Credit, Karma And The Empty ‘House Bank’
Several readers suggested this article on bankruptcy myths. “Here’s how bankruptcy affects your credit, your possessions and your karma. While the bankruptcy laws vary from state to state, every state has exemptions that protect certain kinds of assets, such as your house, your car (up to a certain value), money in qualified retirement plans, household goods and clothing.”
“‘For most people, they’ll pass through a bankruptcy case and keep everything they have,’ says John Hargrave, a bankruptcy trustee in New Jersey. If you have a mortgage or a car loan, you can keep those as long as you keep making the payments (like the rest of us).”
“‘I’ll never get credit again.’ Quite the contrary. It won’t be long before you’re getting credit card offers again. They’ll just be from subprime lenders that will charge very high interest rates.”
“However, if you’re planning to buy a house or a car, you might want to do that before you file. Those loans will be tough to get, and the higher interest rate on such a large purchase would make a significant impact on your payments.”
The Associated Press. “Credit counseling agencies say that consumers are coming in in droves seeking help. ‘My phones are going crazy,’ said Howard Dvorkin, president of a nonprofit credit counseling service in Fort Lauderdale, Fla. ‘Consumers are carrying an exorbitant amount of debt, and they don’t have any savings to fall back on.’”
“The Federal Reserve’s decision last week to raise short-term interest rates for the 17th consecutive time will boost yet again borrowing costs for consumers, likely prompting more delinquencies on credit card bills, as well as on auto loans and mortgages.”
“Credit expert Catherine Williams said rising costs for gasoline and utilities were only part of the explanation for rising credit card delinquencies and increased consumer financial stress. ‘People refinanced (their mortgages) six months or a year ago, so the ‘house bank’ is empty,’ Williams said. ‘Most can’t go back and tap their home equity again.’”
“In addition, she said, consumers can only juggle debt payments for a while. As she put it: ‘You let the car payment go one month, then the house payment. Then you make a lot of little creditors happy for one month, maybe for two months. Then it becomes obvious that you have to catch up on car payments, and everything else slides.’”
I read the book “Credit Card Nation” some time ago. Quite fascinating read. Some hilights? The college kids are tapped out and senior citizens are the new growth market. I’ve also seen people say that within one month of finalizing their bankruptcy, they started getting credit card offers from the same credit card companies that took them to the court. It even mentioned bankrutcy on the envelope.
There is a movie called “Maxed Out” that was produced and runs on the subject of credit cards, but I have yet to see any real distribution or show times for it.
I keep checking netflix to see if they have (or will be getting) it. They don’t yet…
the reason credit card lenders and mortgage companies go after this sector is because they can’t declare bankruptcy and liquidate for seven years. money in the bank, as they see it.
http://www.maxedoutmovie.com for info & some clips. I don’t think they have USA distributor yet.
if you go to PBS’s FRONTLINE website all their episodes are online, including The Secret Life of the Credit Card.
I remember that one. Apparently the CC companies started making money hand over fist when they LOWERED the minimum payment. After all, lower payments mean more years paying off debt, and therefore more interest.
I’m surprised that bankrate.com would suggest buying a home prior to filing for bankruptcy. Here are two related links:
‘Mortgage applications fell last week as interest rates hit their highest level in more than four years, an industry trade group said. The MBA’s seasonally adjusted purchase mortgage index fell 6.2% to 389.0.
The purchase index, which is considered a timely gauge of U.S. home sales, was substantially below its year-ago level of 477.4. The group’s seasonally adjusted index of refinancing applications decreased 7.5% to 1,356.0. A year earlier the index stood at 2,529.2.’
From Florida Today:
‘Unlike the first three months of 2006, Wall Street’s second quarter — which ended Friday, concluded with more of a small pop than a bang. ‘We’re hoping that this was the bottom,’ Caroline Lau, a financial planner at Raymond James on Merritt Island.’
‘I think it’s up and down. It’s like a roller coaster,’ said Susan Howell of Cocoa. ‘Right now, I’m kind of scared. There’s inflation. And there’s the new guy at the Fed, who replaced Greenspan.’ ‘I’m watching my pennies — let us put it that way,’ Howell said.’
I would wager that when applications are weak, the quality of apps is also weak, and the deals are skinner. Loan officers may be cutting fees (which come out of their commissions) just to get some things through.
The bad news is building — and we will be reading some interesting articles from inman news and the mortgage industry trades in a few months.
