Tucson It is Way Past Time to Get Real with Personal Finances
August 26, 2007
Post Tags: credit-card-debt , financial-responsibility , mortgage-foreclosures , personal-debt-accountability
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Three very poignant articles were in the Arizona Daily Star business section this morning. I’ve provided links to each in the navigation bar to the left for those wanting to read the entire articles later. For the purposes of this post here are the links.
- College students in debt’s grip
- Victims of mortgage crisis struggle to avoid foreclosure
- It’s time to get real, cut expenses and start repaying debt
College Students in Debt’s Grip
Lets start with this one with some excerpts from the article:
Long before college students walk into the sunshine of graduation these days, most are followed by a cloud of debt, much of it racked up on credit cards.
The average U.S. college freshman has $3,150 of debt — more than $1,500 of which is from credit cards, . . . college seniors are racking up an average of $20,402 in total debt, of which $3,262 is credit cards.Research has shown that getting into debt early can lead some students to feel increased stress and depression, and it can also affect what majors they pursue. . .
A poor credit record can affect job prospects after graduation, as more and more companies conduct credit checks on job applicants, said Juan Ciscomani, senior instructional specialist for Credit-Wise Cats.
“If you’re not on time with your payments, you probably won’t be on time to my job” is the attitude expressed by some employers, Ciscomani said.
Here is part of one comment left on-line about this article:
Bank of America, in it’s wisdom(mocking voice here) offered a credit card to my step-daughter. It had a $5000 limit. She accepted the offer then called to tell us about it–”I want to have it in case of an emergency.”
Well, she apparently had a lot of “emergencies” because she ran that card up to it’s limit within 3 months. Among those “emergencies” was the need to take a Spring break trip to Las Vegas, buying lots of clothes, and eating out frequently.
When it came time to make payments, she made a few of the minimum then stopped paying at all. Well, surprise!! Bank of America wasn’t too happy about that and started calling and writing her. She then calls us to tell us that Bank of America is “harassing” her. She wanted her father to solve the problem by paying off the credit card–which he did not do. He told her to talk to them and try to work with them but she again ignored the situation. The result was they sued her and got a default judgement(she ignored going to court).
She doesn’t really see the problem. She figures if she ignores it, it will disappear.
Although we have tried numerous times to demonstrate and discuss financial responsibility with her, she just doesn’t seem to “get it”.
She isn’t alone.
America’s answer to personal Debt. “Ignore it, it will go away”.
Steve Bucci Debt Adviser column is a weekly feature of Bankrate.com His column this weeks is the one titled “It’s time to get real, cut expenses and start repaying debt.”
Here is the question upon which this weeks column is based:
“My wife and I have been married for one year. We both were still attending college when we got married, but now student loans, credit cards, an ATV and a few other small bills have become way overdue. It would take $12,000 to rescue us.
Two of our creditors are going to sue soon. I hate to ruin our credit over such a small debt, but we have nothing to put up for collateral, no parents with good credit and no other options. Is it true as long as we are paying something that they can’t sue us? Any advice would be a blessing. “
We learn a lot just from the question. I especially like the owning of an ATV. We all know, especially in Tucson the ownership of an ATV is a basic staple of life. No parents with good credit is another interesting piece of information, but honestly parents with good credit won’t help in this situation. He doesn’t have to worry about ruining his credit, he already took care of that. Read the article for the answer.
Here’s a hint the answer is in the title of the article.
Victims of mortgage crisis struggle to avoid foreclosure
This is one of my favorites. I love this title. VICTIMS we are all VICTIMS no one is responsible for anything. EVERY BAD THING IN OUR LIVES HAPPENS TO US, NOT BECAUSE OF ANYTHING WE HAVE DONE OR ANY DECISION WE HAVE MADE.
Here is the lead case for this article:
“The walls are bare, the closets are empty, and Connie and Timothy Pent and their two teenage children are living out of boxes as they wait for a dreaded knock on the door of their three-bedroom house in Ocala, Fla.
