The Debt Trap

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gcal

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There is a general dissatisfaction in American life which is the result of always wanting more, bigger and showier. We live in a society that strongly encourages that because some powerful people are benefitting from that (we know who they are).

Kids are tempted with flashy, trendy toys that they are bored with ten minutes after they get them.
 
Teens are told that they need the latest brands to be popular. 

College students are encouraged to mortgage their futures at staus schools instead of attending cheaper community colleges.

We buy more house or car than we need to impress other people (and ourselves), and end up paying increased costs to maintain and insure them. 

We slide towards retirement, never thinking about what we are doing, and are shocked to find out that there will be no retirement because we are buried under huge credit card debt, car payments, and 2nd or 3rd mortgages on our homes. If we can't keep working, we don't downsize. We continue to destroy ourselves by getting reverse mortgages on homes we can barely afford to maintain.

I am not saying this as an outsider. DH and I did our share of stupid things, including paying twice what we should have for this Clàss A. We could have gotten a good class C for half the money, but we didn't want "them" to look down on us. We also wanted to impress ourselves, I think. You know what? The same people who would have looked down on a Class C also look down on our 8 yr old Class A, and we blew an extra $35,000 on a depreciating asset that gives us no more benefit than the cheaper one would have given us.

]Society may be set up that way, but we have noone to blame but ourselves. We have brains. It is our own fault if we make foolish decisions instead of wise ones.
 
I was born frugal and even through lean times, did not sink us into debt. Debt-free since 2000 by being realistic about what we could afford and having more financial sense than to listen what a finance company said we could afford, first house they said we could afford $700.00 a month plus, I said not more than $400.00 and we ended up a payment of $350. Have never bought a new vehicle, just quality used and have zero regrets. I have never defined myself or others by their material possessions.
 
Most of us have been there, one way or the other. We were raised on the American dream which is, in reality, the American nightmare.
 
There have been a couple of articles in my local newspaper talking about the local economy. Mind you, these articles are not on the first page and are small articles so my guess is a lot of people didn't even see them.

The first article posted stated that half the people in my county spend over 50% of their monthly income on a house/apartment and utilities.

If that isn't enough to make you wake up and realize there's something wrong, a few weeks later, there was another tiny article that stated that over 50% of the population has less than $1000 in their bank account.

Then a couple of weeks later, there was an article (I think it was on the first page, not sure exactly), but it was about a new program that helps people buy homes. With a 33 year mortgage. With incomes as low as $19,000.
The article started out describing how people in this program were required to take classes on how to do simple repairs because otherwise they would not be able to hire a professional to fix the minor home repair type problem....
So, why in the world would there be a program helping people get 33 year mortgages when they will not be able to afford a service call? In the life of the 33 year mortgage, these people will never have an unexpected bill that will create huge problems? Their transmission will never go out, costing $1500 to fix? Their Central AC will never go out, or require maintenance?

With everything else that has been going on in my life, these things make me really look around and wonder what the heck is going on.
 
I would say that the desire for home ownship by low incomee people could be the reason for Tiny House communities, but homes in those communitiseem to be absurdly expensive. They also include high membership fees. You might as well buy a small condo if you manage to buy at all. Those condos are seldom suitable for young families. Never, that I have seen.
 
I was in debt once.
I bought 2 guitars and 2 amps.
I paid them off with my allowance.
$5 a week. :p

Since that scary experience (hey , no money left over for new records).
I always paid cash for everything , just had to save up first.

It's true I tell ya !
 
There is good debt and bad debt. 

Everyone needs to know the difference and when to use it.  I see too many ZOMG debt is the devil people.   I'm all about being frugal(As I am extremely frugal) but i also have a plan and stick to it.  I go a little nuts with the extra play money half the time and the other time I just invest it.​

It is scary how  bad most Americans are with money though.​
 
I deleted a post calling people names. Nothing wrong with the ideas and no disagreement with the author, but you've got to find a way to do it without demeaning or insulting people.

There is a big difference between constructive criticism meant to elevate people and show them a better way and attacks meant to make yourself feel better at others expense. If you can't figure it out then your posts get deleted.
Bob
 
I've never understood how people push themselves into unbearable debt.  I wasn't brought up to save money by any means; my parents were/are terrible with their money.  I have had a few different loans and always worked hard to pay them off as early as possible.  I don't think it is a hard concept to understand.  Don't buy things you can't afford.  Pay your bills.  If you can't pay bills, maybe it is time to re-evaluate your choices.  Makes sense to me, but I see people all the time that don't get it.  
Seems like this community likes to save their money and watch what they buy!  You're all so smart!
 