It sure feels good to be debt free. I live within my means and I’m happy with life.Life is more than buying stuff so you can feel important. How is the world really going to remember you anyway? Don’t forget the fact that we are animals trying to interact with other species so we can all live and enjoy each other.
I have two years’ worth of living expenses in my checking account alone. I wonder how many homedebtors have even two months’ worth.
If it’s not growing at at least 3-4%, maybe think about getting it into a money market account. Good job in any case!
Buy some gold with those unFederal unReserve IOUs, and stash it away.
I told people this last on this board, and most laughed it down. Suppose it’s the same people who kept saying Boston housing was o-so strong.
Golden Calves for everyone!
I bought gold with 3% of my sale proceeds, just for insurance. Wanted double that, but wife refused.
Very, very few. I can’t even say I have much savings at my job because most people would think I’m nuts, and would want to know why I was still working !
I am debt free too. I paid off my mortgage 3 years ago ( I paid off my 30yr-fix loan in 9 years & 8 month). I live within my means and love to be financially free.
My message to most people in this sociely is this:
” LIFE IS NOT A FASHION SHOW, TRY TO GROW UP”
Glad to hear I’m not alone. I’m still renting because things didn’t settle down job-wise until a couple of years ago, and now I’m waiting for the market to cool. In the meantime, I’m debt free and living well within my means with no credit card balances or car payment, I have over a year’s expenses in savings, and I’m contributing quite a bit to retirement. I don’t care about show houses, show cars or the latest gadgets, and I don’t feel the need to try to impress anyone with the things I own. I’d rather spend my money on traveling, which I do periodically. I’d rather have the financial independence to do what I want when I want rather than be a slave to finances. I’ll buy a house when my finances support it (almost have my 20% down) and when the market isn’t insane.
Good job! Let’s remember the lessons from Winnie the Poo
Look for the bare necessities
The simple bare necessities
Forget about your worries and your strife
I mean the bare necessities
Old Mother Nature’s recipes
That brings the bare necessities of life
That would be — Disney’s “The Jungle Book”, I think.
But Winnie the Pooh is full of wisdom, of course. We have the Latin version, which is fun to read.
That would be a great bumper sticker!!
I still have a mortgage on my house. I paid $120k for this place 10 years ago and its market value is about $400k today (but at least $100k of that is bubble) and currently owe around $75k with a 5.5% rate.
I have several times that in savings and investments and make more than 5.5% in earnings/appreciation. As long as that continues I’m not paying my mortgage off. My wife wants to pay it off regardless but so far I’ve resisted that move. Not to say it won’t happen in the future though.
Even so, it is a very, very nice feeling to be way positive on the savings side (even including the mortgage). This wasn’t always the case, at one point we were drowning in debts and came very close to bankruptcy many years ago.
I have a strong feeling that many people today aren’t going to be able to avoid the financial disasters that we just barely escaped.
DaveyJones:
AS the people above can tell you .
There is a phycological advantage to having your house paid OFF!
Not just being able to pay it off! Sure you may actually be ahead net of tax…but your true risk profile is much higher.
Do as your wife says…peace of mind is greater than an electrons on a bank or broker account with an Account number your name…
I truly enjoyed sending my DEMAND notice to remove my lien. The banks won’t do that automatically as they should ..the crooks!
Then i would follow with this!
Gold after a 22 year bear market is cheap versus stocks (aka DJI) Gold versus eal estate is extremely cheap.
My advice to my adult children save in gold coin, one day in the not to distant future 17 gold coins will buy a better than average American home.
” LIFE IS NOT A FASHION SHOW, TRY TO GROW UP”
I am going to send this to some people I know, even family members. I think it says it all. If they do not like it…tough tuna boats!
I also live within my means. My home is furnished with yard sale stuff and such. I even got some great antiques at yard sales.
My car is a beater that works great…gets me to where I need to go. No payments and great gas mpg.
I bought my house a long time ago, and it’s paid off.
However, I’d rather be paying RENT and have no debt than have an interest-only mortgage! You’re better off financially than one of these “owners” are. And if you can save each month, even a little, you’re MILES ahead.
hasn’t bankruptcy just gotten more expensive as fewer people are able to file 7 and have to go through a payment plan instead? but i would think this affects unsecured credit like credit cards most. the secured credit of mortgages is still following the tried and trued foreclosure route. or have the new bk laws changed that also?
I’ve been looking into this on Findlaw as I run some worst-case personal scenarios through my head.
