I'm in the process of a watchin' a documentary called Maxed Out. Perhaps you've seen it. The opening scene features a real-estate agent who uses irregular accounting procedures identical to those of the Enronian scandals (the film made the comparison, not me), but then trickles down to the responsibility of the consumer.
To companies like Mastercard, some of the most "popular" customers are evidently people who've been through bankruptcy, because 1) they can't file for it again and 2)they are addicted to the mentality that they'll pay for stuff after the fact. Or as one interviewee said, "They have a taste for credit" and they're "willing to make minimum monthly payments--forever."
I myself have dabbled in debt. Being a handy dandy wage slave at a vinyl record shop, I haven't and won't get rich. So I think I use this conclusion poorly. Instead of saving every penny I earn and waiting bi-weekly for a paycheck, I've resorted to taking draws from the counter and "employee purchases" to satisfy my addiction to the phonograph. My low salary has resulted in a conscience that says quite clearly, "Buy more. It won't matter, because you don't have any big expenses-- you're under your parental's roof." And I don't even wait to see the cool cash flow into my hand. I spend credit.
I feel as reckless as a bowling ball and the result is a shotty one--an unnecessary, but nonetheless, constant dependence on my employer for satisfaction and more credit.
Is this the American dream? Only getting ahead when you have to push others down, by using their "taste" against them?
I wonder if we can change this system. I'm convinced that the shift starts at the local and individual level. In my case, I've got to be more self-reliant if I choose to pick up that Ethiopian Jazz record or even that $3.99 Herbie Mann, The Wailing Dervishes gentle groove. If I make the conscious decision (meaning the non-lustful shopping complex) to purchase something that's not on Maslow's basic tier of needs, I've simply must have cash in hand. It's a hard money conundrum.
The problem I have is that I'll get some money from work and then buy that highly coveted thingamabob that I've been eyeing. Then I'll realize that I'm out of food and have to buy it with credit :P Lately I've been paying more attention to what I put on credit and what I don't, though, trying to control my spending. It's a difficult process as I am also addicted to music, but more of the digital kind, which is SO EASY to buy!
Seriously, though, whoever thought up the idea of credit cards was an evil genius. The whole situation reminds me of the sub-prime mortgage crisis: lenders were giving out these mortgages to people who didn't understand what they were getting in to and were unlikely to handle any increased payments. The lenders, however, had no problem selling them because even if the person defaulted, they would still get something in return. What you said about credit cards targeting people who have had bankruptcies in the past reminded me of that kind of unscrupulous (in my opinion) lending.
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You must be the change you wish to see in the world -- Mahatma Ghandi
Honest disagreement is often a good sign of progress. --Mahatma Gandhi
My Blog: http://www.progressiveu.org/blog/kablock
Yep, I think we can simplify it to a sacrifice issue. I'm curious--do you think we should call for more regulation of the banking and lending industry?
"Seriously, though, whoever thought up the idea of credit cards was an evil genius."
Lolz I really like that.
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Well, I'm hesitant to say regulate right off the bat since I'm not completely educated on the subject and I don't really know how they would regulate it. Is there some way to make sure lenders educate lendees about what they're looking at? It seems like it would be tough for the government to get into.
It would be nice to sort of incorporate some basic finance education into our school systems. Educated consumers would be harder to dupe, for sure. It could also be helped with an overall value shift: not caring so much about having more and more and being content with what we're doing in our lives instead. I know I get caught up in buying just because I have that "MUST HAVE NOW" impulse, then regretting it later.
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You must be the change you wish to see in the world -- Mahatma Ghandi
Honest disagreement is often a good sign of progress. --Mahatma Gandhi
My Blog: http://www.progressiveu.org/blog/kablock
Shux I only asked because you wrote the post on regulation, sorry. I dig yer impulse to include it in a curricula with perhaps the history of banks and lenders dupings. :)
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No need to apologize, I do support regulation for a lot of industries for various things they do, but in this case I just wasn't sure how it COULD be regulated effectively. I know I'd be interested in the history of lender duping :D
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You must be the change you wish to see in the world -- Mahatma Ghandi
Honest disagreement is often a good sign of progress. --Mahatma Gandhi
My Blog: http://www.progressiveu.org/blog/kablock
"Is there some way to make sure lenders educate lendees about what they're looking at?"
It is already required by the truth in lending act There is full disclosure, in very fine print, on the loan paperwork that the borrower signs. Perhaps they could modify the regulations to include a minimum font size?
Regulation exists aplenty, but the guvment skewls fail miserably on the education side. Often those that call for more regulation are not aware of how super regulated we already are.
Good insight.
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I think a lot of the problem is that people aren't educated about credit. People get sucked into baaaaaad credit card offers. You know the ones I mean, they say 0% credit rate on the front, but flip it over and your new rate after x number of months is 35%. Or maybe those "checks" that get sent to you in the mail that aren't really checks at all. People don't realize that credit cards aren't free money and no one educates them about how to build credit and keep good credit.
I was having a similar discussion with an adult friend the other day. We didn't really come to any well-developed conclusions about who should educate people about credit? Perhaps it could be the next user-suggested ProU poll...
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That's an excellent question G-belly. I guess I was lucky to have a mom who's Controller for a credit union. She taught me everything from how to balance my checkbook to how to file my taxes. I often wonder "How does everyone else learn about finances?"
Ooh. I've wanted to watch that one for a long time, but every time I download it on Netflix, I start getting too nervous to watch it. Is it worth a watch if I am aware of the problems credit abuse can create? I don't want to cause unnecessary anxiety and I hate money.
http://www.progressiveu.org/blog/ediblewoman
I'm the same way with that zeitgist film...
Honestly if you have an hour to spare, you'd be better off watching Blade Runner or something :)
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