What is frugal living?

[hereforinfo]

I didn't overstate my income and made timely payments on my debt until I lost my job.

Yes, but you created your credit card debt in the first place by spending more money than you made. You had the debt before you lost your job. You made the choice to carry all that debt. Again, the whole point we were discussing is not whose fault it is that people can't pay back their debt or lost their jobs. I think that's been debated over and over and there is plenty of blame to go around.

What we were discussing here is whether people are responsible for borrowing the money in the first place, or whether the banks are "abusers" for offering them the money. Someone said the banks made it too easy to borrow money. My argument is that just because you can do something (borrow more money), doesn't mean you should.

[LuciluS]

We are filing BK mainly because of medical bills; however, we had our fair share of credit card debt too.

I can recall receiving twice a week checks from the banks/credit cards requesting to use them at your convenience. Crap, the checks were number like 1001, 1002. None of the checks or any info on the same piece of paper as the checks were on stated there were any fees for using the checks. the transfer fee charge was in small print on the 1st page of the envelop. Of course, with name, acct # & etc. these checks had to be shredded every week as too much info about us. It was a nuisance.

I can see people who are in a financial bind or don't completely understand their finances, would deposit those checks into their regular checking account and think nothing of it UNTIL they got there CC statement and was hit with a transfer fee.

As they say, it takes two to Tango & it's just as much the Banks fault for constantly mailing out those checks (crap, we haven't paid our CCs in over a year & just got some checks from Chase yesterday) as it is the Consumer.

Now, the default rate is declining, but I believe the year 2008 was the highest Credit Card default rate in history.

[IBroke]

Yes, but you created your credit card debt in the first place by spending more money than you made.

What you just posted is the definition of the term "credit". Nothing more and nothing less. If you're not supposed to spend more than what you CURRENTLY have, what is a credit-card and a loan good for in the first place? Why do they exist? Why do banks hand them out?

Or are you trying to tell me that nobody should obtain a mortgage or a car loan UNLESS you have that entire money for such a loan on your savings account? That would be the end of this country's financial system.

My credit-lines were set by the banks - not by me. I certainly created that debt - but the interest I paid was the income for the banks. Do you think they are doing this because they love their customers so much? They need to issue more and more credit and count on the customers that they use the credit - or they can't boost their profits. I explained that before.

Again, this is how the financial system in this country is set up. This is (or at least, was) a CREDIT-NATION. If you would take away all the money people are in debt right now, you would also have to take it away from the companies, businesses and banks who received it. In that case, this country wouldn't look different....I'm not sure if it would look better.

[IBroke]

I meant "the country WOULD look different..."

[hereforinfo]

Of course it's reasonable for people to use credit to purchase homes and cars, major necessary items where the loans are secured by the collateral. It's also reasonable that people would use credit cards to pay for things here and there out of convenience, or for instant gratification to purchase something they can pay back in a reasonable amount of time. A lot of people carry balances, it doesn't make them bad people. It's usually not the best financial decision because you are paying interest, but whatever, we're all human. I think it's unrealistic to expect that no one would ever buy anything if they didn't have the cash to pay for it. It's a normal part of our society to use credit, and used in a reasonable manner it's good for the economy. It's also great to have it available for an emergency, or for necessary expenses when times are bad.

Where it all went wrong is when people were taking out tens or hundreds of thousands in home equity loans and credit card debt to buy expensive items and live way above their means to the point where they could pay for 20 years and barely make a dent in the interest, much less the principal. Many people were taking out helocs just to pay the minimum payments on the helocs and credit cards, right from the start, while continuing to charge up lavish vacations and big screen tv's. No one is denying that the banks were too lenient, but if someone did what I just described and got in way over their heads they are responsible for their own situation. The bank put the money out there, but no one FORCED anyone to take it. Yes, we are a credit nation and credit is a good thing when used responsibly, but my whole point is that IT'S NOT THE BANK'S FAULT YOU ARE IN DEBT. YOU MADE THE CHOICE TO SPEND THE MONEY. Who cares if they set the limits? You aren't required to use them.