Here is a good summary of how the 2005 bill changed things.
Does anyone know how a deficiency judgement would be handled in Chapter 13 vs. Chapter 7? I’m guessing it’s dischargeable under 7 but would have to be partially repayed in a 13, which could add an interesting twist to the bubble’s pop.
You would think the requirement would be a repayment under Chapter 13 on a deficiency judgement . Anyway , the tax liability would still be charged under Chapter 7 and Chapter 13 on the deficiency judgement I would think .
ANY debt wiped out in a Bankruptcy is NOT taxable income. A common weasel-like-fear-mongering tactic bandied about by the credit counseling industry. HOWEVER, debts negotiated down by the credit counseling weasels IS taxable as to the amount forgiven.
I’m in Jackson Hole, WY finishing up a BK seminar and the national concensus among us practitioners the participating judges is the Congress screwed this law up SO bad that it will take many, many years of appellate decisions to BEGIN to “clarify” what the paid-for capitol hill residents meant. Most stuies have shown that, under the new law, 90-95% of the people who qualified under the old law still qualify under the new law.
My reading of the law as well. As long as you don’t walk away from the house AND the house is sold before you go into BK.
I’m not as sure all of this is just an “irresponsible debtor” thing. Here in the US, our salaries have been stagnated now for years, while our job base is moved offshore to places like India and China, where $5 an hour is a very good wage that you can REALLY live on. Also, we really do not have the kind of “wood shack” kind of housing necessary to support an ever growing legions of folks who through cost of living increases have found themselves no longer abloe to survive. This group is particularly represented by seniors as mentioned above, who turn to credit cards in order to buy the horribly overpriced medications they need to live.
I agree that in general very young folks do not understand the impact of credit, and cannot see where 2 coffees at Starbucks a day turns out to be $2500 a year, which means a maxed $7500 card within three years on just gourmet coffee…
It’s a shame to see my generation overly indebted due to bottled water, gourmet coffee and excessive alchohol consumption. (sigh)
“It’s a shame to see my generation overly indebted due to bottled water, gourmet coffee and excessive alchohol consumption. (sigh)”
Housing (even renting) is simply too expensive, and the cause of most of folks money problems. Little crap like the above, gasoline, et al. is not going to break anyone’s bank that’s not already broken.
One of my favorite news clips during $3 per gallon gas pricing last year was a woman filling up and complaining because of the price. In her hand was a 16 oz. Evian water which worked out to more than $10 per gallon figuring she paid $1.19 or so for it. Some things are necessities and some things are just plain stupid.
I bought groceries at Albertson’s this morning. As I passed the Starbucks counter I saw someone pay $6 for one of their super duper mocha espresso delight drinks with some kind of crap on the top. How do people afford that?
It’s a drug…they have no choice. Have you ever had one of those, I had a bunch because one spring a couple girls working for starbucks were giving out free super $5 coffees in front of the Hoboken train station. I asked for a bunch and they gave me around 25. Those things are strong as hell. After drinking one, I felt like I could walk 30 blocks in Manhatten in 2 minutes.(haven’t had once since my coupons ran out)… I was lucky)
What happens is this. Little Jane suburbia is in college with a cool car daddy bought for her and mommy’s credit card, so yeah she can afford a $5 coffee. She drinks them when ever she feels like, then gets hooked. After drinking these for a couple years, a regular cup o joe ain’t gona do suburban jane any good. I am sure anything that strong would be difficult to take yourself off.
The best thing about the new BK law is that you can evict a tennant easier. Give them a 3day then put their stuff on the street and change the locks when they go to the store or to work. I don’t like dead beats.
20/20’s website currently has a Myths video up and they tackle bottled water. They did a blind taste test with people and people preferred the New York City tap water they disguised.
I agree with this. I doubt most people in severe credit card debt are getting themselves there by buying non-necessities. I suspect a lot of people are driving up their debt buying groceries, paying utility bills and housing costs. This is why we are in a state of inflation: credit has been very cheap for very long, which means people at the bottom of the income heap are screwed into using their credit to pay for everyday life.
I second this. In aggregate, the people at the bottom have been pushed in to this. If they were collectively smart enough to declare bankruptcy early, or cut back, they wouldn’t be the bottom people.
Our economy and cities are structured (oil) to make it difficult to ‘cut back’ in the ways that would be necessary for the entire lower tier to pull it off.
