Families, Deep in Debt, Facing Pain of Growing Interest Rates

[NashVegas]

With the Federal Reserve about to raise interest rates for the first time in four years, Joyce Diffenderfer is beginning to wonder how she and her husband, Curtis, will deflect the growing cost of their $16,000 in credit card debt.

Not that her concern is a pressing issue yet; it is more like a fire drill in anticipation of a fire that she is still not convinced will occur. The Diffenderfers figure that a modest rate increase would initially add only $35 to their monthly card payments, which now total more than $600. Still, they have run out of ways to sidestep the cost of borrowing, and if the rates keep rising, as the Fed's leaders suggest they will, then the only alternative, Mrs. Diffenderfer said, would be to seriously cut family spending.

http://www.nytimes.com/2004/06/28/business/28DEBT.html?hp

[Tandalayo_Scheisskopf]

1. One must wonder...

What possesses people to run up $16K in debt on a credit card, at those interest rates.

Impulse control in this country is almost non-existant.

[brmdp3123]

2. My thoughts exactly...

I really don't have alot of sympathy. My spouse and I have very modest incomes, yet we manage to provide for 2 kids, have our own home, no debt, and money in the bank. We just don't spend what we don't have.

[NashVegas]

3. I Can't Imagine It

Although I once had a co-worker with a 20k credit card balance. When he told me, I was incredulous.

[Red State Rebel]

7. Bingo!

The magic words - don't spend what you don't have...Why is this such a difficult concept for people???

[Occulus]

34. all too often

the CC companies hook kids when they're young. They're JUST as bad as the tobacco companies in that respect.

Unfortunately, I fell for both. And the $8K+ in CC debt I have is just as hard to get rid of as a nicotine addiction. The problem is, with CC's, you don't have to actually use them to get screwed; I haven't made any purchases on mine in well over a year, and for some reason even though I'm in the "hardship program" ad making the minimum payments (and more as I can), the amount just doesn't seem to be dropping at a perceptible rate.

We need legislation requiring ALL CC companies to set the card so it comes out o an amount prepaid by the holder. Anything beyond that could be on credit, but we need an automatic way for people to get used to spending only what they have while they also get used to a neat little piece of plastic they all too easily can buy all sorts of things with.

[dsc]

6. I have no idea how the family in that article ran up those bills

but in two cases of relatives of mine it was a) medical bills and b) using them to stay afloat when laid off. Though neither one hit 16k.

[enki23]

8. losing their job possesses them

the desire to avoid dragging their kids to soup kitchens, or shelters. the desire to fix the car so they can drive to their new jobs as a temps posseses them. so does the desire to pay for their kids's antibiotics prescriptions. for me, it was groceries when my entire unemployment check went to rent. groceries, gas, everything i had to have to live. cash advances to help pay bills. that happens to people too.

sometimes a credit card is an excuse to buy new shoes. and sometimes a credit card is all that stands between you and the street.

self-righteous bullshit notwithstanding.

[AP]

12. I think, for a lot of people, it starts in college. You have to finance

your tuition and all your expenses, and you're hoping that you'll be able to get a job after it's over, then you end up with a crappy Bush economy which is delivering all its wealth to the top rather than (hopefully) middle class people who had to borrow money just to get through college.

[susu369]

41. Thank you, enki23

for your message in the middle of all these simon-pure posts.

[AP]

10. Wage stagnation and people having to pay a lot of money for stuff they

can't live without and are increasingly provided by privatae monopolies -- house, medicine, education for their kids, cars, gas, let's not forget Enron ripping off Caliifornia in the electricity markets, etc.

[kysrsoze]

16. Try a divorce and custody battle - I was up to $18K while working 2 jobs

It happens and it's horrible.

[mike_c]

26. bingo!

I'm hemorrhaging credit card debt at the moment and most of it is going to lawyers.

[kysrsoze]

47. Sorry to hear that. It really sucks. Keep your chin up. You'll be ok...

eventually

[progressivebydesign]

30. Shocked that someone on DU would take a holier than thou attitude..

How about job loss? Pay cuts? Rising costs? Divorce? I can name more reasons why a family would rack up credit card bills that way. You think most people like that are doing it so that they can buy jet skis?? Often it's medical bills, school costs, house emergencies, etc. People here, of all places, shouldn't be casting those types of stones at others, without knowing what happened in their lives. Trust me on this.. you never know a family's true financial problems.

