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It's All About the Money - The Fucking Bluebird of Goddamn Happiness [entries|archive|friends|userinfo]
Zoethe

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It's All About the Money [Apr. 15th, 2005|07:18 am]
Zoethe
[Current Mood |cynicalcynical]

The Bankruptcy Reform Bill has sailed through Congress.

Because the Republicans care about you.

The rationale is that individuals should be responsible for their own poor decisions and not shift the burden of their debts onto others. Which is true. I can't argue that point.

But whatever happen to corporations being responsible for their poor decisions? Why should the credit card issuing institutions - who were the impetus behind this reform - be rewarded for their foolish and aggressive marketing strategies that issue vast amounts of credit to people who clearly are incapable of repaying the debt? Business to business, companies monitor the debts and credit rating of their clients because they know that if they overextend and a company goes belly-up, they are unlikely to see a dime in return. But in order to increase their profit margin in a competitive marketplace, credit card issuers have been handing out plastic like Santa hands out candy canes. And there are a whole line of Santas, each ready with one more, no matter how many you already have stuffed in your pockets. It seemed like the more the economy dipped, the more solicitations arrived in the mail. 0% APR for 6 months if you roll your debt onto this card! Or this one! 4.5% for life!

You see, credit card companies like you to carry a big balance. Sure, they had to front the expense of your purchase, but they'll make you pay for it many times over before they're done. Responsible consumer spending bums them out - if you pay off your bill every month, you are barely worth their business. So it is in their best interest to encourage consumers to spend more than they make, to run up debt. So they push cards at consumers, and they push consumption so that you'll run up that card.

A truly capitalistic system would recognize that part of the risk of doing business in this way is a pretty high default margin. And a little research seems to peg that rate at about 7%. Which is a lot. But this is a trillion dollar a year industry, and it got that way by aggressively selling debt. Default margins are a cost of doing business in this way. Suck it up and deal with your choices. That is capitalism. End of story.

Except. When you have that kind of cash at your disposal, it's really easy to throw some around in Washington, DC, and paint yourself as the poor victim of those terrible, rotten shiftless individuals who took advantage of your good will in badgering them continually to buy your product. Now, they're all "gamblers, impulsive shoppers, divorced or separated fathers avoiding child support, and multimillionaires - often celebrities - who buy mansions in states with liberal homestead exemptions to shelter assets from creditors."

Come on.

Certainly, those people are out there (the child support part is bullshit, since child support obligations are not dischargeable under current bankruptcy law), but a lot of them are people who've lost their jobs, or people who have crushing medical bills and no insurance. Or the very same single mothers who have been abandoned by those deadbeat dads and can't make ends meet.

Of course, the next appeal is to how this will help "all of us" because default costs an average of $400 per household in additional interest charges.

In other words, the credit card companies are already shifting the burden of their bad business decisions to Joe Consumer. And if you think that credit card interest rates will actually fall as a result of this plan, I have a nice bridge to sell you.

I'll let you buy it with no money down and no payments for the first year.
LinkReply

Comments:
[User Picture]From: christilyn
2005-04-15 11:38 am (UTC)
I was going to make a post about this today.

I totally agree.

I got offers for thousands and thousands of dollars worth of credit cards as a college student. I resisted the temptation because I knew better--but I have friends who are still reeling from that debt.

It's disgusting.

Would you mind if I link to this post in my journal?
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[User Picture]From: zoethe
2005-04-15 11:40 am (UTC)
Not at all!
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[User Picture]From: christilyn
2005-04-15 12:03 pm (UTC)
I hate these people.

When I had cancer the first time, I had really crappy insurnace b/c I was a college student. I did the right thing...got insurance...but it wasn't enough.

My parents paid the $15K in medical bills that went uncovered because they could. Other doctors waived their fees--and the hospital wrote off my $12K bill, thanks to a friend's husband who served on the hospital board who navigated the system for me. I was very lucky.

Can you imagine what nearly $30K in debt would have done to a 25 year old starting their career after just graduating from grad school with $8K in student loans?