I’m not quite as forgiving. No matter what income bracket you live in, there are usually people poorer than you who ARE living with YOUR means. I suspect most times what happens is that people have outgo closely matched with their income and very little savings and then “something happens*” and they spiral into debt because they can’t quickly change their spending patterns to match their new circumstances.
*The big three somethings are: health problems, divorce, and job loss. If you don’t get health insurance from work it’s very difficult to afford on say, a 20th percentile income. Very few of us could afford serious health problems without insurance.
It depends on what you define non-necessities as. This myth that people are being nickel and dimed to death and have to use credit cards to make ends meet needs to be exposed. You cannot account for huge credit card balances (tens of thousands) if you have a job and are trying to live frugalily. The problem always comes when you have an income that can’t support your lifestyle. This is much more about the attitude and sense of entitlement that has also fueled the housing bubble hat it has to do with stagnent wage growth. As a non-scientific poll, I have never met anyone with extreme credit card debt that didn’t have a hude TV, designer clothes and didn’t love to eat at nice restrurants. They couldn’t afford to pay their rent but could always afford to charge that new outfit or lunch at PF Changs.
Charbucks is not gourmet, just overpriced.
It is a shame to see the amount of money people are spending on a cup of coffee at “Starbucks”. They must have about 75% profit on each cup of coffee that they sell or maybe more. They are very smart..We are not. Just make a cup of coffee yourself and you can save soooo much money.
They pay about $1.80 a pound for their coffee beans (green), or about 10 or 15 cents a cup. Plus the costs of roasting and transporting the beans, the overhead and labor costs of 9000 stores, marketing and so on. But, yes, it’s a very profitable enterprise. Also yes, you can buy good beans from top-grade roasters (who are often paying more to the farmers) and have much better coffee for less money.
I agree: about $3.00 is a lot of money for 16 oz of an espresso drink. But has anyone here eaten out lately? A glass of Coke will run you $2.25. You can forget about getting a non-fast-food meal for less than $10.00. Of course these are Seattle and West Coast prices. Other areas may be more reasonable. In comparison to prices like this, coffee deserts like mochas and lattes don’t seem so overpriced.
I’m confused by the advice. -If- you can make the payments on your house and car you can keep them? So, what we are talking about is forgiveness of personal debt, credit cards and the like. Essentially the “punishment” for living beyond ones’ means and ruining the housing market by buying what you cannot afford is to keep the house and live within ones’ means. Of course the truth is that a great many will not be able to keep up the payments. In that case what we’ll see is going out in a blaze of consumption. Max out those cards, stop making payments on everything, squirrel away cash with phony expenses. Yet another sign to watch for.
How are the 2005 bankruptcy law changes going to change things? At the least, far more are going to file chapter 13 then would have previously, which should make people less likely to run up big debts immediately before filing.
The intention was that anyone who had income would have to go Chapter 13, essentially put together a repayment plan rather than forgiveness of the debt. Experience so far is that this hasn’t happened, in that the people filing bankruptcy post-legislation haven’t had two pennies to rub together. Probably a lot of this is the result of the rush to file last year before the law came into effect.
Or perhaps it’s because, despite popular opinion, most people who file for bankruptcy don’t have two pennies to rub together.
Or perhaps it’s because, despite popular opinion, most people who file for bankruptcy don’t have two pennies to rub together.
Or perhaps it’s because, despite popular opinion, most people who file for bankruptcy don’t have two pennies to rub together.
I’ll say it again . . .
Broke is the New Black
I should trademark that before someone else does and writes a book . . .
you are always hilarious!
I think you can count on being featured in Ben’s book
That line is so good that I would be tempted to use it as a chapter title.
Put that on a T-shirt, TxChick!
Txchick,
Definately copywright that one! Rotfl!
Neil
“‘You let the car payment go one month, then the house payment.”
I have to say, I don’t understand this. There was a time, not so very long ago, when I had a lot of debt and not much income. I had one hard rule—always pay the rent first, no matter how tight things got. Yeah, it looks bad if you miss a credit card payment, but that isn’t going to put you out on the street wondering where to go.
I think most people are like you in that they would pay the rent/mortgatge first. The fact that people are falling behind on credit cards means that they are prioritizing their defaults, so to speak. They’ll pay the rent, they’ll make the car payment, and they’ll buy food and absolute necessities. The really bad sign is that they don’t even have enough left over to make the minimum monthly payment on their credit cards.
