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I agree that over extending ourselves is very bad, but I also realise thaqt any family of four making $50,000, $70,000, $90,000 per year is not in poverty...whether they have any debt or not.

Mabey Im missing the whole point
 

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This article paints things with WAAY to broad a brush.

Rockpiles thread about his son got me thinking. My SIL, the druggie, has decided a long time ago that my DH is doing well because he was the "Favored son". Nope. IT was because he USED credit, not abused it with bad debts the way that she did.

Because he paid his debts, he got a car loan. With the car he went to a better job, and the car was paid off on time. So, the car really paid for itself, especially since he drove it AFTER it was paid off.

The next car paid for itself too, as the first was unreliable after a time.

With the better job and established credit, we got a loan on a house and then I got a car as well. I also got a job, which the car took me to.

Cars get paid off and we continue driving them, and the mortgage payments are made on time. Without credit, he would have earned less, advanced financially more slowly, and we would not have a house and (now) 6 acres.

Yes, credit can be used foolishly, but many people are more sensible than that!
 

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I think he was speaking less of people making 90K than on working families who are on the edge of middle class - the reference to people making large incomes was seperate from his claim that many middle class people are living on the edge.

I guess what I think is important here is the integration of the discussion of personal responsibility, but also the responsibility of banks and lenders not to be predators. On the one hand, you are right, any rational family of four should be able to live comfortably on 50K. But we make it hard - that family's ability to make that much money may come from a college education that both parents are still paying off. The job that makes them 50K often comes in a housing market where a *cheap* house in a not-great school system is 200K, and daycare costs are 18K a year - my sister lives near Boston, and that's pretty much their circumstances. Both parents work because his job (which makes real money) doesn't provide benefits, and hers pays poorly, but does.

Now on the one hand, almost all of us here have done something different. But that doing something different is difficult - I had to move 150 miles from my parents and sisters in order to buy land at a reasonable price. And I'm lucky - I don't have school debt (scholarships) and my husband can make a passable salary and get health insurance. If my sister made different choices, she'd be lambasted for a lack of personal responsibility if one of her kids got hit by a car or she developed cancer - because, after all, she should have been responsible and worked for health insurance.

The thing is, personal responsibility is real, but it isn't the end of the story - as long as people are hearing the voice that says "this is how you live an ordinary, basic life - with credit" - the voices that say you can do it another way are going to be overpowered.

Sharon
 

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Terri said:
This article paints things with WAAY to broad a brush.
...
Yes, credit can be used foolishly, but many people are more sensible than that!
I think you are failing to distinguish (which the interviewee does quite explicitly) between "credit" - which isn't bad and "contemporary lending practices" which often are.

For example, when I went to college, the hallways of the student center used to be filled with people trying to get students to sign up for credit cards. These were hard sells - American Express used to offer free round-trip airfares, and the people used to say "You can save your parents some money." And yet many of the students could afford the monthly fees. Visa used to have someone offer to "check with your parents" for you - and, of course, they didn't. And these were undergraduates who, in general, were massively indebted for their education.

No one is saying "all credit is bad." But, for example, simply applying for a loan can, in some cases, allow your credit card to double your interest rates. And if you don't read your bill carefully, you could accumulate thousands of dollars more debt in a few months, because you applied for a car loan you were perfectly entitled to get.

Sharon
 

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Thanks. It was an interesting article (and an interesting site). When I graduated from college in the late 70's, it was a difficult undertaking to get my first credit card. As a recent graduate, I had no real credit experience, something that was an important consideration in getting a card at that time. I'm not sure when the shift to getting credit cards (really any debt) was made easier, but I'm not sure we're the better for it. It's made "having it now" too easy to achieve, without the necessity to toil (and sweat) and wait for it.
 
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michiganfarmer said:
I agree that over extending ourselves is very bad, but I also realise thaqt any family of four making $50,000, $70,000, $90,000 per year is not in poverty...whether they have any debt or not.