Yeah, I hate these people.
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[User Picture]From: virginiadare
2005-04-15 12:22 pm (UTC)
I got one credit card in college and used it to pay my tuition and ran up a nice 3k debt, ruined my credit and didn't get into nearly as much trouble as I could have. I was lucky.

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[User Picture]From: naath
2005-04-15 01:15 pm (UTC)
I also get such offers... I can't understand how they think I will pay! I have a credit card, because some places don't accept my debit card, but I only use it to buy things that I can afford and pay it all off every month. I'm sure the company hate me - I cost them money because they have to administer it and I don't pay them any interest, but it works for me. 'tis horribly tempting to blow my credit limit on something and then just get another card... but I have resisted.
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From: flcodemonkey
2005-04-15 11:46 am (UTC)
The part about the bankruptcy bill that REALLY raised my blood pressure was that the bill contained special language shielding asset trusts (read: wealthy family bankruptcy shelter) from creditors. The amendment to remove it was defeated on a straight partisan vote.

Also, amendments proposed to end the practice of companies filing for bankruptcy raping the retirement and benefits of their employees were also defeated.

Of course, poor families or people with unexpected medical bills can lose their house, or be stuck under crushing repayment schedules. Bravo!
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[User Picture]From: fragiletender
2005-04-15 11:49 am (UTC)
Too true, at the start of the year I cut up my one and only credit card because I'm trying to clear the balance on it and I didn't want the temptation of that "free" money sitting in the drawer. I've been carrying a balance for ages because everytime I got it nearly paid off I would use it to buy another big thing - a really bad way of using a credit card but oh so easy to do, even if you're not being extravagent (I wasn't, I was using it for flights home, birthday presents, Christmas - that sort of thing). It drives me nuts that I've spent so much on the debt already and on the day it's finally clear (should be later this year) I will dance for joy.
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[User Picture]From: fuschia
2005-04-15 12:12 pm (UTC)
Ugh. Just...ugh.
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[User Picture]From: kythsharrie
2005-04-15 12:14 pm (UTC)
My mother, fortunate with an inheritance not too long ago, actually used a good portion of that to pay off two credit cards and lowered the third one to an amount she could comfortably handle. The two companies she paid off all of the sudden gave her trouble with that and she had to call them several times saying "I'm closing my account, please do not contact me again". It's like, good grief, back off.

And, of course, suddenly she's getting more offers for more credit cards. She just tears them up and tosses it in the trash.

For the first time in a long time, I'm glad I don't have credit cards. 'Course, that leaves me with no credit history at all if I want a student loan or.... This industry sucks.
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[User Picture]From: girlfromsouth
2005-04-15 12:24 pm (UTC)
Here via christilyn. And this...

"Or the very same single mothers who have been abandoned by those deadbeat dads and can't make ends meet."

I mean, THAT right there is why I'm enraged over this bill. Entirely. That woman was my mother, and we suffered for ten years when I was a kid because my father disappeared and left us holding the bag of all the debt he'd run up. But, well, naturally that's just her own poor choices, and she should have to live with that.

I hate these people. HATE.
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[User Picture]From: calamityjake
2005-04-15 12:26 pm (UTC)
This argument also works against NHL owners.
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[User Picture]From: wyrrlen
2005-04-15 01:45 pm (UTC)
Awesome.
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[User Picture]From: paranoidgrl
2005-04-15 12:30 pm (UTC)
The really annoying thing about credit card companies for me is that I'll help people get a discharge in bankruptcy, and the next day, they'll go home and find new cards in their mail. They don't care that people have proven themselves to be bad risks. They love newly discharged people, because they know they'll get paid (either voluntarily or through a lawsuit) for the next seven years.

I really feel for people with unexpected medical bills under this new law.
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[User Picture]From: kibbles
2005-04-15 12:42 pm (UTC)
Those multimillionaires can still use shelters that were left protected yesterday.