I noticed there is also an expectation that car sales will soften significantly. The explanation is that it is on account of gas prices, but that would only mean that things would skew towards gas-efficient cars. If the total volume of cars sold drops, I think it’s because the consumers can’t swing the cost of car payments and are maxed out on debt.
Are we slowly devolving into a society where the obnoxious label “consumer” will be replaced by “exhumer,” where Walmart will bow down to the neighborhood dumpster, and where dumpster diving will replace soccer as a world class sport? We live in interesting times indeed.
Credit, Karma And The Empty ‘House Bank’
Hi Ben,
I sent my donation today, a bit more than the other months… which only will pay for my own Bandwidth usage..
I use the link on right hand side to donate by paypal or click the advts.
Good for you. Many of us contribute but you can be sure most don’t. Ben has worked this blog 7 days a week for about a year and a half. A little financial thank-you would not only be helpful, it would let him know the sincerity of our gratitude. Not having this blog to read daily would be like giving up caffeine — not sure how I could cope.
I will contribute my tip that adding gzip compression capability to your web server will cut your bandwidth use by about two-thirds (if that is an expense line) and make it load faster for us.
“‘I’ll never get credit again.’ Quite the contrary. It won’t be long before you’re getting credit card offers again. They’ll just be from subprime lenders that will charge very high interest rates.”
Only in the current credit bubble. When lending standards tighten, the newly bankrupt will be treated like financial lepers, as they used to be years ago. I know two people who went bankrupt a decade ago and both had a long, hard time regaining credit. One couldn’t even get a checking account from their own bank for many years afterward, let alone a credit card.
Future bankruptcies won’t be pretty.
This will come as a rude awakening to too many after the fact, too. They’ll walk away from mortgages expecting only minor, short-term difficulties (i.e., slightly higher interest rates) only to find they’ll be shut off completely.
Agreed! I think with some people their whole life they have either been bailed out or just never faced the consequences of their decisions, financial or otherwise. They can only go so far with that and when the merry go round finally slams to a stop and they get tossed off they will be totally stunned, saying “What, you mean I’m responsible for this? I don’t get it. Why do I have to pay?”
When I was a kid and left my bike outside for awhile and it started to rust up, my parents looked at me and said “Too bad. You didn’t take care of it and we aren’t getting you another one”.
I’d bet that alot of people who are going to get nailed in this bubble never learned about personal responsibility (financial or otherwise). They will now.
I would hope that this newfound sense of financial responsibility is shoved down the throats of the lenders, brokers, and the like.
They are absolutely complicit in the whole financial meltdown to come, and should eat their piece of the sh*t pie when it is served.
I don’t think the government, which is us respectful taxpayers should have to bail out all the F*Buyers and the institutions that Fuc*ed them over!
That’s funny . . . I know someone who filed for bankruptcy a decade ago and she owns three rental properties, a business, as well as her own home.
it really depends on the reason for declaring bankruptcy. one person i know had a bankruptcy about 12 years ago and is doing fine today. the reason for the bankruptcy was just plain bad luck with his business. he was able to recover and made good after that. another one declared bankruptcy a decade ago because of too much credit card debts due to health problems with his children, he was able to get a reprieve then but is back to having too much credit card debts again. i am just waiting for him to declare another bankruptcy sooner than later.
I am no conspiracy buff, but out perhaps unintended consequence of debt is to keep people tethered to this jobs, working harder than may be they otherwise would. Think of an activity like computer programming or music creation: regardless of the pay level, there will be some people who will do it because it is fun. But think of coal mining or customer support at AOL - I cannot imagine a sane person doing those jobs without absolutely needing to. Debt is the reason people are often tethered to such jobs; a person without debt will invest the savings in himself/herself to try to find another line of work.
Having a good segment of the population in debt is certainly one way to boost the supply of workers for such jobs. I actually heard something like that from a Singaporean once, a country that went from poor to rich in just one generation. He said that the average Singaporean juggles a whole bunch of debt, so he/she has to work hard to service them. When they were a poor country, there wasn’t much debt available anywhere, and consequently they were also more free to work just to satisfy basic needs. Now that they are rich, everyone has to work a lot harder just to “keep up”.
I am not glorifying poverty, just saying that debt is the enemy of freedom. Freedom is an infinitely more valuable fruit of capitalism than material goods. If enough people valued freedom and stayed out of debt, even those boring/repetitive/painful jobs would pay more, helping those who actually need those jobs.
