Deep in Debt, Deeper in Denial

[SLCPUNK]

"Maxed Out," a documentary that opens nationwide next week, examines the dark side of America's love affair with debt.

By turns humorous and heartbreaking, "Maxed Out" exposes the targeting techniques of credit card companies (the most profitable customers are broke); the gold rush mentality in the business of debt collection; an influential credit scoring industry riddled with errors; and the power of the credit card lobby at the highest levels of government. (MBNA, the biggest campaign contributor to President Bush, was behind the restrictive bankruptcy legislation of 2005.)

Submerged in Debt

"Maxed Out" is directed by filmmaker James Scurlock, a Wharton business school dropout and entrepreneur. Scurlock also wrote a book based on the film, which is due out next week from Scribner, a division of Simon & Schuster.

Scurlock says he started out hoping to do a lighthearted riff on consumer irresponsibility, but was shocked by what he found: College students and housewives committing suicide over their credit card debt, and the nation's biggest banks involved in predatory lending schemes.

In one case, the film shows Citigroup's lending arm foreclosing on a Mississippi shack owned by developmentally impaired woman and her severely retarded 44-year-old son after they were refinanced into a loan they couldn't afford.

"I wanted to know why people are living so close to the edge," says Scurlock. "A lot of people just haven't been able to keep pace with expenses like health care, education, and housing. Credit cards become the life raft that people don't even have to reach for -- they're just there." Scurlock points to new "medical" credit cards, for example, which invite consumers to dive deeper and deeper in debt.

Conservative Consumer Advocacy

This indictment of the industry comes from a 34-year-old who was voted "most conservative" by his business school peers at the University of Pennsylvania, and who worked on the election campaign for George H.W. Bush.

"It's not in anyone's interest to have a financial industry that behaves like a used-car dealership," says Scurlock. "I think it's conservative to expect that credit will be regulated in this country. People need to have to have a strong financial industry that's trusted -- and to the extent that that erodes, that's very bad for the country and the economy."

In the film, Scurlock interviews the two young founders of People First Recoveries, a Minnesota collections and debt purchasing firm, who purport to represent the "kinder, gentler" side of the debt collection business. And yet they describe themselves as "pirates" -- using swashbuckling techniques like calling neighbors and relatives to intimidate debtors into paying.

In another interview, Harvard law professor Elizabeth Warren recalls a presentation she did for financial services executives in which she discussed how many bankruptcies could be prevented simply by eliminating those customers on the financial edge. A member of the firm informed her that those consumers comprise the most profitable part of the business.

The Personal Accountability Gap

Unfortunately, Scurlock never directly addresses the personal-accountability aspect of debt in his film. I was hoping he would ask at least a few hard questions about the consumption choices that lead people into the red.

"A lot of people we talked to said, ?Gee looking back at the level of debt, there should be a Mercedes or a Ferrari in my driveway, but I have nothing to show for it,'" Scurlock says. "Most Americans are very optimistic. They think things will always get better from here, they'll make more money, they won't have any emergencies. Credit has become so ingrained in the culture that so many people can't imagine living without it. Once you decide you're never going to be out of debt, you can afford anything."

Other than my mortgage, which is fixed for 30 years at a low interest rate, I don't do debt. No revolving credit card debt, no auto loans, no home equity borrowing. Would I like to bust out the back of my home and create a designer kitchen and family room? You bet. Am I going to sacrifice my children's college savings or retirement goals on the altar of my extreme makeover? No way.

I had the good luck to have wise parents born during the Depression, who drew a very clear line about debt. They taught me that you buy things you can afford -- not things on which you can afford a monthly payment. You don't shop for recreation. And the only thing you should borrow to buy is an appreciating asset that will very likely, over time, pay you back more than you put into it, such as a home.

Anything But Maxed Out

Here's my problem with taking on debt: I have a profound respect for the unknown. For instance, my husband and I work for ourselves. This is an excellent way to avoid ruthless bosses and layoffs. But if one of us were to get injured or become ill, it would be pretty hard to keep business hopping.

Meanwhile, I'm optimistic that if I work hard, my income will continue to rise. On the other hand, I have dozens of friends and acquaintances who, despite their hard work, were downsized or squeezed out after a merger, spent long periods unemployed, and/or returned to jobs that paid less. The rosy scenario of a steadily climbing income that peaks just before retirement is the stuff of economic models -- not the real life of the middle-income Americans I know.

