I really get an awful feeling when I read this document. It really highlights how completely inept we have become as a society when we start doing this.
http://biz.yahoo.com/ap/080219/borrowing...
This does not bode well for the future of this country whatsoever.
Why are you surprised, much less sickened? This seems pretty normal. I love that he is 40 and only has (or had) 20k in savings! Now thats lack of foresight.
Of course I shouldn't point the finger, my girlfriend is rounding the corner on 38 and has zero savings except her house. Imagine being in love with someone who's worse off than the person that sickens you, man that hurts.
Josh
I actually like stories like this.
The theme is (I think) we are supposed to sympathize with this guy. Lets look at a few quotes before we break out the tissues...
"poses inside his Irvine, Calif. home"
"American Express reduced the limits on three credit cards"
"pay down their credit card debt"
"pawning a diamond ring and selling camera equipment he owed money on"
"$550 monthly payment on a gray BMW 335i he leased last April."
So the guy was living beyond his means and got dinged. I hope he learned his lesson. I figured it out ten years before he did so I'm not gonna end up in the same boat.
JWM in SD
I'd argue that this kind of thing started before the RE Bubble got into full swing. It is not surprising and pretty much corroborates what we have been saying about a lot Clownifornians living beyond their means. Multiple this moron by a million and you are looking at OC writ large.
What really makes me personally sick about the SoCal lifestyle is how all the clowns leveraged a home they couldn't afford into toys and vacations they couldn't afford via HELOC's.
Only in America can you blow a million dollars on personal consumption and then cry for a bailout. And have politicians actually listen.
Wow.
My husband and I just did our annual retirement financial inspection while preparing our fed taxes.
Both of us have deposited the max since our first jobs and that has been around 30 years. Plus there is some company rollover money.
It totals right under $300,000 - sure glad we have a few more years to save because I'd hate to retire on that!
My point is that I feel sorry for anyone who didn't start saving early because it sure builds up slow. Our deposits to IRA / Roth have always been considered priority and I can assure you we have never driven anything like a BMW or thought we could buy a house in Irvine.
What will make you sicker is if that if you leave it up to enough politicians, they'll try to make YOU the saver/financially responsible PAY for their mistakes by redistributing wealth and assets. Take a look at who's running for prez. And read all about.
My point is that I feel sorry for anyone who didn't start saving early because it sure builds up slow. Our deposits to IRA / Roth have always been considered priority and I can assure you we have never driven anything like a BMW or thought we could buy a house in Irvine.
Actually, I don't really feel sorry. I can't count how many times when I talked to people who mentioned about how they didn't participate in some 401k plan of some sort, the number of excuses that they say. (It's a scam, you lose money in it, I can do better if I save myself, blah blah blah blah). A lot of people are over-confident in financial self discipline, and very few want to admit that they need those plans to force them to save.
selfportrait
----- Sour grapes for everyone!
It's so sad to me that the media continues to profile a few idiots like this who are really not representative of most Californians.
We're in our 40's, and everyone we know is fiscally responsible. We are people who have our houses paid off, and have planned and saved for many years to provide for a sound retirement. We understand the meaning of the word reality.
Many Californians are transplants and they are great, responsible people, but for some reason, many of the real flakes I've seen in recent years, came to California from other places in search of "the dream," and have lived far beyond their means. Perhaps it's time for them to leave.
It's so sad to me that the media continues to profile a few idiots like this who are really not representative of most Californians.
We're in our 40's, and everyone we know is fiscally responsible. We are people who have our houses paid off, and have planned and saved for many years to provide for a sound retirement. We understand the meaning of the word reality.
Many Californians are transplants and they are great, responsible people, but for some reason, many of the real flakes I've seen in recent years, came to California from other places in search of "the dream," and have lived far beyond their means. Perhaps it's time for them to leave.
Americans suck at savings. That's no joke. It's not a native ca/ non-native CA thing. You go to the east coast, west coast, south, etc, it's the same thing over and over again. Statistics in CC debt don't lie..