“I am not glorifying poverty, just saying that debt is the enemy of freedom. Freedom is an infinitely more valuable fruit of capitalism than material goods. If enough people valued freedom and stayed out of debt, even those boring/repetitive/painful jobs would pay more, helping those who actually need those jobs.”
You’re singing my song, brother. I value freedom from paid employment above ANY material possession. I spent 15+ years doing the 60 hour a week thing in law firms and I do not ever want to work again, at least for someone else. I’ll rent for the rest of my life if I have to to avoid this.
AMEN!!! Do you mind if I swipe that to use with others??
“Debt is the enemy of freedom” I’ve always known this (thus our mad dash to pay off our two month old mortgage), but never was able to put it so succiently.
Kiya, go right ahead. Thanks for the kind words!
“Debt is Slavery” would fit better on a bumper sticker.
You saplings are few centuries behind the curve
So it means the US will end up a slave nation to Japan, China and about every country to the world? No you don’t end up a slave if you have big big nukes. You do like Uncle Sam is doing. Never pay. Unfortunately not many ordinary people can do that, except my Uncle Sam. Think I will buy myself a nuke. That way, my banker will be very nice with me.
“I am no conspiracy buff, but out perhaps unintended consequence of debt is to keep people tethered to this jobs, working harder than may be they otherwise would.”
You can think of this from an employer’s standpoint: Employers have traditionally used fringe benefits with vesting features (e.g., pension plans whose value does not fully vest for many years after an employee’s hire date) as a means of self-insuring against short-timers. Getting an employee willing to purchase a home (in normal market conditions) had the same effect, as closing costs could only be smoothed against future home equity gains over time. I think the equation has become far more extreme as of late, especially given the near-term outlook for falling prices in some areas (e.g., San Diego). An employee who bought now could find himself in a very weak position at work, as job security would become an essential form of insurance against job loss and having to sell a home while underwater. I guess I don’t see any conspiracy theory here, as it is basically the employee’s choice of whether to rent or own a home…
“Freedom is an infinitely more valuable fruit of capitalism than material goods.”
But modern capitalism is mainly about selling us a pile of crap we mostly don’t really need. Over 200 years ago, Adam Smith wrote about the primary motivation for economic activity was not physical survival needs, but status-seeking, or “keeping up with the Jonses” as we would say today. And the Chinese are demonstrating that freedom and capitalism do not have to go hand-in-hand. Being free from debt is not freedom, except perhaps in a very limited sense (though I agree that freedom from debt is a good thing). As long as you have attachments to your material things, and cravings for more, you are not truly free.
You just described The Matrix.
I think these ideas predated the Matrix by a little.
I know, but it was such a cool movie that I have to mention it where I can. Too bad the second one was so bad that I never saw the third.
> I am no conspiracy buff, but out perhaps unintended consequence of debt is to keep people tethered to this jobs, working harder than may be they otherwise would.
I don’t see a conspiracy there but straight forward observation. I remember having read a similar observation about the US and its inclination to debt (compared with old Europe), and it was at least a hundred years old. A little debt as a whip on your back or a sword above your head might be indeed useful for society to make you work harder, but too much debt can turn the whole society into worse conditions as in the great depression.
Random thoughts that I noticed this weekend in No.VA.
At least 3 car dealers that have been here for decades closed their doors lately. A Mercury/Lincoln, A Ford, A Dodge and a Buick dealership.
The “For Sale” signs get thicker the farther away you get from the traditional D.C. suburbs.
Nothing is selling and I mean nothing since spring.
I take little to no glee in what is to come having been through a couple ugly downturns in my life.
stcamp
“Mercury/Lincoln, A Ford, A Dodge and a Buick ”
Sheesh, nothing says “gas guzzler” like that series of words above.
I suppose oil price shock is still working through the economy, among other things (i.e. debt).
The Big-3 automakers released their June sales numbers yesterday and they were truly horrendous. Part of this trend maybe HELOC financing drying up. But mostly I think its because US automakers are 1-2 steps behind their foreign competitors. Toyota’s US sales numbers show that company is weathering the downturn in US real estate just fine.
the problem is the american car companies still do not get it. they keep on whining about health care cost and the like. when in fact buyers will choose a japanese car most of the time because the price difference (with american car are less expensive) is just one car break down away. how many times do you think that nice suv will breakdown right after the 3 year/36k miles btb warranty and before being paid off?
