The next credit crunch?

[mia]

Source: Chicago Tribune

Now that the easy money in home mortgages is all but over, consumers may soon be caught in a financial squeeze with their credit cards.

That's the worry among some economists and credit counselors as home lending has shifted abruptly into low gear this summer. That leaves homeowners owing big sums to Visa or MasterCard without an important escape hatch -- the ability to pay down the plastic by dashing off a check from their home equity line of credit or rolling the debt into a new, bigger mortgage.

"You're not going to be able to get that mortgage loan. You'll be stuck with the higher interest credit card debt," warns Carl Steidtmann, chief economist with Deloitte Research. "We will have to live within our means. I know it's a troubling phenomenon. But we're not going to be able to spend at levels well above our income levels."

Home mortgages have become much harder to get this summer as a wave of overleveraged homeowners, many of them with adjustable-rate loans, have defaulted on their home loans. As foreclosures soared, numerous lenders had difficulty raising new capital, and some have closed up shop. Others have tightened their requirements on borrowers and bumped up interest rates, which could decrease how much money a prospective buyer can borrow....


Read more: http://www.chicagotribune.com/business/chi-sun_crunch0826aug26,0,4784210.story

---

This could be the beginning of the end for a lot of people. I'm determined to cut back to the bare minimum. With the rising costs of food and gas it's going to get tougher just to hold on to my home.

[Vinca]

1. You can't get money out of a rock. The credit card companies

would be wise to lower their rates so customers don't go under. Maybe they will since the prospect of putting liens on worthless property is Plan B.

[mia]

4. Then debtor's prisons may make a comeback -

privatized of course.

[Double T]

5. halliburton is busy preparing the multifunction internment camps...........

for that very need.

[HereSince1628]

9. And, I believe they've already approved the notion that detainees

can be used as labor by corporations. Which would probably mean a minimum wage that would be garnished to cover the room and board provided to you by the gov't.

[mia]

10. Free labor. I wonder how long it will take before we become a

nation of indentured servants.

[Xenotime]

36. Are you fucking shitting me?

I haven't heard that. What a fucking wacked idea.

[backscatter712]

45. We already have privately owned prisons, and prison-outsourced labor.

CCA, aka Corrections Corporation of America is making record profits.

On top of privately owned prisons, companies are already hiring prison labor for various jobs, including manufacturing and call center jobs, as an alternative to outsourcing to Mexico, India or other countries. When you call that 1-800 customer service number, if you aren't talking to someone with a Hindi accent, but an American accent, chances are very good that person you're talking to, and giving your credit card number to, is behind bars.

If you're doing time, you'll pretty much be expected to be a part of the prison work program. Granted, prison work programs do have a lot of positive benefits for the inmates, like teaching them job skills, and giving them something to do while they're serving their sentences, but you don't exactly have a choice in the matter as to whether you want to participate or not. Oh, and minimum wage laws in this country have an explicit exception for prisoners - they get paid less than a dollar an hour, and a good chunk of what they are paid is garnished to pay fines, restitution, fees for your imprisonment (yes, in most places, if you serve time, you have to pay "rent" to the prison while you stay there, if there's any way they can make you pay.)

[Occulus]

56. I've known people who have served time

Several, actually. Some multiple times, some are behind bars right now, etc.

Their statements regarding pay and garnishments and whatnot is fairly consistent with what you've spelled out. It's a form of slavery (they felt like slaves, for His Noodlies' sake) and it needs to be abolished on Constitutional grounds. NO prison should have workers within it who are not paid at least the Federal minimum wage, and NO prisoner should have those wages garnished for rent or in fact anything else but what they choose to purchase while they are in prison.

By the by, those "job skills" are very useless if you can't find an employer willing to hire a convicted felon or other former prisoner. I've seen this happen over and over and over again, and each and every time, the former prisoner must turn to crime as a means of supporting themselves, or die. No, they can't move. Where? How? The next town over, where it's the same? Or would you rather they hitchhiked there, wherever "there" happens to be?

It's a race to see if they get caught in a crime and thrown back in jail for even longer before they get a job. If they were in for certain crimes, it's basically a condemnation into frequent, if not permanent, unemployment. Thus, the entire cycle begins anew.