The financial system in our country was never intended for someone earning $50k/year to borrow money to live like he was making $500k/year. Unfortunately the lenders and many borrowers took advantage of the system and broke it. Now the rest of use are paying the price.

[IBroke]

Of course it's reasonable for people to use credit to purchase homes and cars, major necessary items where the loans are secured by the collateral. It's also reasonable that people would use credit cards to pay for things here and there out of convenience, or for instant gratification to purchase something they can pay back in a reasonable amount of time. A lot of people carry balances, it doesn't make them bad people. It's usually not the best financial decision because you are paying interest, but whatever, we're all human. I think it's unrealistic to expect that no one would ever buy anything if they didn't have the cash to pay for it. It's a normal part of our society to use credit, and used in a reasonable manner it's good for the economy. It's also great to have it available for an emergency, or for necessary expenses when times are bad.

Where it all went wrong is when people were taking out tens or hundreds of thousands in home equity loans and credit card debt to buy expensive items and live way above their means to the point where they could pay for 20 years and barely make a dent in the interest, much less the principal. Many people were taking out helocs just to pay the minimum payments on the helocs and credit cards, right from the start, while continuing to charge up lavish vacations and big screen tv's. No one is denying that the banks were too lenient, but if someone did what I just described and got in way over their heads they are responsible for their own situation. The bank put the money out there, but no one FORCED anyone to take it. Yes, we are a credit nation and credit is a good thing when used responsibly, but my whole point is that IT'S NOT THE BANK'S FAULT YOU ARE IN DEBT. YOU MADE THE CHOICE TO SPEND THE MONEY. Who cares if they set the limits? You aren't required to use them.

The financial system in our country was never intended for someone earning $50k/year to borrow money to live like he was making $500k/year. Unfortunately the lenders and many borrowers took advantage of the system and broke it. Now the rest of use are paying the price.

hereforinfo, I totally agree on that post. And again, I never blamed the banks for MY personal situation. I relied on my job without any savings. Bad for me.

Your $50K/year is a great example. Before the crash, an individual with an income of $50K/year probably would have been approved for the same loan/credit line and individual with an income of $500K/year would have received 30 years ago. That's were the SYSTEM went off the rails.

There are so many people in this country losing their job although THEY handled their finances responsibly. As soon as that happens, you can see that there's something wrong with the system and not only with some individuals who ran into debt.

But the way the system is set up today, many are already in debt before they start making money (student loans).

[LuciluS]

The financial system in our country was never intended for someone earning $50k/year to borrow money to live like he was making $500k/year. Unfortunately the lenders and many borrowers took advantage of the system and broke it. Now the rest of use are paying the price.

Yep! Those lenders were paid hefty money for making just a simple consumer loan at a Bank. I know this for a fact as my ex-husband has been in the Banking business all his life (36 yrs).

Crap, I can remember his boss telling him many, many years ago to take up Golf (not a cheap sport) as many deals are made on the golf course. The bank paid his monthly membership dues to a swanky country club. They (banks/credit card cos) could have cared less if they were overextending credit to the consumer because they made plenty of money off the interest, fees, etc. They should not have been allowed to over extend credit to the consumer just like the consumer shouldn't have taken the offer.

So as I say it takes two to tango - Banks, Credit Cards Cos. and etc. and the Consumer. You can't state it's always the consumer's fault as I knew first hand from my ex how deals were made.

It's just like the person collecting on these bad debts. They will say anything to try to get you to pay, whether it's legal or not! Why? Because the collector only gets paid if he/she gets money from the consumer. I had one woman collector from NCO who yelled, cursed & told me she would take everything I had. I told her to do what she had to do. That ws 3 months ago and NCO hasn't called back. I'm receive SSD only which cannot be touched.

[BigJohn]

When it comes to 'fault', nobody has mentioned the people behind the 9/11/2001 'attack' which tumbled our country into 2 wars which caused our country to go severely into debt, which such behavior was mirrored by many of us.

[hereforinfo]

The banks, or anyone for that matter, can only take advantage of you if you let them. They can't force you to do anything. The choice is always yours. The consumer could just as easily have turned it around on the bank and taken advantage of them - let the bank exec treat you to golf and lunch at a swanky club, then say "no thanks" to the loan. :-)

[hereforinfo]

When it comes to 'fault', nobody has mentioned the people behind the 9/11/2001 'attack' which tumbled our country into 2 wars which caused our country to go severely into debt, which such behavior was mirrored by many of us.