Been looking to see who voted on this, in my own state, Clinton abstained/wasnt there/something like that (NOT pleased with that), Schumer voted Nay. Can't find what my reps voted, I looked but maybe it was too soon to see?

We don't have credit card debt, but my husband was in a trade school (nothing to do with his union) that gave him a personal loan for school but he didn't realize that it wasnt like a regular student loan. Not only is the interest rate nearly 20%, but it had to be paid back immediately, not after a certain amount of time like a student loan and not flexible with anything. We tried, and they just said they wouldn't work with us, they'd sue us instead.

They won, of course.

The school says they have nothing to do with the loan...
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[User Picture]From: zero_design
2005-04-15 01:03 pm (UTC)
It's foolishness like this that makes me want to instigate Project Mayhem! :p

(read Fight Club if you need to know what Project Mayhem is)
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[User Picture]From: zoethe
2005-04-15 01:18 pm (UTC)
Fight Club is one of my all-time favorite movies. I know from Project Mayhem. And I understand your feelings.
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[User Picture]From: zero_design
2005-04-15 02:11 pm (UTC)
And I don't even live in your country! *sigh*

Have you read the book as well?

It is quite a good read... as well as being the gateway drug to his other books which are just as good, if not better.
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[User Picture]From: zoethe
2005-04-15 02:19 pm (UTC)
Haven't read him. It's on my list.
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[User Picture]From: zero_design
2005-04-16 12:12 pm (UTC)
It is well worth the read, so far as I'm concerned. If it's any incentive to let his stuff drift a bit higher on the list, it's a fairly swift and easy read.
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[User Picture]From: force_of_will
2005-04-15 01:17 pm (UTC)
PBS has been tracking these ideas pretty well. Frontline worked on the credit card industry, NOW worked on the unstable nature of the new economy and the shift of hardship burdens to the individual.

You do not mention the nature of the "revolving" credit line either which allows the companies to basically change your rate any time they feel like it.

It's a suckers game and I will always remember that, I believe it's somewhere in Plato's "The Republic" that he advances something along the lines of "Moneylending will be the downfall of great nations"

The US is a collective idiot with a big stick...
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[User Picture]From: zoethe
2005-04-15 01:21 pm (UTC)
It's the callous indifference to the average person - couched in doublespeak - that outrages me. Particularly when I have no faith that the average person will be smart enough to vote them out at the next election.

We need a good old-fashioned tar-and-feathering and to run these crooks out of town.
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[User Picture]From: haplochant
2005-04-15 02:28 pm (UTC)
Thank you for this article. I am a 21 year old college student who, during a 6-month bout of weakness two years ago, ran up $20,000 in credit card debt. My minimum monthly payments are absolutely crippling-- even on a debt management plan they total $500/month (it was almost $1000/month without the plan). Now I have to work two menial jobs on top of a full class load. I have almost no time to study, frequently miss classes or assignments because I'm so exhausted, and STILL almost never make enough during a month to cover my bills and my debt payments. There is rarely a day that goes by without me anguishing over my poor choices, and I blame myself 100% for my situation.

But, there is something very wrong when someone who can't legally buy a beer, someone who makes less than $10,000 in a year, has the ability to spend more than double over her annual income in a mere six months.
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[User Picture]From: zoethe
2005-04-15 02:34 pm (UTC)
It's appallingly easy to do. Brava for you, working so hard to pay it off. There is no way you should have been able to buy that much debt, but the companies don't care. To them, YOU are the commodity.
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[User Picture]From: hookncrook
2005-04-15 02:52 pm (UTC)
Once I was honest on a credit card application (I just filed it for the free radio for my kid) and even after losing two credit cards before because of non-payment--yes, I am a poor consumer-- the bank gave me a credit card limit four times my monthly income! What is wrong with them, they knew I'd never be able to pay it off if I charged even $500 on it and they gave me a $2,000 limit!

