the reason why the housing boom was the worst thing that...

[Dancing Fire]

could of happen for so many young couples...

they use the (imaginary money) equity in their home as an ATM machine to purchase cars,boats, go on vacations etc,etc...what they don''t realize it is that..... until they sell their home "IT AIN"T REAL MONEY".

most young couples don''t understand the difference of being able to buy a ticket items and being able to afford big ticket items,completely two different things. i can walk into any Mercedes dealership and buy a couple of 100K cars without any problem,but can i afford it? HECK NO!!


remember, abnormal rise in the housing market only do more harm than good. if the housing market keep on rising it''ll just make my daughter''s generation unable to afford a home,so the housing bust is really good news for those affordable buyers.

 

[Kayakqueen83]

I think I''m going to like you, Dancing Fire

very good point

 

[NewEnglandLady]

I wholeheartedly agree.

Another thing that drives me nuts is the "what can you afford a month" question. When I buy a car, I''m not buying something for $300 a month, I''m buying a $20,000 depreciating asset!! Or when you buy a house, it''s "what mortgage can you afford a month"...it''s like people have lost a sense of how much things cost as a whole instead of in monthly increments.

DH and I have saved for many years to try to pay for a house without taking out a mortgage (though admittedly we are not there yet). We''ve sacrificed A LOT and worked really hard to do so, yet when we recently went to a realtor to discuss buying a home, they automatically assume you want to take the chunk of money that took a decade to save and use it as a downpayment on an insanely expensive monstrosity of a house that eats up 33% of your monthly income AFTER the huge downpayment. We had to listen to a realtor talk to us about how we could "certainly afford it" and how we''re still "so young". UGH! Yeah, sorry, we still have to save for our unborn childrens'' massive college accounts and we do want to retire when we can still enjoy our lives, so I''ll pass on the overwhelming mortgage and just buy what is feasible for us now, thanks.

 

[Gemma12]

I really feel bad for people that trusted financial institutions to lend them money and believed that it would have to be something they could afford. We looked into buying real estate in the US and were shocked at how much banks would lend us (much like NEL''s experience). I do believe that everyone has a responsibility to make sure that she/he can pay back a loan before they take it out but surely there is something seductive in ''but the bank will lend me $1,000,000, they must think I can repay it...''

Meanwhile I''m kind of hoping for a bit of a bust in Oz-now that we have just paid off our first place and are on the hunt for a second! Of course, immediately after that a boom would be great!

Good on you NEL and I hope you can get your dream home soon!

 

[Dancing Fire]

Date: 5/12/2008 9:47:25 PM
Author: Kayakqueen83
I think I''m going to like you, Dancing Fire

very good point

i know my net worth ain''t S**T compare to most of the members here on PS, but i''am proud of myself to be debt free since i was 45 yrs old,feel so good w/o a mortgage or auto payment every month. i could care less my home is worth 500K or 250K, i will not use it as a ATM machine.

 

[movie zombie]

DF, its going to effect our children in more ways than not being able to afford to buy a home:



http://www.huffingtonpost.com/peter-dreier/vulnerable-republicans-si_b_101301.html

any idea of what kind of loss like that will have on our roads, schools, libraries, etc?!

movie zombie

 

[Haven]

We were also shocked by how much banks were willing to lend us, even now after mortgages have apparently gotten harder to obtain. We decided to spend less than half of what we qualified for and we are very happy with our decision.

I have to say that I don''t think financial ignorance is limited to young couples. When we were searching for our home we went into MANY homes (at least 20) that were either in foreclosure or approaching foreclosure and they were all owned by older couples or families with older children. I think the living-beyond-one''s-means epidemic affects people of all ages, not just young couples.

 

[Skippy123]

Date: 5/13/2008 12:22:02 AM
Author: Haven
We were also shocked by how much banks were willing to lend us, even now after mortgages have apparently gotten harder to obtain. We decided to spend less than half of what we qualified for and we are very happy with our decision.