[freeforall]

4. One more reason not to have a credit card

and live a simple life. So many things we don't need...

[enki23]

11. great. i'd like to see you 'live the simple life'

if you were a working class sort with a bad back and extremely poor job prospects, like... say, my father. easier still for you, i'm sure, if you had a kid with Cystic Fibrosis like, say, my father.

always an easy answer when you don't bother to fucking think.

[Doctor Smith]

13. How would a bunch of credit card debt make any of that better?

[NuttyFluffers]

29. Captain Obvious to the Rescue!!

It buys you *TIME*. You exchange for debt and suffering in the future for immediate emergencies in the present.

would any of us be better off with greater injuries/misfortunes because we decided to suck up all the pain without any help? you and your loved one's lives, your shelter, your livelyhood (car, computer, whatever gets you more capital) - all this has immediate expenses. you could choose to be wiped out immediately or roll the dice and try to buy TIME to see if you can survive later on. when your life/sustenance is on the line you don't have TIME to make such choices callously and flippantly.

judge not lest ye be judged.

[ilovenicepeople]

20. Thats true

I like to consider myself basking in my inopulence.Dont get me wrong I'm not saying I'm happy, its just that no matter how much money I made the thing that I truly want could still not be bought.PEACE on EARTH! GIVE PEACE A CHANCE

[Just Me]

5. When they HIT BOTTOM and finally see the BEAST,...

,...that has suckered every dollar from every American dreamers pocket,...only to be LEFT BEHIND,...

,...then, perhaps,...the poor, betrayed, victimized American dreamers will finally GET IT!!!!

Meanwhile, the whole freakin' world is pissed off at us and enjoying building towards the power of total humiliation against us.

If ONLY the rat's crap that controlled this country would pay,...for ALL of those who sincerely committed their lives to something honorable, with integrity.

I have to believe,....in justice,...that "they" will pay,...in fire.

[lucky777]

9. Medical bills and lay offs

I had no debt at one time; then my wife had medical/dental, and I got into a fight with my employer --- next thing you know, you are in deep credit card debt to just pay the bills. We're finally digging out after a few years and getting the credit rating back up!

But it is not really an impulse problem -- most people in America are two paychecks from homelessness. That's the system -- it keeps people on the edge.

Funny how you people never blame the rich for lack of impulse control when they buy boats and mansions from money earned by workers. Here you are blaming the poor for their lack of impulse control -- you sound like Republicans.

[jayavarman]

14. "Most people in America are 2 paychecks from homelessness"?? not really

Your post was well taken, congratulations on pulling out of a tough spot.

Whenever I hear that '2 paychecks from homelessness' stuff, though, I have to cry bullshit. . . . not even counting the fact that it takes at least 3 mos. to foreclose or evict.

As someone who has worked in banking for many many years, and has counseled & helped hundreds of people from all kinds of backgrounds- I can tell you that statement is just not true.

Sure, some people are that close to being really screwed, but it is nowhere near 'most' & I would venture to guess it's not more than 5% of the population.

Most folks have been able to amass some kind of savings in their lives, be it equity in a home of cash in the bank. When I first started in banking I spent years working in minority inner city communities. . . . The majority of my clients were hardworking people in low paying jobs. When I first started I would constantly be amazed at what a good job people were doing at saving- I'm not talking tons of $$$, but 10k, 20k, 50k in cds etc. . . was commonplace. After a month or so I ceased to be shocked, my clients knew how tough things could be & (as our grandparents used to say) "knew the value of a dollar."

I of course have seen the 2 checks away from homelessness types as well (in reality it is usually a couple checks away from bankruptcy). In 80% of the cases those types were people who got into debt for lifestyle type things- cars, houses, clothes, etc . . . and end up owing 70-80% of their paychecks in bills.

I'm painting with a broad brushstroke here, & certainly losing a job can throw anyone for a financial loop, but the homelessness thing is overly dramatic & in no way describes the financial situation of anything approaching "most Americans". I could go off for a long time on this, but let's be realistic.

How "far away from homelessness" are folks on this board? Personally, with absolutely NO income & current bills as they are I'm maybe a year or so . . . If I sold my house etc . . & got a $500 a month apt? a long long time, certainly long enough to get another job, or apply for social security if I became disabled.