This is why, once you're "in the system" (as the people I know who got sucked into it describe this soul-destroying monster), it's almost impossible to climb back out. For one crime in particular, there quite simply isn't ever any freedom from being "in the system", jailed or not. I'll leave it to all of you to figure out which crime I intend with that statement.

One person in particular whom I know, in my presence, telephoned Engler's office during the time he was Governor of Michigan. He explained his plight (being a felon and being unable to get a job) to the Lieutenant Governor, who took his call, and (I am NOT joking, here) was told to commit a crime so he could have prison employment programs open to him.

!

It was absolutely incredible. Both our jaws dropped.

He still hasn't found an employer who is willing to hire him. Note that that doesn't mean he hasn't found possible employment- only that he simply can not get hired, period. Yes, even in fast food. Yes, even at Mal-Wart.

That is how serious the situation is, and it is serious, because all too often such people turn directly back to crime when the going becomes impossible. All too often these days, employers will say, up front, "we do not hire felons." No exceptions. This includes temporary services, at least in my area.

Would you like to know why they won't hire felons? I'll give you a hint: an aspect of the industry was featured in "SiCKO".

.


...



Insurance companies. I personally have been told by temporary agencies and other employers, and told by others who have asked, that it is the company providing their liability insurance that is forbidding them from hiring felons because it is too high of a risk. And so, yet another element in the circle locks all the others in tighter. It's a circle, a very vicious circle, and anyone at all who points it out or tries to change it is met with the "crime lover" label and thus doomed to failure at the outset. Nobody wants to defend prisoners or former prisoners because they are the "scum of the Earth", "lowest of the low", "waste of human flesh", etc., and etc.

I'm getting tired of seeing people's lives get destroyed after they were in prison for the simple fact that they were in prison. If we open the economic door to former prisoners, we very likely would see dramatically lower rates of recidivism across the board, but nobody wants to confront that fact. After all, no business owner wants to hire a criminal- right?

Right??

*sigh*

Welcome to DU, backscatter712. Have fun, be nice, and don't feed the trolls, and you'll be fine. :hi:

[Thothmes]

69. Constitutional Grounds

Read the XIII Amendment to the Constitution. That covers the constitutional grounds you are referring to.

[Gormy Cuss]

11. The very first step that I'd like to see is a clampdown on term changing after the debt is incurred.

If someone charges $1000 at an interest rate of 12% then that should be the highest rate that the card issuer can assess on the debt. If the issuer wants to charge a higher rate on new debt, fine.

[lligrd]

27. Exactly. There is No Excuse For Allowing Rates On An

existing debt to rise. Bring back the usury laws.

[Wapsie B]

51. That and bring back deductibility of personal interest.

A shining example of Reaganomics was cutting that one out.

[unblock]

32. they can't change the rate on existing debt without giving you an opt-out

unless you agreed to a floating rate in the first place, if they want to change rates, they first have to notify you of a change in terms and then you have the right to close the account and keep the old terms.

i agree that it's still b.s. and they should permit you to charge new debt at the new rate and keep old debt at the old rate, but at least you do get this opt-out method.

[Gormy Cuss]

39. The problem is that you need to be able to afford the opt-out.

That's how they chain people to the debt. If you're not in a position to pay it off in full or execute a balance transfer to a new vendor, the choice to opt-out is a hollow one, yet the opt-out provision is where the credit card companies point to defend this practice as voluntary.

Of course, most agreements also stipulate that the customer agrees to any change in terms at any time as long as the company provides the opt-out notice. That's why quite frankly I don't trust the industry to end the practice on its own.

[deadmessengers]

46. That's not how it works, actually

Here's how it works -

1) Your credit company jacks up your rates on your existing debt.
2) You send them a certified letter telling them to go Cheney themselves.
3) Your account is closed, meaning that you can no longer charge new items. The old debt remains, at the *old* interest rate.
4) You continue to pay down the old debt at the old rate. As long as you keep making payments, they can't raise your rate on the old debt.

In other words, you don't have to be able to come up with a ton of money at once to opt out. You just have to be able to open another account somewhere else if you still want to charge new items, or forego the convenience of having a credit card.