Ditto, we did the same. I think it is tough to come up w/20% down but we did it. We also decided to buy a house the way Haven did, so that if one of us were ever laid off, etc we could keep making our payment without worrying so much if it ever came to that.


It is sad I have seen some people that made good money lose their house because they were laid off.

 

[Kaleigh]

Date: 5/13/2008 12:22:02 AM
Author: Haven
We were also shocked by how much banks were willing to lend us, even now after mortgages have apparently gotten harder to obtain. We decided to spend less than half of what we qualified for and we are very happy with our decision.

I have to say that I don''t think financial ignorance is limited to young couples. When we were searching for our home we went into MANY homes (at least 20) that were either in foreclosure or approaching foreclosure and they were all owned by older couples or families with older children. I think the living-beyond-one''s-means epidemic affects people of all ages, not just young couples.

I agree the living beyond the means is not just endemic of younger people, it runs the whole gamut. We are seeing it here in droves.

 

[miraclesrule]

It''s so true. I think it''s a disgrace to market credit cards to students on campuses. After my very first credit card debt in my early 20''s, I was thinking "this is crap". After that was paid off, I vowed never again to buy anything I coudln''t afford with cash. Unfortunately, when I was nearly 40 and wanted to buy a house, I didn''t have any credit at all. The lender told me that I had to get into debt to buy a house. Huh?!?!? Eventually, we simply got letters from my dentist (who was on retainer it seems), my landlord, and my auto insurance agent who had been receiving payments from me for years. That allowed me to get into my home. Then my daughter went to work at a bank. She would persuade me to do all the things that I needed to do to get my credit score to the highest level. You need to have 5 different types of credit from different areas. Home, car, retail, pay them for five years to get the best rating. INSANITY!!

See, this is the stuff that makes me froth at the mouth. They don''t teach you in high school about credit rating scores or the predatory practices of the banking system. I was very happy not having had contributed to the national debt, but it turns out that the game isn''t played that way. I just hope my remodel gets done quickly after my daughter''s wedding so I can re-finance and get rid of the interest only equity line she talked me into...probably so she could get the commission. Smart girl.

 

[monarch64]

Date: 5/13/2008 1:16:37 AM
Author: miraclesrule
It''s so true. I think it''s a disgrace to market credit cards to students on campuses. After my very first credit card debt in my early 20''s, I was thinking ''this is crap''. After that was paid off, I vowed never again to buy anything I coudln''t afford with cash. Unfortunately, when I was nearly 40 and wanted to buy a house, I didn''t have any credit at all. The lender told me that I had to get into debt to buy a house. Huh?!?!? Eventually, we simply got letters from my dentist (who was on retainer it seems), my landlord, and my auto insurance agent who had been receiving payments from me for years. That allowed me to get into my home. Then my daughter went to work at a bank. She would persuade me to do all the things that I needed to do to get my credit score to the highest level. You need to have 5 different types of credit from different areas. Home, car, retail, pay them for five years to get the best rating. INSANITY!!

See, this is the stuff that makes me froth at the mouth. They don''t teach you in high school about credit rating scores or the predatory practices of the banking system. I was very happy not having had contributed to the national debt, but it turns out that the game isn''t played that way. I just hope my remodel gets done quickly after my daughter''s wedding so I can re-finance and get rid of the interest only equity line she talked me into...probably so she could get the commission. Smart girl.

And that is SO one of the big problems in this country, imo. Does anyone know if HS econ classes have started incorporating lessons about credit? I wish they would...I know myself, my dad just taught me NOT to get CC''s and if I couldn''t afford to pay for something with cash then I shouldn''t be buying it, period. Not the best way to go about finances, either, as he didn''t teach me the responsible way to establish credit. I made a lot of credit mistakes in my college years and on into my 20''s, and have spent years repairing the damage I did back then. I think that in one semester, my high school econ class (or just a couple hours of speakers or something,) could have taught me how to avoid that struggle.