I bet many on this board (& in the country as a whole) will find themselves in a similar situation

[Mnemosyne]

19. Pardon me, but how many people do you know working for minimum wage?

In NW Pa. it is almost impossible for someone, even with a bachelor's degree, to find more than a 10 - 20 hr week minimum wage job.

Many I know, that are very frugal, have lost decent paying jobs due to outsourcing, and are now having terrible struggles. Savings gone or ridiculously depleted. And forget it if you have any kind of health crisis. And these people didn't live lavish lives, no $150,000 houses and $50,ooo vehicles.

One of the greatest threats to our time is lack of empathy and compassion.

We are taught to hate the poor, they must be lazy.

Hate fat people, they are pigs that eat all the time and have no self control, and they are lazy too. Forget that our lovely gov. has poisoned us so much in the last 60yrs. with pesticides and heavy metals in our environment that attack the endocrine system causing thyroid problems that aren't detected by basic TSH tests.

Hate the gays, they are a threat to our family values. How weak ones faith must be to be threatened by what someone else does in their bedroom. AID's is God's punishment for their sins- Ron Raygun, so he let many suffer to punish them. Must be nice to be God's helper, like shrub, et al.

The gov. uses smoke and mirrors to distract all from their true agenda and many fall for it.

http://geocities.com/bohemian_grove_dirt/

"The Franklin Coverup" - Senator John DeCamp - investigated S&L scandals in 80's found more than he wanted and couldn't ignore.

And try to live if your only means were SSD or SSI. I hope things are always fortunate for you, there are many that have not been so lucky thru no fault of their own.

When you cease to be grateful for what you have or to have compassion and empathy for those less fortunate, you may lose what you do have, not neccessarilly monetary things either.

KARMA EXSISTS!!!

[jayavarman]

22. Jumping to conclusions

Who said anything about hating anyone?

I could reiterate & expand upon my previous post- about working in banking & coming into contact will all sorts of folks . . .

But instead I'll try to give you some advice . . . . If you are finding yourself in the situation you just described (people with degrees only able to find part time minimum wage jobs) the only logical thing is to just GET THE HELL OUT!

I found myself in SW Pennsylania a couple of weeks back (Somerset County) & everyone i talked to who was young said the same thing you just described . . . It sucked economically & they were getting the hell out.

Reminds me of a conversation I had with a client recently. He is an older man who had built up a successful landscaping business over the past 25 years or so. He grew up dirt poor in Mississippi & now that he is semi-retired spends alot of time there. Started out cutting grass for whoever would pay him. Anyway, he is active in his community & does alot to help out kids. He was telling me how he was talking to a group of kids Who were asking him "you've done so well & you grew up in the same town & were just like me, how did you do it & what kind of advice can you give me?"

His advice, "Get the hell out of Mississippi."

If there is no opportunity where you are, go somewhere that there is opportunity.

[gottaB]

27. What percentage of the US population has a bank account?

According to a Census Bureau report publish a year ago, in 2000 65% of US houselholds held interest-bearing assets of some kind. 67.2% owned a home.

http://www.census.gov/prod/2003pubs/p70-88.pdf

If it weren't for home equity, the median net worth for the lowest quintile woulnd't get a family of four through a month. In the next quintile, the median net worth ($6,349) could house and feed a family of four for several months.

I don't know that the average household is two paychecks away from being homeless, but it seems like that's true for about a third of the US population.

[Art_from_Ark]

32. Home ownership

Does this figure only include people who have a clear title to their home, or does it also include people who have a mortgage? As far as I'm concerned, having a mortgage is not "owning" a home.

[gottaB]

33. includes all people who have equity in their homes

Mortgages are calculated as liabilities.

I largely agree with you about home ownership. A house is hardly a liquid asset. If one is forced to sell a house due to dire circumstances, the equity might not be realized in full. Happens all the time, I'd think.

Comparing net worth to net worth excluding home equity is telling. You have to get into fourth quintile before you see households that might be able to survive a year without selling their house, though I'd assume that their mortgage payments might be higher, and presumably they'd have to adjust their lifestyle. If a median family in the fourth quintile did sell their house, they would be in a better position to either wait for somebody to meet their asking price, or lower their asking price without suffering extreme hardship.