Yep. After years of refusing to buy foreign cars, we own a Honda and will be replacing our 1996 Dodge with another Japanese car. We LOVE our Honda!
US automakers keep trying to use unions as their scapegoat. Their real problem is the product lines, IMO.
As someone who married a daughter of Honda subsidiary manager, we have yet to buy a Japanese car in our 14 years of our marriage (only 2 Fords: Volvo and Expedition — my first car before marriage was another Ford: Mazda RX7). Until Newton’s laws get repealed, we will always buy cars which provide maximum distance between our bodies and other vehicles for minimum price. We view poor mileage as a life insurance premium (i.e., trying to be pound-wise and penny-foolish)…
‘97 Expedition has 114k miles and was bought with cash [most expensive car ever since I bought by exercising stock options] and we got towed twice after warranty, once due to dead battery and once due to dead alternator. And the only other post warranty repairs were: a check engine light related fixes and broken air suspension.
My choice for our next vehicle would be a diesel pickup since the ability to haul stuff would be handy and I like the option of turning to veggie oil for fuel.
Some of that is consolidation; a smaller family dealership will sell its inventory to a larger local dealer, who then becomes “Soandso Subaru/Buick” (for example); the smaller one’s aging founders retire, and the rest of the staff find other jobs. Happened to the dealer I bought my previous car from.
And this is where we get our auto-mega-malls from.
Somewhat relevant is Hussman’s recent market commentary, in which he muses over the effects of the Fed’s actions relating to inflation and general economic health, and misperceptions thereof (according to him).
Interesting read, IMO, and would enjoy others’ comments on the material:
http://www.hussman.net/wmc/wmc060703.htm
Hussman is one smart dude. I prefer to rely upon my own observations, rationale and conclusions, but if I had only one person in the world to financially advise me, it would be him.
Hussman is great! I’m a small investment advisor and all my clients own his fund.
Hey ginster.. I’m an Ops Manager for a small Asset Management firm myself, and I get appalled when I hear the owner (my boss and our firms only current Investment Advisor) tell people that there has “never been a better time to buy a home” here in Phoenix!!!
Jesus, how could someone with twenty years of top notch experience get it so wrong?! What would you recommend to your clients?
way,way OT, but for you hussman fans- have you ever seen his fitness site? It is excellent- he seems to be a pretty intelligent guy in more than one area.
oops! here’s the link:
http://www.hussmanfitness.org/
TXCHICK57 - I am with you. Burned out by Corporate America after 16 yrs and plenty of 60 hrs + for a large company in CA. Hence, the move to ABQ. Never want to work for as a corporate slave again. Highly recommend same for all. Don’t let some dumbass corporation put their thumb on you. They don’t appreciate it in the end when they have used you all up.
need 2 leave, I know EXACTLY how you feel. I spent 22 years in the Army (retired as an E8) and think if I’d stayed one more day I would have been court martialed. Don’t get me wrong, I really liked the military. But ENOUGH WAS ENOUGH. One can only go so far and then that’s it.
Hey, need2leave, what are you doing now in ABQ? Just living off liberated equity from the move? Or have you found something you love to do that pays the bills without being a corporate shill. I konw ABQ has a big artist community.
After about 10 years in corporate america, my eyes were opened to the same issue. I was layed off from my 60+hr a week job when the plant I worked at outside Chicago suffered through a long bought of mismanagement that cost it $1M plus in lost profits for a variety of mistakes. 3 mos and several $000’s in saving later, I found another job and 8 weeks into that they decided that it would make sense to move the division I was working for back to Omaha, NE. Two layoffs in a row. That was ‘03/’04 and my mindset has never been the same since. No car loans, lot’s of savings, don’t hesitate to leave a job if the demands begin outstrip the potential rewards. I pulled that trigger in ‘05 when the SD company I was working for began to demand %50 travel and 60 to 70 hr weeks for lousy “suntaxed” salary pittance of a bonus.
Oh my. After working long hours to help make some .com stuff happen, some nifty DoD stuff happen, I am now starting my own gig (Jan 06). I tell you I work even LONGER hours now, but it all seems to be much more enjoyable. Life may force me back to a corporate job some day, but I sure hope not.
Suzanne has already flunked out of real estate. She has gone on to pimping some business opportunity. Here is her information. Found on spam mail.
CLICK HERE TO MAKE MONEY NOW!
http://www.homebusinessgo.com/suzanne (opportunity web site)…
make sure you click on “dance” fill out the brief interview, then view the presentation about the company, compensation plan, and opportunity!