They’ve fallen behind in payments on their home loan, and their lender told them in July that foreclosure was imminent.
“We thought we were fine,” said Connie regretfully. “You never know.” . . .Subprime loans
Many of the victims are subprime borrowers — those like the Pents who don’t qualify for market interest rates because of blemishes on their credit record.The Pents mourn losing their three-acre property in the middle of horse country, with its swimming pool and fish pond.
“It was my dad’s house,” said Connie, 39, an elementary school receptionist. “It’s quiet, it’s open — we love it.”
Their troubles began in April 2006 when they refinanced the remaining $207,000 on a 30-year fixed loan to a two-year adjustable rate mortgage so they could pay down hefty obligations on their SUV and pickup truck. A mortgage broker informed them just before the closing that the remaining debt would be $3,500 more than expected, but they signed anyway. . . .”
Buried in the content of this Victim article is this quote:
“David Downs, a professor of real estate at Virginia Commonwealth University, says blame for the current quagmire falls on all involved. But he says the consumer should be held accountable first.
“If somebody takes on financial risk, it’s incumbent on the consumer to understand that,” Downs said.”
This fits in perfectly with the post yesterday
Is Technology Driven Consumerism Effecting Affordability of Housing?
In three articles in a single business section we see much of what plagues this country regarding personal finances.
- No one wants to take personal responsibility for their poor financial choices
- Instead we call people making poor financial choices “VICTIMS”
- If we just ignore it, it will go away
The Analyst and The Frog
(This story is rated G for Gross, but it gets the point across)
There once was an analyst that wanted to test a frog.
- Frog is told to jump, frog jumps 4′ high
- Analyst removes one leg from the frog
- Frog is told to jump, frog jumps 3′ high
- Analyst removes second leg from frog
- Frog is told to jump, frog jumps 2′ high
- Analyst removes third leg from frog
- Frog is told to jump, frog jumps 1′ high
- Analyst removes forth and last leg
- Frog is told to jump, frog is told to jump, frog is told to jump
- Analyst’s conclusion, “Frog with No Legs Goes Deaf”
It is a silly story, with a silly conclusion by the analyst.
The Media Reporting on Affordable housing and Mortgage foreclosures
- Credit Cards All maxed out
- New Cars, Trucks SUV, & ATV in the driveway
- Cell Phones and Video Games for the Kids Big Flat panel HDTV for Dad
- Eat out all the time and save nothing
- Sign a Mortgage Agreement you can’t afford
- Refinance a fixed rate 30 yr. Mortgage with a 2 year ARM
- Media conclusion “Victims of Mortgage and Real Estate Crisis”
It is way past time for blame and excuses.
It is time for everyone in this country to get real about personal finances and responsibility for the choices made.
Is there corruptions and fraud in the Mortgage industry? Absolutely.
Did a lot of people get loans they shouldn’t have YES!
Who is responsible? Do we honestly not know the answer to this question or should we all just ignore it and hope it will go away.
August 27th, 2007 at 2:09 pm
Spot on article! The days of “zero down, no payments for XX months” needs to be taken out of the vocabulary for most people. Get back to the basics of buying what you can afford, rather than buying - and relying on appreciation to build equity in your real estate investment.
September 1st, 2007 at 12:06 am
I don’t really know what the answer is. People just keep wanting to buy stuff they can’t really afford. Its unfortunely somehow becoming almost part of our culture. When I was in school I worked and avoided trips so I would not have to come out of college with a lot of debt on my shoulders.
September 3rd, 2007 at 10:07 pm
The consumer shouldn’t be held individually liable. I believe both lenders and borrowers share responsibility.
Lenders know what a borrower can and can’t afford, often better than the borrowers themselves. However, generating fees or commissions controls the lending process, not common sense.
It’s also an “immediate gratification” society and people just “have” to keep up with the Joneses, no matter what the cost. Borrowers cannot control their impulses.
It’s a recipe for disaster.