Musings on debt

[sparkindarkness]

Because I was the sensible person and watched Panorama (not an excuse to lay on the sofa and whinge, honest) and it was doing a segment of personal debt and people getting in trouble.

To be honest, I have a lot of irritation about people who get in debt. My cousin is classic. He is in debt, lots of debt. He bought a new car - he decided to buy something odler so he could get something flashier. It broke down. He bought a new car - also flashy. He buys designer clothes, he goes out drinking 4 nights a week (and never spends less than £50), he buys his 3 year old niece trainers that cost £45 (which is ludicrous in an of itself) and he complains constantly about his vast debt.

I have precious little sympathy for him. Or for his mother who took out a loan to go on a second holiday in the same year. They just annoy me for being so frustratingly short sighted.

So when I look at someone with an income of £15,000 a year and unsecured debts of £40,000+ my first instinct is to scream "you fool" and hit them with a haddock. Sure, sometimes it's legitimate - students, divorcees or various other tragedies can afflict you, but usually that's going to be spending above your means.

But the flip side is this - OK, someone who spends £40k+ while on a £15k income is a fool.

But what does that make the lending institution that gives them the money? They must be at very least blithering idiots - they're financial experts after all! I remember when I was a student - I was offered credit cards daily. if I had applied for them all I could probably have had a credit limit in excess of £20,000. My cousin is still offered credit cards from the same company he is technically defaulting to.

So, I'm not inclined to give the overspenders a lot of good will - but laws to help protect the lenders? Make bankrupcy harder? No, I don't agree. They're quite capable of spotting a dangerous loan. They know when someone's entering into more debt than they can afford. If they continue to lend then they have only themselves to blame when they get burned in a bankrupcy.

Comments

[bladespark.livejournal.com]

Ah, but MOST people who get into debt don't file bankruptcy, they just keep paying interest, and paying, and paying, and paying. Lenders clean up in a massive way here. Credit card companies pull in ridiculous sums of money these days. That's why they WANT the bad credit risks, because they can get away with charging them more interest, and then they make money off of them. Some of those people will be paying the credit card companies for their entire lives.

I don't give the credit card issuers any good will either. They're deliberately tempting idiots into debt so that they can then profit off of them.

[corruptedjasper.livejournal.com]

Which is, in fact, exactly what the panorama episode is supposed to have said, according to the previews.

Which is also why the big money is urging to make bankruptcy even harder -- then they can push even harder before the bough breaks, and they will clean up even more.

What it comes down to is a) there's one born every minute and b) these days there's no longer any way you can sell all your stuff (or stow away, for that matter) and buy a third class ticket on the Titanic out of this hellhole and skip out on your debt *effectively* -- they'll still come and find you. That was always the bankruptcy-without-the-courts-getting-involved option -- you couldn't take much with you, after all. Now that you need actual bankruptcy proceedings to go bankrupt, plus that even the person on the lowest income will have lots of actual Nice Things they don't want to lose in a bankruptcy, makes it a much less attractive option -- which is, I think, a significant contributor to the lending-money-to-bad-credit-risks tendency.

[cosmorific.livejournal.com]

I went deeply into debt when I went back to grad school, and even more so when I lost my job and health insurance. It probably would have helped me a lot if I'd been better at financial planning beforehand, but I like to think of myself as being not entirely an irresponsible git.

[ladyhelen.livejournal.com]

Trouble is, not all of us can help ending up in the situations we do. All you neeed is a string of personal problems which cost money that you can't afford and you end up in debt - in our case we started out trying to live on virtually no disposable income which was fine until we got hit with a succession of garage bills, vet bills for a sick cat, and being forced to move house 4 times in 5 years.

When you get into the spiral of needing to use a credit card to live from month to month, you're really in the shit. And once you're in debt, it's very hard to get out.

*shrug* It's just one of those things. We're steadily working on pulling ourselves out, but it's so hard.

[allthepettylies.livejournal.com]

Debt sucks.

I was making about 1150$ a month, back when i was ACSM.
Not bad if I do say so myslef, for a person of my age.

And after paying my share of rent, utilities/power, cell phone, gas, and food, I still have $$ to afford niceties.