 

[Dancing Fire]

Date: 5/13/2008 12:18:48 AM
Author: movie zombie
DF, its going to effect our children in more ways than not being able to afford to buy a home:

<The U.S. Conference of Mayors projected that 10 states alone would lose $6.6 billion in local tax revenue>

http://www.huffingtonpost.com/peter-dreier/vulnerable-republicans-si_b_101301.html

any idea of what kind of loss like that will have on our roads, schools, libraries, etc?!

movie zombie

MZ
there're no easy solutions to this problem. the goverment shouldn't bail out the banks or the homeowners with taxpayers money.

 

[bee*]

Date: 5/12/2008 9:47:25 PM
Author: Kayakqueen83
I think I''m going to like you, Dancing Fire


very good point

Me too! In fact, if you were a new poster and not registered from years ago, I would think you were my FI. D has been saying the exact same things as you, only it''s related to our market here in Ireland. The exact same thing is happening here. I''m going to tell D to have a read of your posts!!

 

[Pandora II]

Date: 5/13/2008 12:22:02 AM
Author: Haven
We were also shocked by how much banks were willing to lend us, even now after mortgages have apparently gotten harder to obtain. We decided to spend less than half of what we qualified for and we are very happy with our decision.

I have to say that I don''t think financial ignorance is limited to young couples. When we were searching for our home we went into MANY homes (at least 20) that were either in foreclosure or approaching foreclosure and they were all owned by older couples or families with older children. I think the living-beyond-one''s-means epidemic affects people of all ages, not just young couples.

I was amazed how much we can potentially borrow for a mortgage at the moment. I hate the idea of owing so much money that if something awful was to happen like one of us couldn''t work that we would struggle to pay the mortgage every month.

I only want to borrow about 45% of what we could.

The whole credit thing is madness. I think living in Italy really coloured my view-point. When I was there (until 2003), you couldn''t really get credit. I had a $1k overdraft limit and that was it. Most places didn''t take cards so you paid for everything in cash. It makes you think more about money when you are handing over bank-notes rather than a piece of plastic.


One thing I have noticed in the UK is that there seems to be less of a work ethic amongst students and an over-reliance on credit. From when I was 16, I always had weekend and evening jobs, my parents didn''t give me money and I paid off my own debts. I remember working a whole summer to pay off my university overdraft after graduation. I didn''t go out or buy myself anything for nearly 2 months, every penny I earned went to the bank.

I have a 22 year old sister who just has no concept of money - she has huge student debts, expects my parents to give her money to go out and finds having a part-time job as well as studying ''just too exhausting''...

I would love to see schools really teaching about fiscal responsibility. It just doesn''t seem to occur to them. I was shocked to hear a couple of people in my office (early 20''s) discussing 0% balance transfers. I had no idea what these were and it terrified me. I have my CC paid off in full every month - I couldn''t sleep at night if I knew I owed money and could have a problem paying it back.

I also see so many people who think it''s fine to spend like crazy and then just go bankrupt when they can''t afford to pay things back. Even worse, the courts here will allow you to go bankrupt and write your debts off if they are for things like buying designer clothes, holidays etc - if they are for things like desperately trying to pay your bills etc then they turn it down. So people who are genuinely struggling are stuck whereas people who are just irresponsible can just walk away.

It''s going to hurt some people who don''t deserve it which is sad, but all in all I think the credit crunch will ultimately save a lot of people from a world of financial pain

 

[DivaDiamond007]

Date: 5/13/2008 8:07:18 AM
Author: Pandora II

Date: 5/13/2008 12:22:02 AM
Author: Haven
We were also shocked by how much banks were willing to lend us, even now after mortgages have apparently gotten harder to obtain. We decided to spend less than half of what we qualified for and we are very happy with our decision.

I have to say that I don''t think financial ignorance is limited to young couples. When we were searching for our home we went into MANY homes (at least 20) that were either in foreclosure or approaching foreclosure and they were all owned by older couples or families with older children. I think the living-beyond-one''s-means epidemic affects people of all ages, not just young couples.

