of the slackers will be back to cash only.
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Old 07-22-2008, 07:13 AM   #15
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Originally Posted by Cattusbabe View Post
A little kindness please. I know that most here are financially sophisticated and thus would never fallen into some of the financial pits that the people in the NYT and other article have.

We here have educated ourselves on financial matters. Some have done it sooner, some later but we got there and it has paid off. Most of us continue to learn (one of the benefits of posting here).

...snip...

I do not know when the world got so mean spirited that we now look upon the misfortunes of others and call names. These folks were doing the best they could with what they had to work with. The world has changed and they are paying the price for their ignorance. No need to pile on.

There but for the grace of God go I.
Respectfully, I strongly disagree. This stuff (household budgeting) is for the most part grade school arithmetic. I'm not all that sophisticated at investing, whatall with what's the best after-tax ROI, pre and post tax investments and all that. I get lost in it. Admittedly I got lucky and took a job at age 22 that has a pension the likes of which isn't to be found anymore.

But I do know that if outgo exceeds income, sooner or later (and probably sooner) I'm going to be in deep doo doo. I knew that when I was 21, got my first credit card for the sole purpose of establishing a credit rating and then was scared to death to use it, because I had seen others fall into that trap.

And in a Business Law class, I learned that there are only three ways out of debt:

1. Pay it back.
2. Declare bankruptcy (and abdicate my responsibilities in the process).
3. Die.

I think none of this is terribly difficult to understand.
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Old 07-22-2008, 07:23 AM   #16
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David Brooks has a good column in the NYtimes about the "culture of debt". He points out that this debt is good is everywhere, which has lead to the situation we now find ourselves in.


> This third position begins with the notion that people are driven by the desire to earn the respect of their fellows. Individuals don’t build their lives from scratch. They absorb the patterns and norms of the world around them.

> Decision-making — whether it’s taking out a loan or deciding whom to marry — isn’t a coldly rational, self-conscious act. Instead, decision-making is a long chain of processes, most of which happen beneath the level of awareness. We absorb a way of perceiving the world from parents and neighbors. We mimic the behavior around us. Only at the end of the process is there self-conscious oversight.

http://www.nytimes.com/2008/07/22/opinion/22brooks.html

I really agree with this.
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Old 07-22-2008, 07:31 AM   #17
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Respectfully, I strongly disagree. This stuff (household budgeting) is for the most part grade school arithmetic. I'm not all that sophisticated at investing, whatall with what's the best after-tax ROI, pre and post tax investments and all that. I get lost in it. Admittedly I got lucky and took a job at age 22 that has a pension the likes of which isn't to be found anymore.

But I do know that if outgo exceeds income, sooner or later (and probably sooner) I'm going to be in deep doo doo. I knew that when I was 21, got my first credit card for the sole purpose of establishing a credit rating and then was scared to death to use it, because I had seen others fall into that trap.

And in a Business Law class, I learned that there are only three ways out of debt:

1. Pay it back.
2. Declare bankruptcy (and abdicate my responsibilities in the process).
3. Die.

I think none of this is terribly difficult to understand.
You are right. It is pretty simple. Just spend less money than you have coming in and it will work itself out.
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Old 07-22-2008, 07:43 AM   #18
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Cattusbabe, are you willing to be dragged into the pit by people like this woman? Her continually irresponsible behavior , encouraged by greedy American business, has caused an economic dislocation we're all going to be paying for years to come.

Read through the posts on this site. Even this group of well-to-do Pollyannas is catching on to the fact that times are going to get quite rough.

Would you be willing to take this woman in and support her until she gets back on her feet? She's not going to be alone. She has tens of millions of brothers and sisters in the same predicament.

And what the are inappropriate emails?
I don't see how her situation would drag me into a pit. If she were rolling in dough it would not make me richer either. We each have control of our own financial situation. Which I why I am where I am at and she is where she is at. What we do for ourselves has more impact on our personal finances than what the government, big business or the sad sack up the street does in my opinion. The government waste, money so do businesses and some of us still manage to become financially independent. We will deal with this economy just like we have dealt with the ones in the past. This is not the end of the world.

No, I would not be willing to take her in. That is not my responsibility. I'm just not going to take a holier that though attitude. I was just as ignorant about handling money back in the day. (and guess what most of you all still FIRED on schedule) I got my act together how ever. This woman could have also but did not and is paying the price. I just do not feel the need to pile on and kick a person when they're down.
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Old 07-22-2008, 07:48 AM   #19
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James, thanks for sharing this link, I also see that Callie posted it as well. Brooks does a good job of explaining the polarization (just like what happens here) of blame in these cases. His take on the situation doesn't really offer resolution, but does offer some hope for personal changes like those that occurred after the Great Depression.
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Old 07-22-2008, 07:51 AM   #20
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A little kindness please.

...

I do not know when the world got so mean spirited that we now look upon the misfortunes of others and call names. These folks were doing the best they could with what they had to work with. The world has changed and they are paying the price for their ignorance. No need to pile on.
Who is being mean or calling her names? I didn't see this at all. Just disgust that people like this get themselves in this situation and expect the government to bail them out. And guess who funds the government? I'll be damned if I'm going to sit quietly by on my own budget while bailing someone else who won't even try.

Quote:
Sure they are not money savvy, most know this, however they had faith that their government and financial and business institutions would not leave them hanging out to dry. They did not expect to have to run a gauntlet just to get a loan to live in a decent home, buy a car or the pay bills.
But that's not the whole story at all. What about the jewelry store account, the QVC shopping, the buying things to "make her feel good"? That's the part I can't stomach. I think they should run a damn long gauntlet for that irresponsibility.

Look, I have no problem making sure everyone has food, shelter and transportation. Health problems, layoffs, bad luck...we should open our wallets and help these people with that. (I'm less cheery about it when someone got fired for inappropriate emails instead of a layoff, but still, people need the necessities).

But when they won't give up their luxuries, they are on their own. I give the lady some credit, she actually is selling off some of her luxuries, which she shouldn't have kept buying when she started getting into trouble in the first place.
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