Here's the other irony: Credit card companies market their products by claiming they offer you a world of choices -- take that dream vacation, buy the 60-inch television. But by steering completely clear of credit card debt and saving on a regular basis over time, I found myself with much richer options -- choices about how I would balance work with family, health, and friendship. That satisfaction is more enduring than anything I could have purchased with plastic.

Buying with Blinders On

Why, I asked Scurlock, don't people understand this? Why do so many consumers buy things on credit and then pay double for them over time? Why do they sacrifice what they want most in life for what they want this very second?

It's pretty simple, Scurlock says: "I think there's a lot of denial. Most people can't do the math. There is very little, if any, focus on the balance sheet side of the equation."



http://finance.yahoo.com/expert/article/moneyhappy/25516

[polluxlm]

The banking system needs to go. Loaning out money they don't even have so they can make you a slave for life. Legal mafia.

[sandman]

The banking system needs to go. Loaning out money they don't even have so they can make you a slave for life. Legal mafia.

please tell me you are joking.

debt is a great and necessary thing. it's not a dirty word as people try to make it.

but just like a good beer, an enormous amount of it causes problems.

[Eazy E]

I wonder how my friend was able to rack up 20gs of online gambling debt before he was even of legal age to declare bankruptcy (which he did the second he was eligible).

Debt is necessary in the business world for financial leverage, the real trouble is caused when individuals can't control their spending with credit cards and loans (even with the ridiculous interest rates).  I think the situations of people around me will have steered me clear of getting in this kind of trouble.  I'm set to get out of school with zero debt, I just need to work off a couple hundred dollars to get my credit card balance to zero.  I think I will be able to maintain this, I don't like the feeling of "owing" money... anyways, this documentary looks like it could be interesting.

[Where is Hassan Nasrallah ?]

The banking system needs to go. Loaning out money they don't even have so they can make you a slave for life. Legal mafia.

please tell me you are joking.

debt is a great and necessary thing. it's not a dirty word as people try to make it.

but just like a good beer, an enormous amount of it causes problems.

you should know that for a society to work out you "always have to think about the worst case"

if the world was full of people me, heroin could be legal, rape too, there wouldnt be a problem, but the world is more like full of people like you

therefore credits sucks ass
and i was so shocked that the nobel price went to someone who praised that kind of process (in theory) for the poors.
yeah let's start there what fucked up here.

[polluxlm]

The banking system needs to go. Loaning out money they don't even have so they can make you a slave for life. Legal mafia.

please tell me you are joking.

debt is a great and necessary thing. it's not a dirty word as people try to make it.

but just like a good beer, an enormous amount of it causes problems.

Tell me you're joking.

Loaning at fair rates to start a business or buy a home is necessary and a great thing. Making you loan money at criminal rates just to buy a jacket or a pair of pants is not necessary and it's not ok. The private banks and financial institutions has to much power and it should be dealt with. The purpose of a loan should be to help people, make them prosper, not to enslave them in lifelong debt for petty bullshit.

[sandman]

The banking system needs to go. Loaning out money they don't even have so they can make you a slave for life. Legal mafia.

please tell me you are joking.

debt is a great and necessary thing. it's not a dirty word as people try to make it.

but just like a good beer, an enormous amount of it causes problems.

Tell me you're joking.

Loaning at fair rates to start a business or buy a home is necessary and a great thing. Making you loan money at criminal rates just to buy a jacket or a pair of pants is not necessary and it's not ok. The private banks and financial institutions has to much power and it should be dealt with. The purpose of a loan should be to help people, make them prosper, not to enslave them in lifelong debt for petty bullshit.

so you agree with me - you call debt a "great thing".

consumers have all the power. unfortunately, many consumers are stupid, careless, greedy, and materialistic.

gambling is another perfect example of a GREAT THING that gets a bad rap cause people overdo it.

without debt we'd all be living in apartments and taking public transportation everywhere.

[polluxlm]

so you agree with me - you call debt a "great thing".

consumers have all the power. unfortunately, many consumers are stupid, careless, greedy, and materialistic.

gambling is another perfect example of a GREAT THING that gets a bad rap cause people overdo it.

without debt we'd all be living in apartments and taking public transportation everywhere.

No, I do not agree with you that our current system is a great thing. Debt in principle is great, but that's not what we got.

And you blaming it on stupid people is ludicris. So that's it then? We have a fucked system in the society and that's ok since it only affects 'stupid' people?