For all US households, median net worth isn't a whole lot more than median income. For the working poor it's considerably less.

[progressivebydesign]

31. Go where there's opportunity?? That was REAGAN's LINE!

Sorry.. but you just repeated a REagan CLASSIC! Vote with your feet! When people complained that they were facing unemployment and other inflationary problems, he told them they need to move.

I really thought your post challenging the thought that many AMericans are two paychecks away from homelessness. Oh.. yeah.. maybe you're right. Living in a house going into foreclosure, having bill collectors calling you night and day, having no food for your children.. having to explain to your children why you can't answer the phone, or why the phone was turned off.. THAT'S a good life! You're awfully damn republican. If you say anything about "pulling yourself up by your bootstraps", I'm gonna scream!

[DavidFL]

36. Ok, I know it's gonna seem like I'm picking on you here...

but really, I'm not trying to. However, it's oversimplistic advice like this, where you assume that because you did something, or know someone else who did something means anyone can -- like your anecdote here about the old man from Mississippi and the one about your cash rich inner city families, which we still have no idea if they are true, if you just made them up or if you read them somewhere -- that really sticks in my craw. And these hokey anecdotes which you are trying to pass off as "common sense" advice make you sound Reganesque, as another posted said, and that's not flattering.

Moving away from one's home costs money. No big surprise there. So it's not like it's something a person working a crappy minimum wage job can pick up and do tomorrow even if they wanted to. I could list off all the expenses it entails, but I really have no patience right now to do so. Let's just agree that while it can be done, it costs quite a bit and would take someone time to save up the amount.

But more than that, your one-size-fits-all anecdotes are not helpful because you don't know what a particular person's situation is. They might be stuck in some small, cruddy town where one can only find minimum wage jobs because they have to stay there to care for a sick parent or an elderly relative, since the government certainly doesn't give a damn about them. Would you suggest a person in this situation just pick up and leave? Also, a person could be stuck living where they are because at one time they did have a decent job, but lost it, and they have school-age children that they don't want to pull out of school and all the problems that that can create in terms of their children having to adjust to a new area, school, friends, etc. So the person may be sacrificing the possibility of a better labor market for the sake of their children. Happens all the time; in fact, my grandparents did it for me and my brother. Anyway, the possibilities are almost endless why someone is tied to a particular community. But take a walk in someone else's shoes before you start dishing out these anecdotes as the solution to their problems.

[Mnemosyne]

44. I am seriously ill, age 46, and have an elderly Mom,

do you think I can move? Not many hires anywhere anymore for over 40's.

You sound republican? and are obviously doing well.

Good for you.


as per hate:
My point was blaming the victims and people that are sheep for the rhetoric of the neocon media.

[shrike]

48. Move? How?

You've obviously never tried to move somewhere when you were jobless and had little money.

That said, I'll agree that some people spend themselves into trouble. I remember talking with the manager of a food pantry which served a county that was quite wealthy. She had clients with top-notch addresses: they'd overextended themselves and relied on the pantry to get them through the month.

On the other hand, 10 years ago I lost two jobs in six months and became an independent contractor in hopes of getting some job security. I had no savings left because I'd spent them all looking for the jobs I lost (job-hunting is incredibly expensive for those who've never done it.) So in my first few months of entrepreneurship I lived off my credit cards until money started to come in. I was lucky in that my gamble paid off: ten years later I'm debt-free and still self-employed.

[zelda7743]

25. I think it's safe to say....

Most people have little to no savings. I know that I wouldn't be able to pay my rent if I had to go without 2 paychecks.

[sendero]

46. Anyone....

.... who does not know there is a consumer-level debt crisis brewing in this country --- well, they just don't wanna know.

It's real and it is coming.

[DavidFL]

35. And this is all anecdotal evidence...

which is certainly not indicative of the financial picture of this country as a whole. Moreover, these anecdotes are uncorroborated and for all we know, you could be making this up.

If it's true, great for these people that they were able to save up and have a nest egg in case of emergencies. I'm happy for them. However, your clients do not represent a statistically significant enough of a sample for you to extrapolate their situation onto the nation as a whole making your conclusion, that the "two paycheck" myth is false, flawed.