You in your 40ies being financially response really in the minorities frankly. And if you compare people in my age group (30ies), you'll find even less financially responsible people. Though my immediate friends and family only have "good debt", so many times other constituents around me (co-workers, peers etc) have regularly hit me to borrow $100 a week or two, talk about how great deals their getting on credit card rates by transferring balances, how they don't contribute to a 401k,and on and on).
selfportrait
----- Sour grapes for everyone!
Oh, I should have mentioned that I am a native Californian too.
So I'm curious...
Some of you trying to distinguish yourself by saying your "native californian"...
What's you're definition of being a native californian???
selfportrait
----- Sour grapes for everyone!
I actually like stories like this.
The theme is (I think) we are supposed to sympathize with this guy. Lets look at a few quotes before we break out the tissues...
"poses inside his Irvine, Calif. home"
"American Express reduced the limits on three credit cards"
"pay down their credit card debt"
"pawning a diamond ring and selling camera equipment he owed money on"
"$550 monthly payment on a gray BMW 335i he leased last April."
So the guy was living beyond his means and got dinged. I hope he learned his lesson. I figured it out ten years before he did so I'm not gonna end up in the same boat.
I feel bad every single time someone slams a poor Bimmer....Come on guys Bimmers are cool sports sedans. The driving dynamics are awesome. .So Bangle was a little drunk when he designed the exterior of the 3 series sedan...and also drunk when he designed the 5 series and 7 series, and Z4....But the good news is Bangle is out...
The douchebag above obviously was in over his head. $550/month on a 335 lease. Wow, he really bent over on that one. I've been getting unsolicited offers for $600/month on a 750...not that I would do it...But man, he really bent over on that one for a 335i.
selfportrait
----- Sour grapes for everyone!
Born in Hoag Hospital, Newport Beach, CA
FLU
I realize, as you said, financial irresponsibility is not indigenous to Californians. Was just responding on that front based on the fact that the guy in the article lived in CA, and that was the topic of this discussion.
As well, I'm responding to the premise of the article based on the people I know--actually dating back several generations in some CA families.
To me a "native" is someone who was born in CA. In my case, born and raised in San Diego/La Jolla.
Hopefully, articles like this will, at the very least, be a "wake-up call" for many in that boat, but I fear it may be too late for most.
So much for the "california native" versus not native argument. It seems like it's a general American consumer problem...
http://www.cnn.com/2008/LIVING/personal/...
Credit Card Debt up 315%
Americans are drowning in debt. Consumers have racked up more than $2.2 trillion in purchases and cash advances on major credit cards in just the last year. And it's become a habit for them to spend more than they have. The overall credit card debt grew by 315 percent from 1989 to 2006, according to public policy research firm Demos.
To compound the problem, fewer people are paying their credit cards bills on time. The percentage of people delinquent on their credit cards is the highest it's been in three years, according to CardTrack.com.
With banks tightening their standards and the drumbeat of recession getting louder, there's no better time to grab control of your debt than now.
First, you have to determine if your credit card spending habits are out of control. Here are some signs:
Once you've made a list of your debts, it's time to prioritize your payments. Interest rates, on average, can range from 10 to 18 percent, according to Curtis Arnold of Cardratings.com. Tackle your highest-interest credit card first. With rates averaging about 14.5 percent, you really want to knock out the high-interest debts quickly. Try shifting high-interest credit card debt onto cards that have lower interest rates.
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The principal is not the only problem, it's also the interest you're accruing. If you have a $2,000 balance at a 14 percent interest rate -- and make just the minimum payments -- it will take you more than 14 years to pay off that debt plus the interest. Try to pay more than the minimum payments on your credit cards whenever you can.
Another tip: Keep a close eye on your card's interest rates and find out if there is room for negotiation
Credit card companies are increasing fees and cutting credit limits, and some are increasing rates, according to Arnold, so be sure to scrutinize your monthly statements. Often the details of these changes are included in the fine print on your statement.
If you've been a good customer and you have good credit, now is a good time to negotiate for a higher credit limit or to knock some points off your interest rate, says John Ulzheimer of Credit.com.
All it takes is a phone call. And it could save you hundreds of dollars in interest payments. Many credit card issuers already have policies in place. These credit card companies don't want to lose your business. Of course, if you don't have a great credit history or you've made a few late payments, you may not get anywhere.
