Yet another stupid debtor and retirement account raider!

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.
 
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....
 
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.... :)
 
Bestwifeever said:
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....
Click to expand...


"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.
 
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.
 
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.

There but for the grace of God go I.
 
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
 
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.
 
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.
 
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.
angel.gif


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
evil.gif
are inappropriate emails?
 
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!
 
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. :bat:
 
Cattusbabe said:
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.
Click to expand...

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.
 
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.
 
Walt34 said:
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.
Click to expand...
You are right. It is pretty simple. Just spend less money than you have coming in and it will work itself out.
 
barbarus said:
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.
angel.gif


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
evil.gif
are inappropriate emails?
Click to expand...

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.
 
Cattusbabe said:
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.
Click to expand...

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.

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.
Click to expand...

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.
 
Early retirement is hard to achieve. I just hope, here, we don't judge or look down on people who are in difficult circumstances. I didn't envision that kinda attitude when I joined this board shortly sometime ago. Little more respect on other people's circumstances should be expected
 
barbarus said:
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.
Click to expand...

Well said above. I don't know who is more stupid- the lady or people who lent her money.

Spent time this week with very educated/observant guy who lives Belgium. He could not believe his readings about the level and attitude of debt in USA. What something "costs" is not its price - rather the "monthly payment".

He said in Belgium (and most of Europe) - generally nobody has CC debt, no car debt, etc. Even for houses, people generally put 40-50% down and have a sensible mortgage (not sure if true - but this was a "fact based" guy...)
 
haha said:
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.
Ha
Click to expand...

While there is no way to prevent stupid people from screwing themselves or sleazeballs from robbing people, I think we are now on the track for much tighter regulation all around. Whether this is a good idea or not depends on your perspective. I am of mixed feelings, and fully expect that the regulatory zeal will go too far. But I see all the signs it is happening: mortgage broker licensing, investment banks getting regulated like commercial banks, mortgage finance possibly shifting from securitization (outside the purview of bank regulators) to covered bonds (well within regulatory control), likely restrictions on home equity and credit card lending, etc.
 
couple of good responses here:

Morgenson:
Calculated Risk: Duelling Discourses of Debt

Brooks:
Calculated Risk: Brooks on Morgenson on McLeod

People are name-calling; the very thread title calls this woman stupid. I missed the part where she was asking the government to bail her out.. Bailouts are reserved for hedge funds and international bankers, after all!

She is running a gantlet.. what more do you want at this point besides your own personal flail with her blood on it?

Missing in all this piling on is the acknowledgement that average people like this, with their job losses, their illnesses, their becoming widowed and divorced, are GOLD MINES for financial companies. So does shop-a-holism drive the economy.

So, I think I would rather not add INSULT to injury in cases like this since people like this woman are the ones who have been making it possible for banks and retailers to post profits.. which I assume you all have enjoyed. Far from "dragging" anyone "into the pit".. what wealth they did have got transferred quite effectively UP. They are only seen as a burden now that they can't sustain the wealth transfer up the chain any longer.

There is no US economy anymore without extraordinary levels of debt. If you can maintain that without debtors, go ahead and try.


-----------
Here's an even more dramatic case:

Credit Slips: Why Is This Legal?

I had lunch with a bankruptcy lawyer, who followed up with an email story:

Today I was interviewing one of my clients and she said that one of the loans she that she had should have been illegal. I asked her what she meant and she said that the loan she received should never have been permissible. Turns out she had a car loan with Volkswagen with an interest rate of about 3% and a loan balance of approximately $23,000.00 Because she had her home mortgage with Wells Fargo (or at least that is what she thinks is the reason) she received an offer from Wells Fargo for an equity loan on her car! (i.e. just like a home equity loan except the collateral is a car instead of a house) I had never heard of such a thing before. In any event, she agreed to do the deal with Wells Fargo (she needed to money to pay her bills and was much too embarrassed to go to family and friends) so she agreed to the refi and at closing she received $4850 in cash, Wells Fargo received $1300 in fees and the total amount of the debt went from $23,649 (the amount owed VW on the original car financing) to, hold on to your seats, $48,852! The interest rate on the new loan was a mere 16.24% (remember the old rate with VW was approximately 3%). Of course she defaulted and Wells Fargo repossessed the car and is now seeking its deficiency balance. Amazing to see an equity loan on a rapidly depreciating asset but when she received the loan Wells Fargo told her that she had paid down her car loan so quickly she had accumulated equity and they had a way to get the equity now.

The Wells Fargo loan was made in 2006 – the cost of the new financing was $17,900 – almost as much as the balance (i.e. $23,649) then due on the original note with VW. Also, the term of the new loan with Wells Fargo – 72 months, on a 2005 VW Passat!
Click to expand...

The woman in the story got an immediate benefit ($4850 in cash), and that saved her some serious embarrassment. But these charges are head-snapping.

What is the best way to think about this? Is it enough to say that the woman is an adult, she received a benefit, she is stuck with the deal? Or is it enough to say that the company's terms are unconscionable, disclosure was inadequate, and charges at these rates should be banned?
Click to expand...

Of course, the system is set up to profit off of the less-intelligent and less-savvy. Half the people have an IQ of under 100. To get angry with them for merely fulfilling their role is like being angry with a tree for allowing itself to be cut down, or calling a fish "stupid" for having been caught in a net.

Since the game is "finance" I won't fall into most of the traps these people have... but I'm not going to congratulate myself or feel smug about it. If the game were football I would get creamed.
 
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