[Where is Hassan Nasrallah ?]

The banking system needs to go. Loaning out money they don't even have so they can make you a slave for life. Legal mafia.

please tell me you are joking.

debt is a great and necessary thing. it's not a dirty word as people try to make it.

but just like a good beer, an enormous amount of it causes problems.

Tell me you're joking.

Loaning at fair rates to start a business or buy a home is necessary and a great thing. Making you loan money at criminal rates just to buy a jacket or a pair of pants is not necessary and it's not ok. The private banks and financial institutions has to much power and it should be dealt with. The purpose of a loan should be to help people, make them prosper, not to enslave them in lifelong debt for petty bullshit.

so you agree with me - you call debt a "great thing".

consumers have all the power. unfortunately, many consumers are stupid, careless, greedy, and materialistic.

gambling is another perfect example of a GREAT THING that gets a bad rap cause people overdo it.

without debt we'd all be living in apartments and taking public transportation everywhere.

so we have to GREAT Things, that are in the end BAD things because of people mis-use .... hum .... interesting .....

[The Dog]

I tend to agree with Sandman here....for the most part, not all cases, if you rack up a ton of debt you are simply careless, immature and stupid.  its the consumers responsability to know that if they get a Macys credit card and save 10% on their purchase that the interest rate is also going to be probably around 30%

if you buy someting with your credit card, you are going to have to pay it back someday.

its amazing how many people can't grasp these simple concepts.

i think finance/credit/savings should be MANDATORY for all High school curriculums in america.  by educating people when they are young on the power of saving and living as debt free as possible they won't grow up to be mired in debt when they are 23 years old.

having debt from college or a home is one thing - having it b/c you like to shop or "need" an expensive car is entirely different.  don't blame the companies, MOST consumers have a choice. 

if you are a lemonade stand and someone is willing to buy a glass for $20 when you are selling for $1, would you not want to make the bigger profit?

[Where is Hassan Nasrallah ?]

Laws and rules are made for the weak ones, not for the strong ones.
do you guys understand that?

Why is it illegal to kill, why do you get punished for that?

Not because of me, you, and every sane person around, who are ab intra - wow cool latin ! - aware of that
These rules are made for the weak ones, the crazies, the simple who could fall and misjudge.

That is "harmful things" - debts, gambling - should be illegal. Then you can restrict it to people whom we make sure are "strong" enough ...

oh wait ....

[polluxlm]

I tend to agree with Sandman here....for the most part, not all cases, if you rack up a ton of debt you are simply careless, immature and stupid.? its the consumers responsability to know that if they get a Macys credit card and save 10% on their purchase that the interest rate is also going to be probably around 30%

if you buy someting with your credit card, you are going to have to pay it back someday.

its amazing how many people can't grasp these simple concepts.

i think finance/credit/savings should be MANDATORY for all High school curriculums in america.? by educating people when they are young on the power of saving and living as debt free as possible they won't grow up to be mired in debt when they are 23 years old.

having debt from college or a home is one thing - having it b/c you like to shop or "need" an expensive car is entirely different.? don't blame the companies, MOST consumers have a choice.?

if you are a lemonade stand and someone is willing to buy a glass for $20 when you are selling for $1, would you not want to make the bigger profit?

Personal responsibility is always the argument in these cases. To what end I ask?

Of course people aren't going to think for themselves. The local tv ad tells you you need that car, I guess you need it then. The credit card company tells you you can have that car, and it doesn't have to cost you anything. Forget about the fine print at the bottom that reads 30% interest.

A great man once said never underestimate the stupidity of the people. Preaching personal responsibility is one thing, continue to preach it when it's obviously not working is another.

[The Dog]

I tend to agree with Sandman here....for the most part, not all cases, if you rack up a ton of debt you are simply careless, immature and stupid.  its the consumers responsability to know that if they get a Macys credit card and save 10% on their purchase that the interest rate is also going to be probably around 30%

if you buy someting with your credit card, you are going to have to pay it back someday.

its amazing how many people can't grasp these simple concepts.

i think finance/credit/savings should be MANDATORY for all High school curriculums in america.  by educating people when they are young on the power of saving and living as debt free as possible they won't grow up to be mired in debt when they are 23 years old.

having debt from college or a home is one thing - having it b/c you like to shop or "need" an expensive car is entirely different.  don't blame the companies, MOST consumers have a choice. 

if you are a lemonade stand and someone is willing to buy a glass for $20 when you are selling for $1, would you not want to make the bigger profit?