[Gormy Cuss]

48. Again, you need to be in the position to tell them to go Cheney themselves.

Far too many people aren't in the position to close off that last resort credit line. You are correct that for those who can, they can close the account and look for better credit elsewhere or choose to live without credit while paying off the old debt. The rest of the customers don't have that choice. Normally it would be easy to say "tough cookies, you shouldn't have taken on the debt" but far too many people think that they'll only be offered credit that they can afford. It once was the case that your standing with the business was the only one considered, now it's universal default. The deck is stacked against consumers.

Having at least one credit card is more than just a convenience in our current state. Try renting a car, or a hotel room without one. You'll be asked to pony up more money in the form of a deposit. Try flying. Welcome to the long security line. Twenty years ago it was much easier to do without. These days it isn't -- it can be done, but there are costs involved. If you choose to use a debit card instead you must have sufficient funds to cover the various holds that will be placed on your money. Yet again, the choice is truly voluntary only to a subset of people. With others it's just varying degrees of coercion.

[wordpix]

19. here, here! They charge 20% interest or so & no banks do that, at least not yet

[Xenotime]

35. There should be gov't assistance for those who can't make payments..

It's the only solution that makes sense. It's important to stop the homeowner's worries and frustration about this matter.

[BlueCollar]

2. watch the late-fee and interest penalties skyrocket

No wonder the banks wanted bankruptcy reform as urgently as they did.

I just finished paying all my revolving credit this weekend.

I'm with you...cut back to the minimums at this point. No confidence right now in anything this group of crooks does...

[Warpy]

3. Like I've been saying for ages

the best thing you can do is get out of debt any way you can. The exception is a fixed mortgage on a modest property, something that will continue to be a hedge against rapidly rising rents as people are foreclosed out of their homes and have to scramble for living space.

Credit card companies are going to get nastier. There is absolutely nothing standing in their way if they want to jack up interest rates just because it's Wednesday and a clerk has a headache. The biggest favor you can do yourself is remove the temptation by getting rid of them now.

A lot of people are going to get an unwanted lesson in what living within their means is as easy credit with payback deferred to the Second Coming becomes a thing of the past.

[Gormy Cuss]

12. If everyone who can remove themselves from credit card debt did so, the cc companies would react

by restoring more customer-friendly terms. They need an incentive to do so and there's only one other one that comes to mind: government regulation.

[Autumn Colors]

6. Calling and asking never hurts

Little hint someone told me. If you've been up-to-date on your payments, call your credit card company every six months or so to inquire if the rate listed on your statement is the lowest one they offer and if not, ask if they'll lower your rate - giving the impression that you've been offered a lower rate card and are considering bouncing the entire balance from company on the phone's account to the lower interest rate one.

You may get your rate lowered, you may not. The only thing you'll lose is a few minutes of your time since the calls are all toll-free.

I took the time to do this and found one who lowered my rate by 6%. They also offered to increase my credit limit. I took the offer. I waited a couple of days until I saw the new rate and credit limit in effect via my online account, then bounced the balances from the higher rate cards to the lower rate one.

NOTE: I asked if this lowered rate was only for a limited amount of time and was told no. I assume when their rates go up across the board, it will be increased, but I wanted to make sure this wasn't something that was only going to be good for a few months.

Now I can pay off the entire balance quicker without the higher finance charges and with only one payment per month.

Just a thought, but don't go and charge up the higher rate cards again...

[mia]

7. Thanks for the tip.

Yesterday I was able to shave off nearly $7 a month in earthlink charges. They had added an anti-virus fee and some other feature without my authorization.
They credited my accout for the fees going back to last September.

[Autumn Colors]

8. I forgot to mention one thing

Ask if there's a balance transfer fee and if so, you'll have to weigh if that justifies doing this.

In my case, it was a 3% one-time fee, but I was transferring balances from cards with rates between 21% and 29% (!!!!!!) to the card with the new 13% rate, so there was no question.