Suzanne Schmitz
EcoQuest National Manager
Suzanne@ecoquestintl.com E-mail
Toll Free: 1-888-511-7780
Phone: 1-541-894-2404
(company web site…company/products)
http://www.ecoquestintl.com/suzanne … view each product in detail !
(More In-depth Company Information…in writing!)
http://www.ecoquestintl.com/busopphm.asp
(Mon. thru Fri. 10:00 P.M. & Sat. at Noon (EST) Live Business Opportunity Call with CEO/President - 15 min.) 1-641-594-7500 Pass Code 546009#…and be sure to listen to this Toll Free 5 min. Opportunity call, available 24/7…1-800-481-3181
Bankruptcy law does not “vary from state to state.” It is a federal law, authorized by the Constitution, and it is applied relatively uniformly across the nation. State homestead exemptions vary from state to state. These allow you to protect certain amounts of your estate from your creditors. That is why O.J. Simpson suddenly moved to Florida: the F-state allows you to exempt all equity in your primary residence, so he liquidated as much as he could, dumped it all into a -nice- residence in Florida, then filed for bankruptcy. Most states only allow you to keep heirlooms, wedding rings, the family bible and certain tools of your trade and a very small amount of “seed” money to permit you to try to get a fresh start.
“‘I’ll never get credit again.’ Quite the contrary. It won’t be long before you’re getting credit card offers again. They’ll just be from subprime lenders that will charge very high interest rates.”
kneecaps = subprime loan collateral
“‘For most people, they’ll pass through a bankruptcy case and keep everything they have,’ says John Hargrave, a bankruptcy trustee in New Jersey. If you have a mortgage or a car loan, you can keep those as long as you keep making the payments (like the rest of us).”
Is it any wonder that people have no fear of debt?
Davey Jones - Congratulations for your retirement. And we must thank you for service to our country. My neighbor here just retired and has similiar feelings. The service is tough work.
Comment by txchick57
2006-07-04 08:54:03
I’ll say it again . . .
Broke is the New Black
I should trademark that before someone else does and writes a book . . .
I saw a tshirt today that reminded me of Txchick’s statement. It was worn by a woman who had to just be hitting her 20s, younger than me.
It said, “I’m having an out of money experience.”
I’d love to know where to find a shirt like that XD.
I have a feeling alot of people in the future are going to be having a serious “out of money experience.”
Your Shirt:
http://www.cafepress.com/jmgnole/1341517
I still prefer the phrase proposed for a t-shirt (or bumper sticker, I guess) here a few weeks back, by whom I cannot recall…”You overpaid for your house”. I’d love to have that one.
“Being free from debt is not freedom, except perhaps in a very limited sense (though I agree that freedom from debt is a good thing).”
I agree. Take a man in prison who is debt free but has total security (if protected by guards) but lacks freedom. OTH, some could argue that he does indeed have debt, not monetary but societal (prison term)…..
The discussion of freedom verses security has always been fascinating to me. As a chemist so has the analogy of degrees of freedom of an atom or molecule when certain constraints are applied. I lost degrees of freedom when I took a job, when I married, when I chose to have a family, when I bought a house, when I got sick, when I bought a car, etc…..
Less succinctly but an old favorite from Tommy Jefferson on July 4 the anniversary of another of his documents.
“If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, and give the earnings of fifteen of these to the government for their debts and daily expenses;
And the sixteenth being insufficient to afford us bread, we must live, as they do now, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account; but be glad to obtain subsistance by hiring ourselves to rivet their chains around the necks of our fellow sufferers;
And this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for a second, that second for a third, and so on ’til the bulk of the society is reduced to be mere automatons of misery, to have no sensibilities left but for sinning and suffering…
And the forehorse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.”
-Thomas Jefferson
(Does anyone know how a deficiency judgement would be handled in Chapter 13 vs. Chapter 7? I’m guessing it’s dischargeable under 7 but would have to be partially repayed in a 13, which could add an interesting twist to the bubble’s pop.)
Theoretically, in Chapter 13 you have to pay back the debt you can “afford” to pay back.
Well, we have decided in much of America that people can afford to live on $5.15 per hour plus certain government benefits. So why would a formerly affluent person facing hard times (or the consequences of bad decisions) be permitted to keep more than that? Couldn’t anything more be used for debt service under current law?