I had to cut up the card the day I got it for fear of the trouble I have had before saying 'no' to easy credit.
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[User Picture]From: haplochant
2005-04-15 02:57 pm (UTC)
Yes, I no longer use credit cards at all (I can't-- mine are all maxed out, and even I am not weak enough to get a new one). I try to convince all of my friends to do the same, except for emergencies. Have one, but don't use it. It is too easy to saddle yourself with debt that will saturate every day with stress and anxiety.
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[User Picture]From: hookncrook
2005-04-15 02:49 pm (UTC)
Evil Republicans. Do you really think morgage companies and credit card companies and whoever is charging us the consumers that $400 a month because of unpaid debts is really goign to jump up and say "Hey, you guys get a break...here is $400 less to pay a month..or a year...or.."

My point is, I doubt anyone will see that $400 break at all because capitalism means taking instead of giving and even when a break is cut your job as CEO is to see your stockholders richer, not your consumers richer.

So i'm against this change..and it terrifies me of what is to come in the next three years and how long it will take us to undo this damage.
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[User Picture]From: richtermom
2005-04-15 04:02 pm (UTC)
About 10 years ago, I was saddled with like $9000 in credit card debt and I just got sick of dealing with it, and by giving up on virtually any fun or shopping for about a year, I paid it all off. Fwomp. Unfortunately, that didn't give me the Life Lesson I needed, as shortly after we bought our house, I whipped out the Discover card and charged less than $1000 in paint, house crap, etc., but I kept missing payments or skipping months or whatever, and I ended up owing over $2400 a few years later. I vowed that I'd never let them wake up my soon-to-be-born daughter with a freaking collection call, so I gave up on all shopping and fun, cut our grocery bill to the bone, and paid it all off within a few months.

Unfortunately, DH doesn't have the same mindset or discipline. When we bought the house six years ago, he had over $15k in credit card debt. Now, six years later, he's still over $8k in the hole. For the most part, I don't care what he does with his mad money, but when he starts using our financial well-being as a reason to not have another kid, it crosses the line.

MINIMUM PAYMENTS DON'T WORK. We're putting some Citibank exec's kid through college and we can't have another kid of our own?
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[User Picture]From: shermel
2005-04-15 04:03 pm (UTC)
I spend a lot of time on a UK debt advice board and it's awful the mess some people get into without even realising. Banks that let people apply for unsecured credit of around 3x their annual salary and then when they're in trouble try to push them into loans secured on their homes. It's nice to watch posters get wise and have their 'lightbulb' moment.

Banks...they're all bleating about 'personal responsibility' but their working practices make the situation worse.

Which is why I take every opportunity to screw the banks when I can. Until last October I had 20k of credit card debt. All at 0%. All sitting in a savings account earning me 5% interest. It's called stoozing, it takes a little work and a lot of organisation but it's very satisfying. I would still have it too, but my credit record needs a rest.
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[User Picture]From: theferrett
2005-04-15 05:44 pm (UTC)
That is such a weird concept. But it's good to know.
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[User Picture]From: ladyortyger
2005-04-15 06:57 pm (UTC)
Wow, that is a really nifty trick...

Not in a position to try it myself, though.
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[User Picture]From: lysana
2005-04-15 04:50 pm (UTC)
I am so glad I filed Chapter 7 when I did. Aside from getting out from under what I freely confess was self-inflicted debt I could no longer keep up on thanks to my husband's job loss, I did it when I could actually take the hit to my record, get my slate mostly wiped clean, and spend some time back in the cash-only realm I dwelled in years ago. Which is infinitely simpler when ATM cards have Visa numbers, let me tell you.
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[User Picture]From: jessihiggs
2005-04-15 05:10 pm (UTC)
The husband and I ran up a lot of credit card debt as young students, and then again as newlyweds. My husband is in the Air Force, all of his paycheck and whatever I was able to make at various jobs (sometimes working two at a time) went to credit card debt. Yes, we were foolish, and made mistakes, we gave into all of the wonderful offers that flooded our mailbox, and could afford the minimum payments on all of them. anyway, we NEEDED them, we had to buy the basics: a bed and other basic furniture, we weren't trying to live outside our means, honest. We were keeping ourselves afloat, barely. Both of our sets of parents were always in credit card debt up to their eyeballs, thats the way it is supposed to be... right?
WRONG!! When my husband was given a guaranteed 6 more months in the military (he will be medically discharged within the next year another fiasco in and of itself) we had to do something. We are going to have to move across country, eventually purchase a home and how are we going to do that when we won't have his income and we are both going to have to find new jobs, and blah blah blah.
So we decided to file Chapter 7. Our 341 meeting is next week. I am wondering what effect if any this will have on our situation.
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[User Picture]From: zoethe
2005-04-15 05:25 pm (UTC)
You should be okay. There is a 6-month grace period before it goes into effect (during which a RUSH of bankruptcy filings is expected).