Well that is certainly true. Our government sets a great financial example don't they?

[Flamingo]

What you just posted is the definition of the term "credit". Nothing more and nothing less. If you're not supposed to spend more than what you CURRENTLY have, what is a credit-card and a loan good for in the first place? Why do they exist? Why do banks hand them out?Or are you trying to tell me that nobody should obtain a mortgage or a car loan UNLESS you have that entire money for such a loan on your savings account? That would be the end of this country's financial system.

My credit-lines were set by the banks - not by me. I certainly created that debt - but the interest I paid was the income for the banks. Do you think they are doing this because they love their customers so much? They need to issue more and more credit and count on the customers that they use the credit - or they can't boost their profits. I explained that before.

Again, this is how the financial system in this country is set up. This is (or at least, was) a CREDIT-NATION. If you would take away all the money people are in debt right now, you would also have to take it away from the companies, businesses and banks who received it. In that case, this country wouldn't look different....I'm not sure if it would look better.

Banks/Lenders are in a business and a business exists to make money. If someone takes on a credit card and doesn't realize that credit was extended to them for the bank/lender to make a profit, they need a serious course in Finance 101. You pay for the use of someone else's money since you don't have that money in the first place - that is a credit card or loan. I remember what life was like prior to credit cards coming into existence in the late mid-1960's. People actually survived without credit cards and personal bankrtupcy was not heard of. As more and more banks and lenders came into existence in the 70s and 80s, credit soared and the bankruptcies started. Being overextended was no big deal to folks cause you could pay back a balance at a small percentage of what was owed, not screwing up your budget to buy something you did not have the cash for. It became easy for people to obtain more and more cards so they ran up more and more debt and when something started to crash down (i.e., job loss/income loss), the damage was done.

My parents prior to credit cards coming into existence had a lot of money in savings and only had the mortgage to their house as their only bill, besides oil and electric. Not too many people today live that way as no one knows how to save for something anymore as we have become a must have it now nation. So realize that when you obtain credit, you are doing it at the profit of the person/institution extending you credit. It's a business and businesses exist to make a profit.

[IBroke]

The banks, or anyone for that matter, can only take advantage of you if you let them. They can't force you to do anything. The choice is always yours. The consumer could just as easily have turned it around on the bank and taken advantage of them

The consumer actually took advantage of the banks - unfortunately, they seem to be "insured" by the government...

[IBroke]

My parents prior to credit cards coming into existence had a lot of money in savings and only had the mortgage to their house as their only bill, besides oil and electric. Not too many people today live that way as no one knows how to save for something anymore as we have become a must have it now nation. So realize that when you obtain credit, you are doing it at the profit of the person/institution extending you credit. It's a business and businesses exist to make a profit.

That's exactly why I pointed out that banks don't extend credit as a courtesy. It's all business and at least prior to the crash, credit was an addictive drug the country was running on.

[sigferl]

Thanks for your post IB. I agree with a lot you have to say but I think addiction to greed and materialism by consumers caused the problem, not addiction to credit.

Credit does not cause problems, only the abuse of credit causes problems.

I think we should start calling them convenience cards to remind everyone that you have to pay the debt off every month, no execptions.

God Bless America

That's exactly why I pointed out that banks don't extend credit as a courtesy. It's all business and at least prior to the crash, credit was an addictive drug the country was running on.

[BigJohn]

I think what got a lot of people in 'trouble' is when gas hit over $5.00 a gallon. For me, that was just more nails in my coffin.

Went overseas to buy a container worth of junk. I knew where to buy the stuff and how much it would cost to ship back. When I got overseas, I was shooked at how much more it would cost to ship... and I didn't have the extra cash.



My business took a hit on September 11, 2001. Another business I had, faltered so badly I had to close that business. Hard to believe 19 'terrorist' could actually pass thru security back then and not one could be detected.

When the values of homes depreciated, nobody really saw that coming.



We are living in difficult times.