I don't have any idea what its like to finally be debt free.........
I've never had debt. Grandpa's rules.............Live without it till you can pay for it !
 
rvpopeye said:
I don't have any idea what its like to finally be debt free.........
I've never had debt. Grandpa's rules.............Live without it till you can pay for it !

According to some TV commercials I have seen (and we all know that TV commercials never lie) the average American has $16,000 worth of credit card debt. I don't think that included car loans or other debt. Never, not ever, did we come close to that. Just think, if that is the average and we have none, someone else has $32,000 worth of credit card debt!
 
nobodyG17 said:
There is good debt and bad debt. 

Everyone needs to know the difference and when to use it.  I see too many ZOMG debt is the devil people.   I'm all about being frugal(As I am extremely frugal) but i also have a plan and stick to it.  I go a little nuts with the extra play money half the time and the other time I just invest it.​

It is scary how  bad most Americans are with money though.​

well...my inquiring/ignorant mind really wants to know what "I see to many ZOMG debt is the devil people" means?  :huh:  I got the rest of your post, i'm pretty frugal myself.  I always buy used/like new when possible & I really like "buy one get one free".   TJB
 
Tjaybird said:
well...my inquiring/ignorant mind really wants to know what "I see to many ZOMG debt is the devil people" means?  :huh:  I got the rest of your post, i'm pretty frugal myself.  I always buy used/like new when possible & I really like "buy one get one free".   TJB

I was just referring to a lot of people who bad mouth any form of debt.
 
Tjaybird said:
well...my inquiring/ignorant mind really wants to know what "I see to many ZOMG debt is the devil people" means?  :huh:  I got the rest of your post, i'm pretty frugal myself.  I always buy used/like new when possible & I really like "buy one get one free".   TJB

I had to dig to find this answer.

ZOMG is OMG with a Z.  It is taking off as a way of emphasizing OMG.  

It started out as a typo, but is catching on.  

Now that I know this detail, the post makes a lot of sense.  :D
 
Young people today are told they won't be able to buy a car or house with out a good credit score. So they get credit cards buy stuff on credit working for that credit score. To maintain a good credit score they have to be in debit all the time. I bought my first house and never had a credit card and bought several cars before I had a credit card. I had a credit card for a few years, when I saw their abusive tactics on how they apply the interest and try to keep you in debit, I got out of the credit card scam. I tried to teach our kids not to get into the credit trap but they had to have a good credit score. My daughter asked me what my score was once I just said it should be a score at 0 if I don't owe any money! One thing I realized is that at retirement age every debit should be paid off including the mortgage or retirement will be hard trying to live like when you had a job!
 
I remember the time I saw a pretty nice looking Grand Am. I bought it and service plan...$10K for everything and payments of $275 a month. I tell you, the happy day was when I paid it off. But now, committing to paying on ANYTHING for 5 years scares the crap out of me. Heck, even three give me the shakes :)

I found a budget that works for me and I start it in April (No fooling!) I find the time leading up to it, I am feeling way more confident and fears are going away...Guess that's what happens when you have $1K in your checking account!
 
I suppose I'll play Devil's Advocate and throw out an example of "good" debt.

My father saved $10,000 and borrowed $10,000 from the bank and built his own house during the fifties.  It took him three years, working every weekend and on his vacation.  It was a big house because he always wanted a big house.  He raised four kids in it, and we took in my mother's mother when she had no where else to go.

My father was raised during the depression, and never threw anything away, we were always fixing broken things to keep them working a little longer.  The mortgage was fixed rate, at 4%, and the monthly payment was probably less than it would have cost to rent. 

The house is still in the family, still in good shape, (Pop built it to last cause he planned to spend his whole life in it) and is probably worth $300 to $350k.

Obviously, my father never regretted borrowing that money.

Regards
John

(BTW, technically, "Devil's Advocate"  means Devil's Lawyer.  I thought ALL lawyers worked for the Devil?)
 
In my personal opinion, no debt is the only good debt. Everything else is a slow con job. Have I ever taken a loan? Yes, I needed it. Do I regret it? Not really but boy did they get some money out of me and I had really good credit.

The idea of good dept is all part of the game "they" want us to play and we believe it because they reason it out to us and tell us it's good and not bad.

Just my opinion.

John
 
well,it has nothing to do with parents/up bringing

i have never used a credit card or had debt,i save and buy out right or build it myself,i'm not a very wanting person

my youngest sister has filed bankruptcy twice and is now being sued by some debt collectors
 
OK , a good credit rating is determined by how much interest you have paid out.....
Now , who do you suppose came up with that idea ?
 
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