I was amazed how much we can potentially borrow for a mortgage at the moment. I hate the idea of owing so much money that if something awful was to happen like one of us couldn''t work that we would struggle to pay the mortgage every month.

I only want to borrow about 45% of what we could.

The whole credit thing is madness. I think living in Italy really coloured my view-point. When I was there (until 2003), you couldn''t really get credit. I had a $1k overdraft limit and that was it. Most places didn''t take cards so you paid for everything in cash. It makes you think more about money when you are handing over bank-notes rather than a piece of plastic.


One thing I have noticed in the UK is that there seems to be less of a work ethic amongst students and an over-reliance on credit. From when I was 16, I always had weekend and evening jobs, my parents didn''t give me money and I paid off my own debts. I remember working a whole summer to pay off my university overdraft after graduation. I didn''t go out or buy myself anything for nearly 2 months, every penny I earned went to the bank.

I have a 22 year old sister who just has no concept of money - she has huge student debts, expects my parents to give her money to go out and finds having a part-time job as well as studying ''just too exhausting''...

I would love to see schools really teaching about fiscal responsibility. It just doesn''t seem to occur to them. I was shocked to hear a couple of people in my office (early 20''s) discussing 0% balance transfers. I had no idea what these were and it terrified me. I have my CC paid off in full every month - I couldn''t sleep at night if I knew I owed money and could have a problem paying it back.

I also see so many people who think it''s fine to spend like crazy and then just go bankrupt when they can''t afford to pay things back. Even worse, the courts here will allow you to go bankrupt and write your debts off if they are for things like buying designer clothes, holidays etc - if they are for things like desperately trying to pay your bills etc then they turn it down. So people who are genuinely struggling are stuck whereas people who are just irresponsible can just walk away.

It''s going to hurt some people who don''t deserve it which is sad, but all in all I think the credit crunch will ultimately save a lot of people from a world of financial pain

ACK! Working in bankruptcy, this is one statement that really makes the hairs on my neck stand up because it''s simply not true. The vast majority of people in bankruptcy have not been living one huge shopping spree on credit and then waking up one morning deciding to "walk away". Most bankrupt consumers have been struggling for years and years - partly because of living beyond ones means (i.e. housing crisis) or due to lack of good paying jobs (i.e. automakers shutting down shop and laying off employees). The other huge factor in personal bankruptcies is lack of adequate health insurance. We recently had a client who was in an auto accident, involving only himself, and the bill was well over $100K. He had no health insurance and was unemployed living with his mother. I think before anybody makes judgments of one in bankruptcy you must first consider the circumstances as a totality instead of assuming that they have a closet full of designer clothes and have done extensive traveling.

Sure, there are people out there who will file bankruptcy and "abuse the system" but there are laws in place to restrict filings such as those, and I can assure you that those cases are the exception and not the rule.

You also must consider that the price of goods has consistenly outpaced wages in many areas - thus creating financial strain on families even if they are living within their means. I''ll use myself and DH as an example - our Adjusted Gross Income for 2007 was a mere $20.00 more than our Adjusted Gross Income for 2006 - meaning there were no raises and the cost of living has gone up in that 12-month period. We''re still aflloat, but for how much longer - and the only debt we have is student loans and a car loan. Scary thought, especially as gas prices in our neighborhood are nearing $4/gallon.

Highschools should be teaching fiscal responsibility but they''re not. I really started learning about fiscal responsibility when I started working in bankruptcy and saw what happens when things go very very wrong. I certainly have made mistakes in the past with credit, especially in college, but promised myself I''d pay it off and I did. It took some time, patience and sacrifice but it was done and I''m so proud to not be a slave to the credit card companies. Now I''m tackling the student loans and the car loan........

Jess

 

[neatfreak]

DivaD: I think what Pandora is saying is that they DON''T usually consider the differences between someone who pilfered their way to bankruptcy and those who had no choice due to high medical bills, etc.