One of the most important steps you can take in tackling debt is improving your credit. Your credit report is being even more closely scrutinized today by credit card issuers, mortgage lenders, auto dealers, insurance carriers and even potential employers.
Also, don't close old credit cards accounts. Even if you don't use them frequently, it looks better for your credit score if you can show a long credit history, said Ulzheimer.
And, he says, delay some spending.
As a rule of thumb, you should try not to use more than 10 percent of your credit limit when making purchases. "The people with the best credit have a utilization rate of no more than 7 percent," he says.
If your credit utilization is 50 percent or more of your credit limit, you are doing some real damage to your credit score, says Craig Watts of Fair Isaac, one of the companies that provides credit scores. When the new FICO '08 scoring model is adapted in May, if you have a utilization of over 50 percent, you'll be penalized even more heavily<!--startclickprintexclude-->
selfportrait
----- Sour grapes for everyone!
Hey FLU,
At the end of that post, it says that the best borrowers have a less than 7% utilization rate, and that the new FICO will hit those over 50%. What does that mean exactly? I pay my Credit Card balances in full every month. I do have a very old credit card that has a low limit that I keep to have the nice long history thing. Sometimes I use up to 60%, always paid off as soon as the bill comes in, because the limit is low. Does this count as utilization? Will I get dinged because my limit is low even though I pay the thing off every month?
I think a native californian would be someone that was born here. As one, I know a many of them and they have no corner on the financial responsibility market. About 50% of my native friends are financially responsible and 50% are careening into their 40s underemployed, up to eyeballs in debt, and still rely on parents to pay car insurance or occasional rent. Being born here is meaningless.
I guess the essence of my posts were misunderstood.
I actually agree with all of you with regard to "anyone" being capable of commiting acts of gross financial irresponsiblity--such as the fool in the referenced article.
That was my point exactly.
I was trying to defend the fact that this type of behavior is not a "California" thing. I guess I just happen to know a lot of solid people, who just happen to be from California, who have their acts together.
My point was that many "Native Californians" are portrayed as "flakes," when, in fact, a great majority of those who demonstrate this type of irresponsible behavior are not natives. I work in TV and film in Hollywood, so, believe me, I know flakes from flakes.
At any rate, the bottom line is clear. Native or non, lots of people are in over their heads. Sad.
One has to admit the SoCal housing bubble did much to enable this sort of behavior in the first place.
This does not bode well for the future of this country whatsoever.
This guy takes out $10K loan from his own 401(k) account.
We the people, have borrowed , $30K, for every man, woman and child in the nation, from future generations*. This does not count promised entitlements.
Which of the two should make you sick & awful?
* 9 Trillion divided into 300 Million souls.
A point to note is that our government HUGELY discourages savings. Look at the interest rates, they are lower than inflation. There is no incentive to save. And the message is SPEND SPEND SPEND, even if you have to use the credit cards. And the current laws make it ridiculously easy to walk away from obligations.
Totally agree about the save/spend psychology going on. Again, sad.
I also believe a lot of our behavior as a society comes from the way we were brought up. My parents didn't buy anything they couldn't pay cash for. We're trying to instill that kind of sound financial thinking in our
kids--that's why we're raising them in the San Diego (La Jolla) area rather than LA--a little less "la-la landish," but not much.
Many of our friends in the Hollywood biz live in Malibu.
We were up there over the weekend, and one guy we know just gave his 16-year old boy a Maserati. My 15-year old boy said he'd like one for his 16th birthday. Fat chance.
I told him that, when we got home, I would show him, on paper, exactly how much he'd have to earn to pay for it, and how many years it would take him to do so. We have things like this come up a lot, and it just takes some time, on the part of parents, to give their kids the values they will take with them through life.
Future generations will bear a terrible burden for the excesses of the present generations, so they'd better be ready to cope with that harsh reality.
Gotta disagree with you on that Kev. Part of the coming shit storm is that people will find it very difficult to walk away from their debts. The corollary problem is that you can't squeeze money out of people that they don't have.
Debt/bankruptcy reform back towards the pre 05 standard should happen fairly quickly.
Josh