Personal responsibility is always the argument in these cases. To what end I ask?

Of course people aren't going to think for themselves. The local tv ad tells you you need that car, I guess you need it then. The credit card company tells you you can have that car, and it doesn't have to cost you anything. Forget about the fine print at the bottom that reads 30% interest.

A great man once said never underestimate the stupidity of the people. Preaching personal responsibility is one thing, continue to preach it when it's obviously not working is another.

but you can't hold the companies responsible for that - sure, its in the fine print, but what do "they" always say....

READ THE FINE PRINT!

Making people feel that they need things they don't is just good advertising.  Why make a car and then an ad for it saying "this car is way over priced, you could just buy this car for thousands less....only guys with small dicks are going to buy this car.."   Great, you're 100% honest, but you won't sell any cars....Well Wat-Ever might buy the car    I kid, I kid 

Go back to my lemonade stand example....if you're stupid enough to buy for $20 when I'm selling for $1 then shame on you - I'll take the $20 every chance I get.

[Prometheus]

questions for all


who is the credit card companies and what are they?


i find it funny that it is said that the entire banking system needs to go yet all that is talked about is credit cards as being bad.


i think the banking system of canada and the US.... both are very similar ..... works rather well..... in canada we have this stupid user fee on non bank brand ATM usage, where you are charged $1.50 by the bak that owns the machine and another $1.50 by your own bank.... and now there are some locale that charge up to $2.50 for the same. on top of that you are dinged if you go over ATM usage amounts $.50 per usage of your debit card. banks are making record profits and say that these fees are required for maitance of the machines. fee income is $420 millin a year industry wide, industry maintance costs only $100-120 million a year.......


what should be looked at with respect to credit cards is how easy it is to bump up your credit line. just max out your card and pay it off fast, then cary a balence of half the value of your credit line for 2-3 months and they tend to double your balence. why not actually see if people can really afford it... christ

[polluxlm]

but you can't hold the companies responsible for that - sure, its in the fine print, but what do "they" always say....

READ THE FINE PRINT!

Making people feel that they need things they don't is just good advertising.? Why make a car and then an ad for it saying "this car is way over priced, you could just buy this car for thousands less....only guys with small dicks are going to buy this car.."? ?Great, you're 100% honest, but you won't sell any cars....Well Wat-Ever might buy the car? ? I kid, I kid?

Go back to my lemonade stand example....if you're stupid enough to buy for $20 when I'm selling for $1 then shame on you - I'll take the $20 every chance I get.

How about reading my fine print? It's not even fine, it's just there.

You can throw around theoretical arguments all you want, it doesn't change the fact that the system doesn't work. When corporations start to rule the government is when our democracy seazes to exist.

[polluxlm]

questions for all


who is the credit card companies and what are they?


i find it funny that it is said that the entire banking system needs to go yet all that is talked about is credit cards as being bad.


i think the banking system of canada and the US.... both are very similar ..... works rather well..... in canada we have this stupid user fee on non bank brand ATM usage, where you are charged $1.50 by the bak that owns the machine and another $1.50 by your own bank.... and now there are some locale that charge up to $2.50 for the same. on top of that you are dinged if you go over ATM usage amounts $.50 per usage of your debit card. banks are making record profits and say that these fees are required for maitance of the machines. fee income is $420 millin a year industry wide, industry maintance costs only $100-120 million a year.......


what should be looked at with respect to credit cards is how easy it is to bump up your credit line. just max out your card and pay it off fast, then cary a balence of half the value of your credit line for 2-3 months and they tend to double your balence. why not actually see if people can really afford it... christ

The credit card companies are the extension of the banking system, created to suck you dry in every facet of your life. This system derives from the European banking elite/cartel which have taken our money since the beginning of time. It's not democratic and it's not free.

Think about it. With all of our revolutions and fight for freedom, why is that it's always the same old banks that come up on top? America created their own money for over a hundred years and did just fine. The bankers couldn't have that. Which is why today america uses the same old tired banking system that europe have been slaves to for centuries and the government is in record debt to them.

Sometimes you can't see the forest for all the trees.

[The Dog]

but you can't hold the companies responsible for that - sure, its in the fine print, but what do "they" always say....

READ THE FINE PRINT!

