In Debt ? Who's responsible ?

[1littlething]

Honestly, I think the blame can be spread around. Here, I read this post this morning and I have to say I agree with with where she is going in terms of debt and blame.

http://pandagon.blogsome.com/2008/01/30/6653/

[Miss Rosie]

Originally Posted by rolltimer

Please, for the sake of your son and your own peace of mind, don't surrender to the notion that this debt is forever. Go to the counseling service and see if you can get the debts reduced, forbearance on interest charges, and payment amounts lowered.

I have talked to people. My problem debts aren't my credit card, which has a low limit and an excellent interest rate. Hurray credit unions! I'm already being cut slack on medical and legal expenses. I still have them.

I can cover this household's normal operating expenses as long as we're very frugal. I just can't afford anything above that, and there's always going to be something above that. If it's not me, it's the car or my kid. It's always something.

I'm not saying that my life totally sucks. It doesn't. Right now, this moment, isn't so bad. Okay, this computer has tape on it in a few places, but the guts are all working. This month, I managed to replace two broken pieces of furniture for well under $100. My adventures in homemade personal care products have begun a cure of my son's too-dry hands that replaces two products with one.

My family helps, too. Our most expensive toys were Christmas gifts, and there have been cash infusions at holidays. I'm currently borrowing a car to take the pressure off my own. And I freelance. It's not much, but it's something.

I have a closer look at certain aspects of this stuff than most, though, and it's not usually irresponsibility. It's the fact that wages are stagnant while the cost of living isn't, and critical things are treated as luxury items, like education, transportation and health care. It hits people like me hardest, but it hits the able-bodied, too.

It might not be hurting you directly, but it's chipping away at your life little by little, crowding out other things, and if disaster hits, it can bury you. Almost everyone is a single incident away from my life, an incident over which they have no control. Three month's living expenses in savings doesn't cut it, because you'll need living expenses plus medical, or a new car, or even possibly both. Maybe even a new house.

So far, only the credit card companies are offering a way out, and that's not good.

[frozemud]

Originally Posted by Miss Rosie

We can go on and on about personal responsibility, but the bottom line is that we live in a country where normal events can cause catastrophic problems that may never be resolvable. People get sick. They also lose their jobs. These things are simply part of life, but in this country they can destroy your life beyond repair.

We also live in a country where medical treatment and education are considered luxury items.

There are problems with this that no amount of personal responsibility on the individual level can solve.

Very well put.

Sometimes I want to scream when I see donation drives and fund raisers for a person with cancer or liver problems whose insurance won't pay for whatever reason. When only people with "good" jobs get the "good" insurance, and even they have to jump through hoops to get it to work like it should. When life-saving drugs cost far more than they have any right to cost. It shouldn't be this way.

People can't really help it if they get sick, and they shouldn't feel the least bit guilty for being in debt with medical bills. All you can do is to do the best you can and try to cut a deal with the hospitals for payment. And try not to let the added stress of a huge medical bill affect your recuperation.


As for the lattes and the cute shoes debt, yeah, I'll take FULL responsibility for that.

[anitra]

Our debt is mostly student loans and a mortgage - my husband had some credit card debt when we got married, but that's cleared up now.

Ultimately, we are responsible for our debts, even if we were stupid teenagers who thought our private university education was worth any amount. The university system makes it way too easy to rack up debt, and hard to get out of the cycle before it's complete.

We've at least learned from our own circumstances/stupidity, and try to advise the teenagers we know so that they don't repeat our mistakes.

[Miss Rosie]

Originally Posted by frozemud

As for the lattes and the cute shoes debt, yeah, I'll take FULL responsibility for that.

But how much of most people's debt is really lattes and cute shoes? A latte is only about $4.00, and most women buy their shoes at Payless, maybe $20.00. That's not much, and it's rarely money people spend every single day.

So what it is? Housing is often more than 30% of net income, and many people who qualified for standard loans were given subprime loans. As the price of crude oil goes up, so does the cost of utilities. Health insurance premiums lower that net income significantly without providing adequate coverage, which leaves everyone vulnerable to an accident or serious illness. Transportation? You have two choices, buy an older car and pay for maintenance and fuel inefficiency, or pay not only the value of a new car but the extra $5,000 or so you lose the second you sign the papers. Most cities have inadequate public transit, including mine, and mine has the best in the state.

Education? A good secondary school costs the price of housing in that district, plus whatever field trip fees and purchased materials the school requires. Alternatives are paid for out of pocket. There are few jobs now that pay a living wage on a high school diploma, so that means post-secondary school of some kind. Most families can't afford that, not even with decent savings, or they must choose between their children's education and their own retirement.

So, we have loans for housing, loans for any major health care expenses, loans for transportation and loans for education. People also have to wear clothes and eat, and food quality plays into the medical expense problem, just as housing plays into the education problem.