Personally, working in healthcare I think there should be a *different* type of bankruptcy for someone whose bills are all medical (and NOT elective). DivaD is so right that there are many people out there who are homeless or bankrupt due to medical bills (this is in the great old US of course).

 

[glitterkitty]

Date: 5/13/2008 9:23:18 AM
Author: DivaDiamond007

Date: 5/13/2008 8:07:18 AM
Author: Pandora II

Date: 5/13/2008 12:22:02 AM
Author: Haven
We were also shocked by how much banks were willing to lend us, even now after mortgages have apparently gotten harder to obtain. We decided to spend less than half of what we qualified for and we are very happy with our decision.

I have to say that I don''t think financial ignorance is limited to young couples. When we were searching for our home we went into MANY homes (at least 20) that were either in foreclosure or approaching foreclosure and they were all owned by older couples or families with older children. I think the living-beyond-one''s-means epidemic affects people of all ages, not just young couples.

I was amazed how much we can potentially borrow for a mortgage at the moment. I hate the idea of owing so much money that if something awful was to happen like one of us couldn''t work that we would struggle to pay the mortgage every month.

I only want to borrow about 45% of what we could.

The whole credit thing is madness. I think living in Italy really coloured my view-point. When I was there (until 2003), you couldn''t really get credit. I had a $1k overdraft limit and that was it. Most places didn''t take cards so you paid for everything in cash. It makes you think more about money when you are handing over bank-notes rather than a piece of plastic.


One thing I have noticed in the UK is that there seems to be less of a work ethic amongst students and an over-reliance on credit. From when I was 16, I always had weekend and evening jobs, my parents didn''t give me money and I paid off my own debts. I remember working a whole summer to pay off my university overdraft after graduation. I didn''t go out or buy myself anything for nearly 2 months, every penny I earned went to the bank.

I have a 22 year old sister who just has no concept of money - she has huge student debts, expects my parents to give her money to go out and finds having a part-time job as well as studying ''just too exhausting''...

I would love to see schools really teaching about fiscal responsibility. It just doesn''t seem to occur to them. I was shocked to hear a couple of people in my office (early 20''s) discussing 0% balance transfers. I had no idea what these were and it terrified me. I have my CC paid off in full every month - I couldn''t sleep at night if I knew I owed money and could have a problem paying it back.

I also see so many people who think it''s fine to spend like crazy and then just go bankrupt when they can''t afford to pay things back. Even worse, the courts here will allow you to go bankrupt and write your debts off if they are for things like buying designer clothes, holidays etc - if they are for things like desperately trying to pay your bills etc then they turn it down. So people who are genuinely struggling are stuck whereas people who are just irresponsible can just walk away.

It''s going to hurt some people who don''t deserve it which is sad, but all in all I think the credit crunch will ultimately save a lot of people from a world of financial pain

ACK! Working in bankruptcy, this is one statement that really makes the hairs on my neck stand up because it''s simply not true. The vast majority of people in bankruptcy have not been living one huge shopping spree on credit and then waking up one morning deciding to ''walk away''. Most bankrupt consumers have been struggling for years and years - partly because of living beyond ones means (i.e. housing crisis) or due to lack of good paying jobs (i.e. automakers shutting down shop and laying off employees). The other huge factor in personal bankruptcies is lack of adequate health insurance. We recently had a client who was in an auto accident, involving only himself, and the bill was well over $100K. He had no health insurance and was unemployed living with his mother. I think before anybody makes judgments of one in bankruptcy you must first consider the circumstances as a totality instead of assuming that they have a closet full of designer clothes and have done extensive traveling.

Sure, there are people out there who will file bankruptcy and ''abuse the system'' but there are laws in place to restrict filings such as those, and I can assure you that those cases are the exception and not the rule.

You also must consider that the price of goods has consistenly outpaced wages in many areas - thus creating financial strain on families even if they are living within their means. I''ll use myself and DH as an example - our Adjusted Gross Income for 2007 was a mere $20.00 more than our Adjusted Gross Income for 2006 - meaning there were no raises and the cost of living has gone up in that 12-month period. We''re still aflloat, but for how much longer - and the only debt we have is student loans and a car loan. Scary thought, especially as gas prices in our neighborhood are nearing $4/gallon.