[unblock]

33. yeah, that balance xfer "fee" can be a real killer!

usually they are around 3% with a $5 minimum and $75 maximum. if you're doing it for a short-term teaser rate for, only 6 months, then 3% for 6 months becomes 6% per annum and that can more than wipe out the "savings" from transferring to a "lower" rate. E.g., transferring from 9% to 3.99% for 6 months is not a savings if there's a 3% fee.

that $75 maximum can help, though, if you're transferring large sums. if you're transferring more than $10,000, then $75 is 0.75% or 1.50% per annum for a 6 month transfer. this usually does not kill the deal.

however, i've seen offers with a FIVE PERCENT fee and NO LIMIT!! the "fee" for transferring $10,000 would be $500!! this is insane and it borders on fraud to call this sort of thing a fee. "prepaid interest", or perhaps "highway robbery" would be more apt....

[wordpix]

20. also, you can call about waiving a late fee if you've been up-to-date & something unusual comes up

I was behind one month b/c I was out of town for 3 wks. and by the time I got back and opened all my bills, I was already late paying the credit card bill b/c I hadn't thought of it before I left. The late fee was $39 + the usual ridiculously high interest. I called the co. (BOA), told the rep my story and politely asked for the fee and interest to be waived and and he credited these the next month b/c it was obvious it wasn't the norm that I paid late. Maybe in this climate, it won't work anymore but it's wroth a try.

BTW, a $39 late fee + 20% interest or whatever it was is OUTRAGEOUS

[unblock]

34. generally you get one waive every 12 months. no questions asked.

it doesn't hurt to have a story, but generally they consider it not worth fighting for if a customer considers it worth fighting for.

however, you SECOND time in 12 months, forget about it. now they have two stories to contest, so they are far less forgiving.

if you think of it from a business point of view, it makes sense. justice and listening to stories on a case-by-case basis is time-consuming and expensive and pointless. if you assume the customer with one offense is innocent and the customer with two offenses is guilty, you're probably right much of the time, and it just doesn't pay to try to get it any more right than that.

especially if you've got a bunch of idiots from bangalore trying to figure this all out.

[sarcasmo]

13. The our economy is great charade is about to be debunked.

[cliss]

14. Living beneath your means.

is highly recommended. You have so much more freedom. You're not trapped by debt. You know that no matter what the evil credit card companies do, you are not affected by it.

You become a very big fish, swimming in deep waters.

Living beneath your means
Life becomes simpler. You have more fun. NO you are not going on that 3-week expensive trip through Europe. You WILL go to Europe, but it won't happen until you've saved up enough money for the trip. You'll probably stay at inexpensive hotels. You'll never see the inside of a restaurant because all your meals were bought at the grocery store, and you just made yourself a lovely picnic in the park.

Things like that. We've travelled all over the world; camped in Hawaii, bicycle toured in N. Zealand, spent 3 weeks in Stockholm - all for pennies.

Your phony friends will disappear because they will move on to greener pastures.

[Debi]

16. That can be done at home as well

new clothes, new vehicles, new homes, new electronic devices - one way to be rid of credit card debt is to quit using credit cards except for in emergency situations. Ask yourself when you want to buy something, "if I have to put it on a credit card do I really need it right now? Or can I wait and save my money and buy it when I can afford it?"

Picnics - cookouts - making big meals and freezing them for later. Movies in the park - jazz night at the coffee shop - visit to the local museum. Garage sales - consignment shops - the Public Library.

And no nasty calls from the credit card companies.

[Retrograde]

22. I heartily agree

Plus, when you get used to living on a little less than you make, you can build up a hedge just in case something unforeseen happens.

And if you're going to use credit cards, think about how you use them. I use mine fairly frequently, but I always pay it off every month. I use one that gives me airline miles, so I can pay for part of those trips to Europe (another hint: find a short-term apartment rental for your vacation: even if you only make breakfast, it's cheaper than eating out every meal.) If for some reason you can't pay off your credit card bills some month, restrict their use to things that are 1) necessary or 2) will still have value a few months down the road when those interest payments are adding up. IOW, using the Visa to pay for that medication you didn't expect to need is OK, using it to grab lunch at MacDonald's isn't.

Speaking of which, I am getting more and more annoyed by the Visa commercials that show consumerism moving right along, everybody using a swipe-and-pay Visa card, until some slob paying with cash or a check has to bring the whole economy to a grinding halt. The voice-over: "Life takes Visa" - it neglects to add "and Visa takes 1-8% from the merchant, and as much as it possible can from you".