Ever since my oh-so-brilliant plan of "hey, this job is bullshit! I'm gonna walk out!" was executed last week, I am currently making 0$ a month.
=(

This is not good.

Lucky me, I have a few job offerings and cash saved back.

But my moral is, I only have myself to blame for being without necessary monies.
Rahly, most people in debt could have thought of a better way of planning their finances.

[allthepettylies.livejournal.com]

Oh yes and I have lawschooling to look forward to in August. =(

$$$$$$

[kitsuken.livejournal.com]

Credit companies make most of there profit from people with long term, high interest debt. If they are *just* within the limit for paying the credit interest then the companies will give them the loan, because then the debtor will take the maximum time paying and pay the maximum interest.

I've actually heard of some people in Bad Service (wish I could remember how to do thos fancy links but it's too early) who had cards cancelled because they were too prompt with payments and paid virtually no interest, credit companies weren't interested anymore after that.

Personally the idea of long term debt kind of squicks me, I don't like the idea of paying for something for the next three years or whatever, it just seems like a complete waste of money on the interest. Unless it's something needed omgwtfity NOW! then it's better saving the money and paying it off in one go, avoiding paying interest.

Oh, and slightly off topic, but I thought you might find this somewhat amusing

[sparkindarkness.livejournal.com]

And that's what the banks encourage - this endless, desperate debt.

So as far as I am concerned they lose all bitching rights when some of their cash cows actually declare bankruptcy and they don't get their money back.

There has been a movement on the part of some of the big creditors to get some degree of bankruptcy protection - that is what i don't agree with

[sparkindarkness.livejournal.com]

Oh yes, that's what it did say. I'm just taking the borderline dishonest and aggressive lending techniques by the banks and factoring in what I know about the creditors pushing to have bankruptcy laws 'tightened'.

Basically, I'm saying if they're going to use the reprehensible tactics they did on the programme then they do not need any kind of protection against bankruptcy - even if some spenders are a little reckless.


I think the industry needs reining in anyway because them lending to all and sundry at ridiculous rates is silly - but they certainly don't get the laws changed becuase their aggressive lending is leading to many people defaulting

[sparkindarkness.livejournal.com]

Sometimes life will drop you in it - no shame in that. I left uni with horrendous debt

[sparkindarkness.livejournal.com]

nope, sometimes debt will just squish you and life has left you in a position where you hve to have debt

[sparkindarkness.livejournal.com]

Most people, yes. Sure, some people end up up to their eyeballs in debt because disaster strikes and they don't have any choice.

[sparkindarkness.livejournal.com]

Hee, I do that. My credit card company is NOT happy with me because I pay off the balance every month - no money for you MUAHAHA.

See, they give out loans like that and make lots of money on it - it's cruel btu I can see them doing it - but if they HAVE done that they KNOW they are taking a risk and they have no right to bitch about loose bankruptcy laws that give some of their victims a get out

[sparkindarkness.livejournal.com]

And OUCH he sums up commercial law brutally! He is a lawyer, you cna tell that and not one willing to pull punches.

I like him

[kitsuken.livejournal.com]

Thought you might approve :p

[ephemera.livejournal.com]

I *wish* I had [or had had] the flashy lifestyle to go with my debt level .... paying for your postgrad on credit cards is not a smart thing to do, people. The sub-prime lending industry is dodgy, dodgy teritory, though, and they need absolutely no aditional protection.

[sefkhet.livejournal.com]

I graduated last week and am quaking in my shoes at the thought of the letter proclaiming the final amount I owe the Student Loan Company, and, I'm going back to uni for medical school next year, if I get in. Don't get me started on the fact that the government have declared people doing second degrees to be ineligible for a student loan to pay their top-up fees and are effectively forcing graduate medics to take out private loans.

[sparkindarkness.livejournal.com]

Exactly. If we need any more legislation it should be to rein in these lunatic lenders!

[sparkindarkness.livejournal.com]

painfuyl thought isn't it?

I remember when I first left uni - the debt was terrifying

Hit me with law school - £8,000+ fee and no government help. Ouch.