Highschools should be teaching fiscal responsibility but they''re not. I really started learning about fiscal responsibility when I started working in bankruptcy and saw what happens when things go very very wrong. I certainly have made mistakes in the past with credit, especially in college, but promised myself I''d pay it off and I did. It took some time, patience and sacrifice but it was done and I''m so proud to not be a slave to the credit card companies. Now I''m tackling the student loans and the car loan........

Jess

Pandora is here in the UK, and her perception of why people are filing for bankruptcy is true. We have an epidemic of people who believe they are entitled to whatever they want, at whatever cost and stuff the consequences. I shudder to think what would happen if we to lost free healthcare under the National Health Service.

In the coming months the rate of repossessions and bankcruptcies is going to grow at an alarming rate, and people who have over stretched themselves will face a bleak time. DH and I have watched people around us move up and up the housing market, borrowing the maximum amount and buying at top end prices - they''re the ones starting to look worried now.

One of DH work colleagues recently moved into a new house after deciding their old place wasn''t big enough - but they could only afford it by taking on extra jobs, selling both their cars and taking out a 35 year mortgage. Meanwhile, we make the final payment on our mortgage next July and own all the equity in our house at the age of 38 (thanks to consistently overpaying our monthly amounts) - which is enough to move to a bigger house when we use our savings to make up the difference.

Most people do not understand you have to make sacrifices to get what you want - its going to be a hard lesson for them to learn.

 

[movie zombie]

Date: 5/13/2008 1:56:59 AM
Author: Dancing Fire

Date: 5/13/2008 12:18:48 AM
Author: movie zombie
DF, its going to effect our children in more ways than not being able to afford to buy a home:

<The U.S. Conference of Mayors projected that 10 states alone would lose $6.6 billion in local tax revenue>

http://www.huffingtonpost.com/peter-dreier/vulnerable-republicans-si_b_101301.html

any idea of what kind of loss like that will have on our roads, schools, libraries, etc?!

movie zombie

MZ
there''re no easy solutions to this problem. the goverment shouldn''t bail out the banks or the homeowners with taxpayers money.

and again we''re in agreement....for the most part. deregulation allowed the problem and those banks are walking away with the $ the made through all this and we the taxpayers are being asked to make it all right.

movie zombie

 

[Dancing Fire]

Date: 5/13/2008 10:40:49 AM
Author: glitterkitty


One of DH work colleagues recently moved into a new house after deciding their old place wasn''t big enough - but they could only afford it by taking on extra jobs, selling both their cars and taking out a 35 year mortgage. Meanwhile, we make the final payment on our mortgage next July and own all the equity in our house at the age of 38 (thanks to consistently overpaying our monthly amounts) - which is enough to move to a bigger house when we use our savings to make up the difference.

Most people do not understand you have to make sacrifices to get what you want - its going to be a hard lesson for them to learn.

good for you gltterkitty

most young couples don''t understand

the goal is to get out of debt as soon as you can after a marriage.

 

[Skippy123]

DF, what do you think will happen with zero interest loans especially now during this time?? Just curious.

 

[Haven]

Date: 5/13/2008 1:25:34 AM
Author: monarch64

Date: 5/13/2008 1:16:37 AM
Author: miraclesrule
It''s so true. I think it''s a disgrace to market credit cards to students on campuses. After my very first credit card debt in my early 20''s, I was thinking ''this is crap''. After that was paid off, I vowed never again to buy anything I coudln''t afford with cash. Unfortunately, when I was nearly 40 and wanted to buy a house, I didn''t have any credit at all. The lender told me that I had to get into debt to buy a house. Huh?!?!? Eventually, we simply got letters from my dentist (who was on retainer it seems), my landlord, and my auto insurance agent who had been receiving payments from me for years. That allowed me to get into my home. Then my daughter went to work at a bank. She would persuade me to do all the things that I needed to do to get my credit score to the highest level. You need to have 5 different types of credit from different areas. Home, car, retail, pay them for five years to get the best rating. INSANITY!!