[renate]

28. I agree that living beneath your means is great if it's possible

"Nickeled and Dimed" really opened my eyes to why it's so expensive to be poor. I always used to wonder why people living in those expensive but run-down rent-by-the-month hotels didn't just put their money towards an apartment in a safer part of town--now I know it's because they don't have the security deposit for an apartment, but the hotels don't require one. Why do they eat at fast-food restaurants when it's so much cheaper to eat at home? Because the hotels won't allow them to have a hot plate to cook on. And so on and so on.

But I agree that for more fortunate people it's much much much more enjoyable to live below our means. My husband and I were both raised by families who were careful with money, so we didn't get accustomed to new cars every three years, designer clothes, etc. We've never carried credit card debt--we only borrow money for cars and the house. We're very very lucky, however, and on top of that we're still living in the same small home we bought 14 years ago, so the mortgage is low. These days housing is so expensive, even starter homes, that it's easy to see how people get in over their heads without being reckless with their money.

If it's doable, though, I couldn't recommend living below one's means more highly. Life can be stressful enough without a debt monkey on your back. But I have a lot of sympathy for those who just can't manage it.

[LisaLynne]

42. I agree -- it's easy to tell people to live below or at their means

but for some people, situations arise where they simply can't. The cc companies, the conservatives, etc, all like to pretend as though those in financial trouble are only in that situation because they lack control. But, that's not always true. Medical expenses can overwhelm people quickly and they may not have been able to afford insurance or even get it. People do get laid off -- people do lose their jobs when the company they've been working for closes up. Living expenses are high and sometimes take everything that a family has to just keep a roof over their head. Then, if something unexpected happens -- even just a car dying -- they can not keep up.

I guess my point is that it's easy to fall into the "just stop spending" mentality (and granted, for a lot of us, that is the main issue) but for a LOT of people, they are only trying to keep food on the table. The CC companies don't want us to look at those people, though. They want us to blame the people in debt as being "weak."

[NYC]

15. Spending well above income was never a good idea.

"You're not going to be able to get that mortgage loan. You'll be stuck with the higher interest credit card debt," warns Carl Steidtmann, chief economist with Deloitte Research.

"We will have to live within our means. I know it's a troubling phenomenon. But we're not going to be able to spend at levels well above our income levels."

Why was that encouraged in the first place? It wasn't for the benefit of the spender.

[mia]

18. Our president said "I encourage you all to go shopping more".

He said it after 9/11 and again during the last Christmas season.

http://thinkprogress.org/2006/12/20/bush-shopping/

[NYC]

24. Bush is rich. He should go shopping more.

The rest of us should live within our means. I remember when credit cards were not ubiquitous.

[David__77]

23. For me, living above my means made sense as a grad student.

If I didn't live above my means, I'd be living on ramen with no entertainment and would have gone crazy. I accumulated some debt, but I knew a higher income was on the way, and now I'm paying it down. There is, sometimes, an exception to a good rule.

[NYC]

26. There are exceptions,

but most people should strive to stay within their means.

[TheOtherMaven]

17. Kick the Credit Card Habit

If you have credit card debt, pay it down as fast as you can. Then DON'T incur any more. Close your accounts, cut up your cards, and get used to paying cash-down or saving up until you have the cash. Keep one debit card for "essential transactions".

It's going to hurt like hell, but you'll be way better off in the long run. I should know - I did it.

There's only one way to deal with loan sharks - DON'T deal with them. And the credit card companies are the biggest and meanest loan sharks EVER.

[Xenotime]

37. That's bad advise...

Closing your accounts will lower your credit score. Then you are going to have a harder time getting financing on a car or home loan.

[bagimin]

38. I dissagree.....

I think it's bad advice.

[TheOtherMaven]

40. "Credit" = Money you DON'T HAVE

Just forget about the words "credit rating". They're a way to sucker you into debt, which is an even WORSE idea than not having a good credit score.

I have no intention of ever again buying ANYTHING on credit - not a car, not a house, not even a pair of shoes. Been there, done that, got terribly burned, never going back.

