re: #240 Pawn of the Oppressor

I don’t know what policies can ever really help what appears to be a huge cultural problem: Greed, Materialism, and Financial Illiteracy. I’ve spent the better part of a year, every day, reading what people have signed and seeing the numbers they signed up for, and it’s appalling. I think a lot of these folks just didn’t read the damned contract in the first place. I think they took a verbal explanation - “OK we’re going to give you $150,000 on a credit card, and you don’t have to pay it back for thirty years, sign here” - and they didn’t stop to think that the collateral is THEIR FREAKING HOUSE. “WOOHOO I have a credit card with a rap star budget!”

(HELOCs make sense if you’re using the money to improve your home, with the intent to sell and upgrade in a booming housing market, but they sure didn’t get used that way.)

Granted, since I work in bankruptcy, *by definition* I am looking at a sample of what went WRONG… But I’ve noticed a definite causal relationship between all these things. The whole house of cards was built on pie-in-the-sky, but like anything else it operated on Garbage In, Garbage Out, and there was a LOT of garbage going in.

- Those major banks that went under a couple of years ago? Yeah, their HELOC contracts are illegible, convoluted, absurd tongue-twisters of interest rate inflation and convoluted repayment systems. Thomas Jefferson would get one paragraph in and say “What is this shit? I can’t read any of this.”

- Predatory Lenders don’t have to be predatory, they just need people to behave like prey. After you’ve seen enough twenty-page Schedule Fs (unsecured creditors list) crammed full of payday loan and clothing store credit card debt, with a monthly payment on a 15mpg SUV that’s almost as much as my rent, you start to wonder who’s really victimizing who.

- Even in my industry I see this crap… I’ve got co-workers with outstanding debts that could be settled easily, who don’t get it taken care of. I know one woman who can’t get a cell phone because they essentially want the entire two-year plan paid up front. The source of her bad credit? A bunch of two-digit medical bills that she hasn’t paid. And this is somebody who runs her own business and aspires to grow that business…

I could go on… But really, if you want somebody to blame for all this economic woe, look in the mirror. Check your spending habits, look at your credit card balance, ask yourself if you need any of what you buy? Can you do better? Do you owe people money? Do you pay back your debts? Of course debt can actually be used to stimulate growth (as we’ve known since the 1600s or so) and sometimes bad things happen to good people who get in too deep, usually with medical bills… But I’d say about 75% of the outstanding, ludicrous debt I look at every day is just fluff. It’s just bullshit stuff which makes me wonder if the concept of frugality just vanished off the face of the earth sometime in the last twenty years.

I worked for a an auto finance company in a former life. It was amazing to me the shit paper the F&I guys would try to sell to us.