[myccrider]

49. Mostly disagree, sorry

While I agree that it's not "most", IMHO there is a significant percentage of Americans who are only a few paychecks from homelessness. Much higher than 5%. My guess is 20% or so of households are at risk judging by my own extended, very blue collar family, friends, and personal experience. Very few in my family have anywhere near $10k in savings. Most are living almost completely from one check to the next. Having even $1000 in reserve is considered to be above average, especially for the younger ones. Looking at statistics, this isn't an uncommon condition in the US.

Almost all of those single women with children out there are living very close to that edge. Anyone working for 1 1/2 times minimum wage or less is living very close to that edge, especially if they have any dependents. Many surviving on Social Security or Disability are one medical or personal emergency from that edge. Same is true for anyone without medical insurance.

Although most would be able to remain in their current abode for 3 months or more, once you get that far behind without the resources to recover, many will find it nearly impossible to come from behind enough to prevent losing that particular place to live.

I'd guess the most important reason there isn't more actual homelessness is that people fall back on their families/friends when they have problems. Borrow money, move in for 'a while', etc. until they can recover. That's certainly what has happened in my family.

When I was struggling from paycheck to paycheck as a single mother, I didn't possess enough to have any bank interested in 'consulting' with me about my finances. I didn't own anything of note, had almost no money in the bank, and was almost completely without personal resources if there was an emergency.

Maybe your sample/experience is biased toward those who already own something (real estate or a non-negligible savings account). When you're REALLY poor and without assets, it is frighteningly easy to slip off that edge.

[Bozita]

15. The current Bill Moyers NOW has a segment on this topic

Harvard economics professor spoke of record home forclosures and bankruptcies. She said that those numbers will soar as interest rates rise.

Excellent show.

[vetwife]

17. I know part of what is happening and it is true

When fuel and groceries and everything starts going through the roof to pay for a new Cluster bomb.....When Healthcare is out of sight. When many people are renting and not owning and no Landlord is gonna give an inch....when families start taking in other family members...or helping out..when states are bankrupt..and ther is no social programs...When cops will fine you 300 for some BS just because they can...when death hits and someone lost their life insurance because they couldn't keep up the premiums...when sickness hits...unexpected emergencies........You get hit hard..When most jobs have been outsourced.....Don't tell me it doesn't affect those people who were not in debt three years ago.

People who live from payday to payday and don't have stock options or portfolios get the
picture..the folks who have still got some savings and health insurance don't get it. The cost of living is three times as high as the cost of earning power. No this is real. Bush wants us in a third world state. No middle class. So his rich buddies can live the way they want and make slaves out of the rest of us. Not all states have programs (social)

For Ga. to be so red,,,,they sure suck at programs for the elderly and disabled.......
Believe what you want..We are buying cluster bombs, payin for M-16's, and a war and reconstruction for a place we had no business being. We are paying though the nose ! Its about Bush's agenda and not about We the people. We can only tighten belts so far.

[Bozita]

21. and the Fed will raise the interest rate this week

If anybody has an adjustable rate mortgage, this is the time to switch.

Folks on the financial edge are in for a rough ride.

[The Zanti Regent]

18. Don't forget the Bankruptcy "reform" bill that will screw them royally!

If the Nazi Party is stupid enough to finally pass the so-called Bankruptcy Reform bill, the banking system will collapse even worse than the Great Depression!

[SoCalDem]

24. My friend who declared bankruptcy last year said

her lawyer told her that if/when the new bill passes, there will be a 6 month "pre-enactment" period and that will be when the shit hits the fan.. All the folks out here who are barely hanging on, will see the handwriting on the wall, and BAIL OUT..

[Boomer]

23. My mind boggles....

at the thought of two mortgages and $16,000 in credit card debt for an essentially optional expense such as remodeling a house. That is sheer madness.

I know many people have found themselves in uncomfortable financial circumstances due to ruinous medical bills, but all the friends and acquaintances of mine who are in dangerous levels of debt managed to get there through carelessness and simple lack of impulse control.

My next door neighbors, who can barely make their rent payment each month, will buy toys for their two boys -- skateboards, bicyles, a drum set -- that are broken or abandoned within weeks. They have a TV/entertainment center three times the size of ours and drive a newer car. They replaced an entire living room suite of perfectly good furniture because they were tired of the old set.