[deadmessengers]

47. So where will you live?

If you're planning on renting a place to live without a co-signer, you're going to need decent credit or have to be able to come up with a couple of months' rent as a deposit. Same goes for phone/gas/electric/cable service. Same goes for insurance, whether it be car insurance, home (owner or renter), health insurance - your credit report is used to indicate your lifestyle. Some employers will check your credit as part of their regular pre-employment background check.

Whether you like it or not, your credit report is being checked for a lot more than new debt.

[Occulus]

57. It should be illegal for landlords to check credit.

Same goes for utilities. Same goes for insurance (auto insurance is a requirement for ownership and use of a vehicle in MI), and especially employment.

Credit checks, from a common-sense standpoint, should only apply to loans. Period.

[davsand]

61. Landlords gotta pay the mortgage too.

They need to know you will pay your rent because they count on your rent payments to keep that business going.

I am not saying I like it, but I am saying I understand why they do it.




Laura

[deadmessengers]

62. Obviously you've never been a landlord

From personal experience owning a rental house, I can tell you that a landlord that's not checking his tenant's credit history is either a slumlord or about to be bankrupt.

[Doremus]

64. Well, I've been a landlord for 15 years.

And when I interview new tenants I request a copy of their credit report. I'm neither a slumlord nor about to be bankrupt.

I simply want to avoid renting to people who don't pay their bills on time.

I could order it myself, but I allow them to provide it so they can decide for themselves if they want to share it, and it doesn't ding their credit if they obtain it themselves. If they decide not to provide it, I assume they either 1) don't want the house, or 2) don't want me to see their report.

So let me ask you: without a credit report how did you assess potential renters and choose the best from the pool of applicants? Please don't tell me you can tell just by talking to them. BTDT doesn't work.

[deadmessengers]

65. We're in agreement

From my post: I can tell you that a landlord that's not checking his tenant's credit history is either a slumlord or about to be bankrupt.

In other words, we're in agreement here, and trust me, I've been there. When I owned rental property I ordered the report myself, paying for it out of the $35 application fee. I did that after I had a conversation with another rental property owner who had a tenant provide him with a forged credit report - something he only discovered after he had to evict the tenant for stiffing him on the rent.

[TheOtherMaven]

60. Right Now I'm OK

I'm on a satisfactory lease, the utilities are all set, I have a good auto insurance policy and a car that runs (it's not new or fancy, but it gets me where I need to go - and that's all I care about). If things go rotten I'm in somewhat better shape than some fool who's in debt to their eyeballs with no idea how to get out.

I'm taking "living below your means" to its logical extreme - not even doing anything that puts me at any risk of exceeding my means.

You wanna roll the dice in this high-risk economy, go right ahead. Just count me out - I don't play that game any more.

[Trajan]

21. It is long past time to repeal the Bankruptcy Bill .....

Give american families the 'fresh start' they will need .....

[leaninglib]

63. I have a better idea...

Why don't you pay their bills and "give" them a fresh start?

[Trajan]

66. I have an even better idea .....

Why don't we honor the traditional approach to bankruptcy that has existed since the New Deal ? ..... Believe it or not: most people file bankruptcy because they CANNOT pay their bills, not because they want to escape responsibility ....

Have you considered the possibility you may be in the wrong forum ? ..... I am strongly considering it ....

I "give" you two weeks ....

[leaninglib]

70. Because so many of the people filing for bankruptcy do not "honor

the traditional approach to bankruptcy that has existed since the New Deal." Rather, they see bankruptcy as a means to game the system and stiff those of us who do pay our bills.

Thanks for "giving" me two weeks.

[Adsos Letter]

25. All I can add is a hearty "Amen" to all of those who have

lauded the idea of living within or below one's means. About 25 years ago my wife and I found ourselves very deeply in debt due to some unusual circumstances not related to over spending.

We scrimped and did without in order to retire that debt. It took us about 5 years. Coming out on the other side of the whole thing we found we had developed whole new spending habits and value considerations. Once we had more money (our incomes went up, and no more debt) we were actually able to save and buy a newly built, but modest, home (1990)...and keep saving.