See, this is the stuff that makes me froth at the mouth. They don''t teach you in high school about credit rating scores or the predatory practices of the banking system. I was very happy not having had contributed to the national debt, but it turns out that the game isn''t played that way. I just hope my remodel gets done quickly after my daughter''s wedding so I can re-finance and get rid of the interest only equity line she talked me into...probably so she could get the commission. Smart girl.

And that is SO one of the big problems in this country, imo. Does anyone know if HS econ classes have started incorporating lessons about credit? I wish they would...I know myself, my dad just taught me NOT to get CC''s and if I couldn''t afford to pay for something with cash then I shouldn''t be buying it, period. Not the best way to go about finances, either, as he didn''t teach me the responsible way to establish credit. I made a lot of credit mistakes in my college years and on into my 20''s, and have spent years repairing the damage I did back then. I think that in one semester, my high school econ class (or just a couple hours of speakers or something,) could have taught me how to avoid that struggle.

Monnie--The Illinois Learning Standards for social sciences address purchasing with credit in goal 15:

EARLY HIGH SCHOOL
15.B.4a Explain the costs and benefits of making consumer purchases through differing means (e.g., credit, cash).
(Taken from Illinois State Board of Ed website, isbe.net)

Public schools in Illinois are required to fulfill this goal. I can''t speak for any other states, though. I know my high school teaches students about purchasing with credit, and several courses incorporate projects that involve choosing a career, researching the average pay for that career, and then budgeting for your intended lifestyle.

In defense of the schools, though, I must say that I believe the PARENTS have a responsibility to educate their children about debt and otherwise, as well as the schools. Remember, we only get your kids for 45 to 90 minutes a day in high school, depending on the schedule and the class. As a parent, you model lifestyle habits for your children from the second they are born, and I can tell you from experience that it usually explains a lot when I meet a child''s parents. I know it''s convenient to blame educators, but come on, where are these kids'' parents?

 

[Dancing Fire]

Date: 5/13/2008 11:19:49 AM
Author: Skippy123
DF, what do you think will happen with zero interest loans especially now during this time?? Just curious.

Skippy
where can i get a loan with 0 interest? you mean like credit cards with 0 interest?

 

[Skippy123]

Date: 5/13/2008 11:36:57 AM
Author: Dancing Fire

Date: 5/13/2008 11:19:49 AM
Author: Skippy123
DF, what do you think will happen with zero interest loans especially now during this time?? Just curious.

Skippy
where can i get a loan with 0 interest? you mean like credit cards with 0 interest?

LOL, sorry, I meant interest only loans. hehe

 

[Pandora II]

Date: 5/13/2008 9:23:18 AM
Author: DivaDiamond007

ACK! Working in bankruptcy, this is one statement that really makes the hairs on my neck stand up because it's simply not true. The vast majority of people in bankruptcy have not been living one huge shopping spree on credit and then waking up one morning deciding to 'walk away'. Most bankrupt consumers have been struggling for years and years - partly because of living beyond ones means (i.e. housing crisis) or due to lack of good paying jobs (i.e. automakers shutting down shop and laying off employees). The other huge factor in personal bankruptcies is lack of adequate health insurance. We recently had a client who was in an auto accident, involving only himself, and the bill was well over $100K. He had no health insurance and was unemployed living with his mother. I think before anybody makes judgments of one in bankruptcy you must first consider the circumstances as a totality instead of assuming that they have a closet full of designer clothes and have done extensive traveling.

Sure, there are people out there who will file bankruptcy and 'abuse the system' but there are laws in place to restrict filings such as those, and I can assure you that those cases are the exception and not the rule.