Another friend of mine ran up tens of thousands of dollars in debt for a graduate degree in an academic field that is no longer hiring, which is still a better situation than the friend who ran up tens of thousands of dollars in debt and never completed his degree. And I would just shake my head when he would charge yet another vacation trip out of town because he needed a break from all his studies.

I've watched hundreds of acres of local farmland ploughed under for cheaply built McMansions selling for a quarter of a million dollars -- what apparently passes for a starter home in this area. God forbid a family of four should have fewer than four bathrooms and a quarter of an acre of land.

Yes, there is a class system in this society that is undermining the middle class security of previous generations, but those generations were also much more savvy about maintaining an affordable lifestyle and avoiding ruinous debt. And I've followed my parents' example and tried to live as simply as possible. When I indulge in luxuries -- like cable TV, a couple of pets, eating out, etc. -- I recognize these as luxuries and do not confuse them with necessitites. I don't *need* a vacation in the Bahamas to unwind, and I sure as hell am not going to put myself in debt for one, no matter how lovely that week might be or how much I may think I deserve it.

It's precisely this kind of profligate spending and ruinous debt that makes a work force scared and compliant, too terrified of losing what they've got to rock the boat.

[koopie57]

28. I thought my husband and I

were the only ones who looked around and wondered how people can afford all their luxuries. Our neighbors just had their house remodeled, both drive new cars and take vacations. I know their income is only about 60 percent of ours. We rent movies rather than go to the theatre, we never take vacations, have old icky carpeting, and our kitchen floor has "spots missing" linoleum that we cover with rugs. Sometimes I feel like just saying the heck with it and getting what I want, but I look and nothing seems nice enough to risk getting further in debt.

[K8-EEE]

45. It Happened To Me, Without "Luxuries" Via UNEMPLOYMENT

It's amazing (especially in such an expensive area as Los Angeles) how six months with no work or with part-time work can go through your savings -- and when you always hope work is coming around the corner (especially when you have offers that fall through at the last minute) that's when the credit cards come out.

We ALWAYS paid our balance in full, for over 10 years before they lay-off...I suppose some people would think that keeping our daughter in a private high school is a "luxury" but she loves the school, the public school she would go to is dreadful, and it's worth the interest to me to charge the tuition (which at $6,000 a year cheap for L.A.!) to not yank her out.

Except for occasional 99 cent taco stand dinners, we don't eat out -- vacation, what's that? Four of us live in a modest 2 bedroom house, since my husband has been back at work we have managed to cut our debt in half and it will be paid off in two months...

I just wanted to say that some people acrue credit card debt without being stupid, impulsive, or spoiled.

[AnnitaR]

37. $3000 televisions!?!

Honest to god I know people who are making under $20,000 a year buying these things! Why?? Because everyone else is buying them. A lot of people these days feel like they have to do whatever it takes to "keep up with the Jones'". Going in debt for a $3000 TV doesn't seem to faze them.

Of course there are people out there that cannot help the debt that they have. That's a totally different story and not what I'm talking about here.

However, there are a large number of families out there that are just plain reckless with their finances. They are in debt up to their eyeballs but still have to have what those around them have.

[alarimer]

38. Unfortunate

Many people find themselves in this situation. Big banks really hate low interest rates which helps ordinary people. They start raising rates and all those people who were snookered into buying more house than they could afford at higher rates are all screwed. Credit cards are so damn easy to get. I have a lot of debt on one with a low interest rate of 10%. But then I make regular, on time payments so I have not suffered a lot. If they raised the rates though, I would take out a personal loan to pay it off. The terms are usually better (11-13% rather than 22% say) and you make regular monthly payments for say 36 months then it is done. I had a lot of student loan debts (that will be paid off in less than 2 years-yippee!) and, despite having a college degree-and then some- have never made more than $30k a year. I guess I chose the wrong profession (biology) which requires advanced degrees to make any money at all.

So it is easy to rack up debts- most of mine is from car repairs, tires, new mattress (the old one was 10+ years old and I was having back problems as a result) etc. It is great if you have no debts but most people are not so lucky and they do make poor choices. I certainly have. I think it is way too easy to get credit cards myself- they even send them to high school students now!!!