In the end it didn't make us "miserly"...it just forced a reassessment of what were necessities in our lives. We have taken some very nice vacations since then; put one daughter through 4 years at UC Davis and getting ready to do the same with another at NYU.

We still have 2 credit cards which we use for convenience and pay off the balance monthly.

What I am getting at is that I realize that what is coming is going to hurt a lot of people (it could include us...no one can see the future, we've all seen jobs go away which aren't likely to return in our lifetime...), and not everyone who has debt is there because of mismanagement; some people no doubt found credit necessary to sustain the basic necessities of life. This is one of the areas government has failed our society, imho.

But, as has been often said on these boards, many, many people are in trouble because of giving in to society's pressure to have the material goods of "wealth" which are no wealth at all, simply "things" to be paid for, and which become a burden on finding real "life".

Perhaps when we come out on the other side of this thing (and I remain optimistic that we will set our country aright, although we face enormous challenges at home and abroad) perhaps the majority will have developed some new (or returned to some old) ways of valuating what is important in life.

I certainly hope so; and I wish us all the best of luck.

[dickbearton]

29. Take your amen means BS to church...

The focus should be on the corporate crooks who created this
problem and now try to profit from it. The Republican crooks
deregulated the economy so they could steal - the American
people blind. Like war profiteering, credit profiteering is a
Republican legalized crime. Forget usury laws, during WW2
these guys would have been put in jail for profiteering.

[Adsos Letter]

52. Pardon me...were you saying something...?

[maseman]

31. Great conversation

I love this topic because it surprises me how many people do not live within their means. I think there are two types of people in debt. The ones that have had something major like a health emergency, family emergency, layed-off work, etc. And then the people who just spend to try to keep up with the Joneses. I have much empathy for the family that goes into debt during an emergency. I have trouble finding any empathy for the family that just spends and spends.

I am blessed with a six figure job and my wife also makes a very good HH income. When I applied 4 years ago for a home loan they cleared me for a $450K to $500K home. I asked the mortgage lender if he was nuts. He seemed very puzzled (we were face-to-face) and I said why the hell would I ever spend anywhere near that level? He said most people with our HH income would spend that much on a house. Long story short we bought a 1,500 sq. ft. 60 year old ranch-style home. Spent about $140K. Yes I need to do a little more maintenance, yes I had some significant landscaping to upgrade, yes it is a little small for a hubby, wife, two kids and a dog. Plus I work out of my home.

Now I thank God we got this house. 30 year FIXED mortgage. If I lost my job we could still make the payment. Our lavish vacation this year was a 5 day car trip to Chicago and a local amusement park. I am not cheap. I put much away for my kids college and other savings. I'd love to buy a corvette, take my wife to the UK for two weeks, do a week in Disney or on a Disney cruise, buy that new plasma-screen HDTV that is the size of a movie screen, but we don't. I can't justify the expense.

Sorry for the rambling. I don't get the wasteful spending people engage in these days. I hope we all weather the credit storm OK. My advice is like many above. Pay off the debt especially of the high interest rate stuff first. A home mortgage isn't so bad since you can deduct the interest.

[deadmessengers]

44. I had the opposite happen, actually.

When I bought my house 7 years ago, I had difficulty finding a real estate agent that was willing to work with me at the price point I was comfortable with. With at least 2 agents, when we got up to the discussion about our price point, they couldn't comprehend why my wife and I wanted to buy a house that cost less than 18 months' salary, when we could easily qualify for a mortgage of over double that price. One guy told us that he "couldn't in good conscience show up $130,000 houses, when we can easily afford a $300,000 house". In his twisted mind, we wouldn't be happy with a less expensive house, and end up blaming him for it. Needless to say, that guy wasn't the buyers' agent we worked with. We did come up a little (ended up buying our house for $142k), but nowhere near the prices that the real estate mafioso were trying to steer us.

[maseman]

49. Our real estate agent

was actually a friend. She was cool with the modest home we bought and never said a word.

I would have absolutely teed-off on a real estate agent (sales rep) who would belittle my intelligence and adulthood regarding what i want in buying a house. Unless I am buying next to a radioactive waste dump I don't want a sales rep who is going to get in the way of my buy.