Take a look at the thread about how much income people think they need to be content, especially those who have or want children. Think about how many jobs pay that much, and what kind of education and training they require, never mind how much seniority, and how much that education alone will cost up-front.

People aren't any less responsible than they've ever been. We've just reached a point where sustaining a middle-class life requires a convergence of discipline and luck that's beyond most people's reach, especially as they must be sustained over a period of decades. This isn't a temporary hardship until we're over the hump. There is no hump. It's just life.

A glance at Quicken tells me that rent, utilities and groceries alone eat 60% of my income. Next on the list are education and the car, followed by household supplies, medical expenses and personal care (shampoo,soap, etc.), which bring me to 84%, and this is without anything major going wrong. Most people wouldn't be willing or able to make the same kinds of cuts it takes to get me even to this. My apartment is shabby and poorly heated, we don't have cable, I homeschool, I don't see a dentist, and I don't use toilet paper, to give you some examples. I ran my budget past a friend whose husband makes the much-wanted low six figures, and hers looked nearly the same as mine. She just has newer, better quality stuff, not to mention dental care and some actual savings.

Cost of living is killing us, not lattes and shoes.

[Finally_Frugal]

I am completely and totally responsible for my own debt----I was like an ostrich with its head in the sand each time I put those new shoes (that I HAD to have), those designer jeans, that pitcher of beer, that airline ticket, etc, etc, etc, onto a credit card with no thought to how I was going to pay it off. Granted, I was following in the footsteps of my father, who did the same thing (well, he didn't buy shoes with his credit, I guess!). Still, the ultimate responsibility falls on me.

It's pretty easy for me to take that responsibility, but I know that there are others who think there must be an easy way out. For example, someone over on Get Rich Slowly (maybe it was J.D. himself!) linked to an excerpt from the Dave Ramsey radio show in which a woman named 'Tina' wanted help with her $10,000 car debt on a car that (due to an accident) was only worth $5,000. After she admitted that she had spent the money the insurance company gave her in compensation (rather than paying down the debt), Dave suggested that she get a second job and work 80 hours a week to get herself out of trouble. To Tina, that was "too much work". A classic example of someone not willing to take responsibility for her own actions.

To those with medical debt, I blame the U.S. health system. Even people who are covered by insurance can end up thousands of dollars in debt if their insurance company refuses to pay (watch 'Sicko' to see what I mean. . . . .)

[fred333]

I would have agree with you on the medical system in the US. Very easy to get in over your head.

[angelajiniel]

I blame myself mostly. My husband and I have thousands in credit card debt from when we first bought our house, and we're not doing enough to make a dent.

I also graduated college with almost $50,000 in student loans. I went to a small, private university, so it was quite expensive. This is where I don't think I should shoulder ALL the blame though. No one really sat down with me as an 18-year-old kid and explained that even though I had a 3/4 scholarship to said university, I was still going to wrack up the loans and that my 3/4 scholarship would end up being less than a 1/2 scholarship after tuition increases from my freshman to senior years.

Would I have done it differently? I really can't say yes. I got a wonderful education and loved every minute of my time there. But I'll be paying for it for quite a while.

[firstourselves]

We just watched Maxed Out, a documentary about debt and the credit card industry, over the weekend. It was eye opening, in the predatory practices of banks, credit cards, and even the government---particularly towards the poor. And yet, for many of the people in the movie, their debt came about as a result of poor choices. I say this without judgment, as I have made my fair share of poor choices, too.

My husband and incurred thousands of dollars of debt when we started a business. Was some of that debt due to poor choices? Absolutely. Was some of the debt used towards a higher purpose---building a business and covering our basic expenses? Yes.

And yet those stressful years provided an incredible learning opportunity. Prior to getting married and starting a business, my husband and I met while attending a private, privileged, very expensive university. I admit that being surrounded by such incredible wealth affected my values: I wanted the good life of my wealthy classmates. But after spending my 20s in debt, working on our business, while simultaneously raising a young family, I realized that financial freedom (and being debt-free) brings much more peace than a BMW, designer clothes, a showhouse, and lavish vacations.

Please don't misunderstand me: I don't think there's anything wrong with nice things. I enjoy a fabulous dinner and a nice home as much as the next person. I just prefer to pay cash, and delay my gratification, rather than buy now and be beholden to the bank.

There's something else to ponder: While frugality and self-discipline are part of the equation, so is wealth creation. I am frugal, and yet I am likewise implementing new revenue streams for my family. In other words, I believe in creating abundance, in finding ways to afford my dreams, while simultaneously practicing frugality.

[rorich]

Originally Posted by firstourselves

There's something else to ponder: While frugality and self-discipline are part of the equation, so is wealth creation. I am frugal, and yet I am likewise implementing new revenue streams for my family. In other words, I believe in creating abundance, in finding ways to afford my dreams, while simultaneously practicing frugality.

I agree with that 100%. Having multiple streams of income while being tight on the expenses is key. This is what I intend to implement this year — a work-in-progress.