You also must consider that the price of goods has consistenly outpaced wages in many areas - thus creating financial strain on families even if they are living within their means. I'll use myself and DH as an example - our Adjusted Gross Income for 2007 was a mere $20.00 more than our Adjusted Gross Income for 2006 - meaning there were no raises and the cost of living has gone up in that 12-month period. We're still aflloat, but for how much longer - and the only debt we have is student loans and a car loan. Scary thought, especially as gas prices in our neighborhood are nearing $4/gallon.

Highschools should be teaching fiscal responsibility but they're not. I really started learning about fiscal responsibility when I started working in bankruptcy and saw what happens when things go very very wrong. I certainly have made mistakes in the past with credit, especially in college, but promised myself I'd pay it off and I did. It took some time, patience and sacrifice but it was done and I'm so proud to not be a slave to the credit card companies. Now I'm tackling the student loans and the car loan........

Jess

I don't know what the situation is in the USA, but in the UK it is very much the case. We have very little unemployment here, a generous welfare system and free healthcare. You also can't get laid off in the UK the way it seems you can be in the US - labour laws are pretty protective of the employee over here. For example, if my company wanted to get rid of me, they would have to have a just reason, give me a minimum of 6 months notice and a hefty payoff.

I'm a local politician in London and I have a lot of people in both situations at my surgeries. I work a lot with the Citizens Advice Bureau, the Debt Guidance people and my constituent's creditors and time and again we can get bankruptcy for the irresponsible but not for the people who desperately need it.

I had one woman who had been working 17 hours a week and also getting welfare. Because she worked one hour over the limit - you can only work 16 hours a week without affecting your welfare benefits (she only earnt about $120 a week), she was told she had to pay the money back that she had got from welfare. It worked out at $70k. There was no way on earth she could afford that, but they were taking 40% of her welfare payments every month which left her with $20 a week to live on.

She had severe learning difficulties and was the main carer for her disabled son and with what she had left to live on she was way below the poverty line. I tried to file bankruptcy for her in order to write the debts off, but we were told she wouldn't get it because it was 'the wrong kind of debt'.

We are still working on her case, and she is one of many.

The main debt advice agencies I work with are horrified at the way in which irresponsible people can walk away from it all yet cases like these cannot.

 

[Dancing Fire]

Date: 5/13/2008 11:53:23 AM
Author: Skippy123

Date: 5/13/2008 11:36:57 AM
Author: Dancing Fire

Date: 5/13/2008 11:19:49 AM
Author: Skippy123
DF, what do you think will happen with zero interest loans especially now during this time?? Just curious.

Skippy
where can i get a loan with 0 interest? you mean like credit cards with 0 interest?

LOL, sorry, I meant interest only loans. hehe

maybe some banks still offer IO loan with a dp of at least 15%? but...those 0 down IO loans are "gone with the wind"

time for a nap!!

 

[DivaDiamond007]

Pandora - I am sorry, I thought that you were in the U.S. Our bankrutpcy system was overhauled in 2005 to prevent "abusive" filings and it''s been good and bad. In my experience, it has not brought down the number of filings but it has forced a number of people into Chapter 13 - basically a bill repayment plan done through the bankruptcy court.

Neatfreak - Many people do think there is a separate "medical bankrutpcy" but there isn''t - although it does seem there should be. If you wanna file you basically have 2 options - Chapter 7 (discharge of debts=no repay) or a Chapter 13 (repay through court).

Personally, I believe that consumers need to be taught fiscal responsibility from the get-go and bankruptcy should always be the last resort. I really try to educate my clients during and after their cases so they don''t end up in the same situation again.

Jess

 

[Pandora II]

Date: 5/13/2008 1:02:54 PM
Author: DivaDiamond007
Pandora - I am sorry, I thought that you were in the U.S. Our bankrutpcy system was overhauled in 2005 to prevent ''abusive'' filings and it''s been good and bad. In my experience, it has not brought down the number of filings but it has forced a number of people into Chapter 13 - basically a bill repayment plan done through the bankruptcy court.

No problem! I should have put that in there. Your system sounds much more sensible.