[susanna]

67. Us too.

Can't tell you how many people seemed p!ssed that we set a lower limit for ourselves regarding a home purchase. We both work, have a good income, and have no children; banks were eager to lend us big $$$ for the McMansions popping up all over. We had to constantly remind them what we were willing to spend, not what they seemed to want to give us (WAY too much). All we heard in our search was the "your home is an investment, you want to spend AT LEAST yada yada yada" speech. We stuck to our guns and got the right house for us at a price we were comfortable with.

I tried to explain, to lots of folks, that our ultimate criteria was: if one of us lost our income, could the other cover the mortgage payments and also necessities (food, shelter, clothing)? If so, it was a contender. Back then (late 90s), no one seemed to get our reasoning. Now quite a few tell us how smart we were back then. What's funny is that I didn't think we were being smart! I figured we were just planning for contingencies, and didn't everyone? I've learned a lot since then. :-(

[whistle]

30. Does anyone have any idea what the real inflation rate is? That is Bush's hidden tax

...on the middle class. Continuous erosion of real incomes, high interest rates, ever rising prises on food, energy, transportation, utilities and other basic necessities. The richest 20% are never affected because their incomes always move ahead of the inflation rate, or they force massive tax cuts which give them more disposable income.

[Skarbrowe]

41. Bank of America has started charging a fee on checking accounts that...

don't have a "direct deposit" of some kind coming in every month. Say what?? I was shocked. They tried charging a fee on my housemate's checking account in July. She keeps a high balance and should not be charged anything. She also didn't go into the bank for any reason. I called and they said it was a mistake they had made with many accounts and they were trying to fix it. The VERY next month she gets the same maintenance charge and I call again. This time they say it's because she didn't have a direct deposit coming into the bank for the month of July or August. Well, no. She's a teacher. My head is spinning. It is true. The guy said that this is BOA's new policy that if you have a checking account and you don't have a direct deposit coming into it every month, you will be charged a maintenance fee. It doesn't matter if you have several thousand dollars in your account month to month. They did say they would make an exception for teachers, but she will have to let them know every summer.

You have to watch every account you have like a hawk.

Point being, that the banks and credit card companies are trying to literally "steal" money from every type of account a person might have. They know that a lot of people don't even check these hidden fees, or if they do, they don't fight them. I'm beginning to wonder if the whole banking industry, financial industry, knows that a big collapse is coming and they are trying to get every bit of money they can from their customers because they know they won't be able to get any more money from them when no one has any left to give.

[NYC]

43. Thanks for that information.

Many people do not have direct deposit. I don't. I'll keep an eye on my bank.

Thanks.

[Autumn Colors]

53. My question to BoA would be:

And how exactly does one have Direct Deposit when one is self-employed?

[Skarbrowe]

54. NYC and Autumn Colors, my only thought, and it's a guess, is that

a direct deposit guarantees money coming in that they can grab for overdrafts or whatever. It doesn't really make sense to me. I can only see it as a major money grab. More and more restrictions are being put on checking accounts and you have to have a checking account to almost be a citizen in this country. My first thought was that there would be tons of people who don't have direct deposits. So BoA could make about 6 dollars a month from them even if they carried a large balance.

I'm still hoping that this man on the phone was wrong. He was so different from the first guy. I only have direct deposit because I get SS. I had a lot of money in that bank before I got disability and I would have really been mad as hell if I had to pay them a damn maintenance fee. It just appears like they are getting so bold at taking people's money for nothing that I wouldn't be surprised if something big is coming. Hopefully, it's just day to day greed that isn't a harbinger of anything. Wishful thinking, I know.

[Autumn Colors]

55. I'll stay with my smaller New England regional bank

Free checking, no minimum balance or Dir. Dep. requirement. Just hoping they were conservative enough with their lending practices to be able to weather the upcoming storm.

[1932]

58. She should switch to a credit union.

[Skarbrowe]

59. She has a a great credit union. Actually took money out of that to

put into BoA to write checks for some big bills because she doesn't carry a checking account at the credit union. She is rethinking that. Thanks!

[Summer93]

50. Kick and recommend - great info - Thanks

[Zhade]

68. "Live within our means" when wages haven't kept up with inflation since '68?

FUCK you, try seeing reality!