We watched Maxed Out last weekend. They did a good job of portraying the credit card companies as money-hungry and predatory, which theyare. The movie tended to show the consumers as victims of the credit industry, with stories of ailing,uneducated, down-on-their-luck people who have been snagged in the web that the credit industry spins. I did feel bad for the people in the movie, especially the poor family who was convinced to refinance their government subsidized home loan into a high-interest private loan, and was facing losing their home.
But we need to stop pointing the finger so much at the credit card industry. They’re in it for the money – they’re not charitable, or concerned with the welfare of the people. We’re not talking about Habitat for Humanity or the Salvation Army here. They’re money-grubbers, and yet they thrive because people are willing to go into debt. In some situations, the debt isn’t a matter of choice – medical bills are a perfect example, especially for people who can only afford a high deductible insurance policy. And yet hospitals and doctor’s offices will often agree to very low payment plans with no interest. These are not the loans where people are paying 30% interest and $45 late fees.
The credit mess in this country has come about over the last generation – our parents and grandparents did not have this problem. If you peeked into my mother’s closet in 1970, you would not have seen 25 pairs of shoes and 8 feet of clothes hanging so close together that they had to be pushed aside to see what was there.
We’ve fooled ourselves into thinking that much of what we want is necessary in order to be happy, when actually the opposite is true. I have heard the statistics about how a good number of bankruptcies are filed because of medical bills, but I have to wonder how many people filing bankruptcy truly know the difference between a want and a need?
The movie vilifies the new tightened bankruptcy laws. And yet if we really stop and think about it, shouldn’t bankruptcy be hard to get? The movie deems it a “second chance” but what it really means is that a person is cheating someone out of money owed. If you get a service or a product, you have an obligation to pay for it. I see bankruptcy as stealing. I’m sure that there are going to be people laying into me for that comment, but that’s how I feel. Being on a payment plan for 35 years to pay off debt that you knowingly incurred is a pain in the ass, but it’s more honorable than walking away. There are tons of blogs written by people who have gotten themselves into tens of thousands of dollars of debt, and they are digging out, little by little, month by month. Does it suck? Of course, but it’s the right thing to do.
Yes, there needs to be more regulation in the credit industry in terms of caps on interest rates and late fees, but people need to take more responsibility for the messes they get into. Just because the credit card company offers you a card, doesn’t mean you have to max it out.
I have a friend whose sister is about to declare bankruptcy. She and her husband are splitting up, and she is behind on all her payments. They refinanced their house so many times (and took out extra cash every time) that their mortgage payment is almost $2000/month on a house valued at under $200,000. They’re upside down on their house and cars, and have a good deal of credit card debt. My friend was hanging out with her sister in a little mountain town for the weekend when her sister told her all of this. The next day, they were walking along the main street in town and the sister went into a tourist shop and bought cowboy boots for herself ($100) and shirts and hats for all three of her kids (about $60 total). My friend was amazed at this, and asked her sister what in the world she was doing spending all that money if she was in so much trouble already. Her response? “it doesn’t matter, because I’m going to file for bankruptcy anyway so it will all get written off.”