Mabey Im missing the whole point
I know. $50,000 sounds like a fortune to me, but some people seem to think it's a struggle to squeak by on that little. :shrug:
 

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ladycat said:
I know. $50,000 sounds like a fortune to me, but some people seem to think it's a struggle to squeak by on that little. :shrug:
It's lifestyle choices, including housing and entertainment, that cause this I think. It is not unusual at all in our area for a young couple (early 20's or even late teens!) to buy a new house (with parents usually "helping"), have car payments on two new cars, and eat out more than they eat at home. Some also hire lawn services and house cleaners, so that their weekends are freed up for leisure activities (like jet skiing on machines bought via credit). They see lifestyles that others have achieved over a much longer period, but they want it now. This could stretch a $50K income to the max in a New York minute.

Most here (and definitely me) wouldn't seek the burdens this "stuff" brings, but it's a free country, so to each his own. However, when it's bought via credit too easily gotten, we all pay a price for it through bankruptcies and a dozen other indirect ways.
 

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DH and I noticed a new low in consumer credit selling recently - an ad came on the tv telling people they could borrow for emergencies (while showing a woman picking out a wedding dress - and no, she didn't look pregnant! lol). The ad was full of references to people "deserving" to buy this that or the other and concluded with "you are entitled to apply..." all you had to do was put up your car title as collateral.
 

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Ramblin Wreck said:
It's lifestyle choices, including housing and entertainment, that cause this I think. It is not unusual at all in our area for a young couple (early 20's or even late teens!) to buy a new house (with parents usually "helping")

This made me think of something my MIL said Friday when we visited her. She was talking about one of the neices who has redone her home. Seems she (neice) and SO are looking to buying another house. MIL said that his parents could buy neice and SO a house if they would just get up off their pocketbooks. I couldn't believe that this 82 year old had that kind of attitude toward things like that. She had worked outside the home most of the years she was married to have what they had but thought this neice should have a new home handed to her on a platter.

I opened mouth and inserted foot by saying "Why would they buy neice and SO a new house. Why not let them earn the money to buy it themselves if they want one. One thing for sure both of them would appreciate the home much more if they work for it." I also made a statement something like "People shouldn't have things handed to them. That it was meant for people to work for a living and having a home is part of earning a living."

sgg-Jan
 

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Indebtedness is the only form of slavery that is still legal in most of the world. It is much like the indentured servitude that many people used to pay their fare to the "new world." They sold their labour for a period of time in order to get a better life. But at least that time of servitude ended after 7 years.

People today are selling their entire working lives to gain stuff that will never be paid off. They don't have the option to quit a bad job, to move away to a better situation, to take more time to guide their own children as they grow up. The decision they made to have the same life as their neighbours has forced on them a lot of consequences that they didn't consider when they signed up. They are often just one paycheck away from bankruptcy. They don't dare get sick or take a few days of vacation, or drop that second job or second income in favour of a better quality of life.

What is really scary is that it is all so normal that most people don't see that there is any reasonable alternative. They justify it with arguments about "good debt" and "wise use of credit." It is like a society where almost everyone has voluntarily had one arm cut off. People with two arms are seen as freaks. They are subject to the ridicule of people who endeavour to convince them to cut off one arm and join the norm.
 

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This standard that you MUST have credit to get by is sort of like the standard that in a couple BOTH must work to get by. I think it's partly what we now think is mandatory for getting by, but I also think "corporate America" no longer pays workers as if they will be supporting a wife and two kids or more on their pay.
 

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$50K in California is barely enough for one person due to the cost of housing here--$1500/mo for a one-bedroom apartment and $600K for a condo.
 

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Ok, what is their disposable income? You see, no matter what your income is, the offset is debt and payments on debt and the interest attributed to debt .. You can make $90,000 a year, "own" a home, and only have $300 disposable income. Your assets, mainly your home, is dependent on market value. You're one to three month's mortgage payment away from destitution. Luckily most of us have at least 6 months.
 
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