[quaker bill]

39. I have been there

My daughter was delivered by emergency c-section while I was uninsured. I had signed up for my new employer's coverage but it had not taken effect yet. So I did my best to do the responsible thing. I paid cash up front for a normal delivery. The emergency procedure cost $15,000 more.

It took 6 years doing every thing I could to pay off this debt.
For those years, there were no vacations that could not be done by short day trips. I kept the old cars patched together myself and took brown bags to work.

Once I paid this off, I committed to never carrying a revolving debt balance again. If I need a newer vehicle, I save up the money and buy one with cash.

Interestingly, by carrying no debt, everyone wants to loan me money, at very low interest rates. The price of a good used car can fall by several thousand dollars when you offer cash. If you have bad credit and no cash, you pay the full price and the higest interest rate. A person deep in debt will pay 50 percent for the same vehicle when you consider principle and interest even if their income is higher than mine.

One they get you in debt, all factors conspire to keep you there. Once you are out of debt there is no end to the offers trying to get you back.

[Boomer]

42. Credit is soooo seductive

Our consumer society waves useless, superficial decorative items in our faces 24/7 and too many people can't resist the temptation to buy them.

When I talk to friends who are deeply debt, the same theme emerges -- they hate feeling deprived. They eat out to socialize, as if it's not possible to see people without spending a lot of money; they take vacations to Cancun, as if it's not possible to relax without leaving the country; they buy designer clothes, as if there are no alternatives to assembling an acceptable appearance. These expenses are necessities in their eyes, not luxuries, and it sucks that they end up in debt to pay for these necessities, but they can't seem to admit that they made a choice to go into ruinous debt.

Meanwhile, I haven't had a true vacation in ten years, we clip coupons, and are not above a shopping trip to Goodwill or the local dollar store. We rent DVDs instead of going to the theater (except for F9/11!) and consider a Sunday brunch at the local diner to be a wonderful treat. Oddly enough, I don't feel the least bit deprived. And I sleep a lot better at night than my friends who just HAD to relax by flying to Mexico.

[Mari333]

40. Its rough here in the heartland

Dollar stores and Wal Mart...5-6 dollar an hr jobs...people who read at 6th grade level. I was lucky I had the money to spend on a health care class so that I can get a job. Health costs if you get sick would wipe people out, totally, if they have any savings at all. The only good thing I ever did was buy my house and now Im selling my land.
I just dont buy anything new or at stores that I dont need. Just buy food, and cheap food at that. Use wood in fireplace, hunker down and live. I almost never go out to eat, and only drive when I have to.
I am used to living cheap.
Now that Greenspan isnt shilling for Bush anymore and the interest rates are going up, I wonder if my house and land on the market will sell. We shall see.
There is a 10% unemployment rate here. a lot of drugs making a comeback for people to make monies. Its really bad in this area, drugs, because its
a. self medicating people who are freaking out
b. easy for poor people to sell them for money

Even the small towns are loaded with people who are homeless. The elderly have it the worst, and single moms with kids.
Credit cards , I noticed last year, being chalked up by many consumers who were on vacation in my town..buying their groceries with them..I heard one couple freaking out that was all they had left to buy their groceries with..
a lot of people are downsizing, but some are being forced to downsize and are angry they have to give up what they are used to.
Every family and situation is different. Some people have health care costs that are wiping out their income..and the credit card is the supplement for other bills and food
On the other hand, some families just dont want to give up their lifestyles.
It all depends. Everyone is different.

[bushwakker]

43. If you have a mortgage - fix that rate my friends

better to raise your rate now and know where you stand than take your chances with what's coming next.

[Bridget Burke]

50. Another part of the great Reagan legacy

His tax bill removed the deduction for interest on credit cards. However, tax laws still favor borrowing on your home equity. So those lucky folks with equity can clear up the credit card debt. Of course, if things go bad, they'll lose their homes.

The 1986 bill still affected consumer borrowing, tax experts say. The law wiped out the deduction for interest on credit cards and most other types of consumer debt. But it preserved deductions for home mortgages, home equity loans and home equity lines of credit.

Back in 1986, some economists warned that eliminating the deduction for credit card interest would curb consumer spending and hurt the economy. That didn't happen. Credit card borrowing is at record levels. The combination of low interest rates, higher home values and the tax deduction has prompted millions of consumers to tap their home equity.

www.usatoday.com/money/2004-06-10-reagan-impact_x.htm