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[User Picture]From: jessihiggs
2005-04-15 05:32 pm (UTC)
Thanks, I was about to come up with a ton of questions for my lawyer.
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[User Picture]From: theferrett
2005-04-15 05:38 pm (UTC)
We should talk to Jon and Kristi about this, now. And make sure we're not involved.
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[User Picture]From: zoethe
2005-04-15 05:45 pm (UTC)
I intend to. And, no, we are not involved.
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[User Picture]From: theferrett
2005-04-15 05:37 pm (UTC)
Grr.

I waited five hours to read it, and I'm still all pissy about it.

*G* Love ya!
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[User Picture]From: finding_helena
2005-04-15 09:09 pm (UTC)
The problem with this is that as long as there are working poor who vote Republican ("Why should my tax dollars go to support some other bum who sits around on their ass, while I'm working hard for them?") then they will be in the majority and thus trample all over the people one rung down from them. A coworker of mine is a single mom probably making in the neighborhood of $11 an hour. I heard her complaining today about people with Medicaid, because she makes barely enough that her kid doesn't qualify, but "people who sit on their ass all day get money for it". For values of "sit on their ass all day" that include raising kids (their own or somebody else's), working at a horribly paying job, being disabled, or trying to attend school. They don't seem to think about that.
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[User Picture]From: lou_zer
2005-04-16 03:34 am (UTC)
Or the very same single mothers who have been abandoned by those deadbeat dads and can't make ends meet.

Or the very same single fathers who have been abandoned those deadbeat mothers and can't make ends meet.

I work collections for the Tax Department, and I've seen about a 50/50 split in who has custody and has gotten screwed over by the other, and sexism doens't help your argument any. Much as I agree with it (having worked the credit card industry for a few, not brief enough, months).
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[User Picture]From: zoethe
2005-04-16 05:51 am (UTC)
Certainly not meant to be sexist. I was paralleling the language of the quote.
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From: (Anonymous)
2005-04-16 02:20 pm (UTC)

Responsible behavior

Responsible consumer spending bums them out - if you pay off your bill every month, you are barely worth their business.

Yeah, no kidding. Aside from a couple of months where we spaced out and forgot to pay the bill on time, we've always paid off our balance in full every month on the one card we use (out of the two cards we have). Since 2000, thanks to buying a house and me putting all of my business expenses on the card, we've probably used them for a quarter-million or more in charges. Of course, they got 1.5% of that in transaction fees, but as you say, that's barely worth their business.

I couldn't be happier about that fact.

Then again, the last time we spaced out, they imposed a penalty fee and froze the card until we met the minimum payment. Unaccountably, that pissed me off-- either charge us a penalty, or lock the card, but not both. I suppose that, if we had more of a history of irresponsible behavior, they'd probably have left the card active in order to let us run up more debt. In that situation, they actually had more of an incentive to punish us.

Sadly, nothing about your post surprises or even shocks me. Republicans being insensitive to individuals while extending corporate welfare? Gasp! Say it ain't so, Joe!

(Right up there with, "Democrats being insensitive to corporations while extending individual (social) welfare? Gasp! Say it ain't so, Joe!".)

-1em

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