Making people feel that they need things they don't is just good advertising.  Why make a car and then an ad for it saying "this car is way over priced, you could just buy this car for thousands less....only guys with small dicks are going to buy this car.."   Great, you're 100% honest, but you won't sell any cars....Well Wat-Ever might buy the car    I kid, I kid 

Go back to my lemonade stand example....if you're stupid enough to buy for $20 when I'm selling for $1 then shame on you - I'll take the $20 every chance I get.

How about reading my fine print? It's not even fine, it's just there.

You can throw around theoretical arguments all you want, it doesn't change the fact that the system doesn't work. When corporations start to rule the government is when our democracy seazes to exist.

i agree about that, but i thought we were talking about consumer responability, not corporations taking over the govt.

as for my "read the fine print" i was referring to consumers not doing that in ad disclaimers, not to anything you or I was writing.

LIke i said, i think it goes back to teaching people when they are young about money/finances/credit.  My parents taught me the value of a dollar.  I'm a saver with zero balance on my cards.  my girlfriends parents were spenders and gave her money whenever she wanted, didn't make her get a job etc....   shes a spender.   Guess which one of us has more money?  Guess which one of us has debt....?

not saying "blame the parents" but consumer responsability stems from consumer education.

same thing with smoking and eating - nobody is putting that cigarrette or big mac in your mouth - consumers TODAY (in the past i think we were lied to/misled) have enough info about the harms of smoking and eating fast food to know they shouldn't be doing either in excess.

[polluxlm]

but you can't hold the companies responsible for that - sure, its in the fine print, but what do "they" always say....

READ THE FINE PRINT!

Making people feel that they need things they don't is just good advertising.? Why make a car and then an ad for it saying "this car is way over priced, you could just buy this car for thousands less....only guys with small dicks are going to buy this car.."? ?Great, you're 100% honest, but you won't sell any cars....Well Wat-Ever might buy the car? ? I kid, I kid?

Go back to my lemonade stand example....if you're stupid enough to buy for $20 when I'm selling for $1 then shame on you - I'll take the $20 every chance I get.

How about reading my fine print? It's not even fine, it's just there.

You can throw around theoretical arguments all you want, it doesn't change the fact that the system doesn't work. When corporations start to rule the government is when our democracy seazes to exist.

i agree about that, but i thought we were talking about consumer responability, not corporations taking over the govt.

as for my "read the fine print" i was referring to consumers not doing that in ad disclaimers, not to anything you or I was writing.

LIke i said, i think it goes back to teaching people when they are young about money/finances/credit.? My parents taught me the value of a dollar.? I'm a saver with zero balance on my cards.? my girlfriends parents were spenders and gave her money whenever she wanted, didn't make her get a job etc....? ?shes a spender.? ?Guess which one of us has more money?? Guess which one of us has debt....?

not saying "blame the parents" but consumer responsability stems from consumer education.

same thing with smoking and eating - nobody is putting that cigarrette or big mac in your mouth - consumers TODAY (in the past i think we were lied to/misled) have enough info about the harms of smoking and eating fast food to know they shouldn't be doing either in excess.

And that's all fine and good, but you're still missing my point. The reason why people fuck up is because they live in a system designed for them to do just that. You ever wonder why the education system doesn't teach you the value of a dollar? It's because it's all part of the same rotten and corrupt system designed to limit your freedom, ability of free thought and lifting your pockets in the process.

[The Dog]

but you can't hold the companies responsible for that - sure, its in the fine print, but what do "they" always say....

READ THE FINE PRINT!

Making people feel that they need things they don't is just good advertising.  Why make a car and then an ad for it saying "this car is way over priced, you could just buy this car for thousands less....only guys with small dicks are going to buy this car.."   Great, you're 100% honest, but you won't sell any cars....Well Wat-Ever might buy the car    I kid, I kid 

Go back to my lemonade stand example....if you're stupid enough to buy for $20 when I'm selling for $1 then shame on you - I'll take the $20 every chance I get.

How about reading my fine print? It's not even fine, it's just there.

You can throw around theoretical arguments all you want, it doesn't change the fact that the system doesn't work. When corporations start to rule the government is when our democracy seazes to exist.

i agree about that, but i thought we were talking about consumer responability, not corporations taking over the govt.

as for my "read the fine print" i was referring to consumers not doing that in ad disclaimers, not to anything you or I was writing.

LIke i said, i think it goes back to teaching people when they are young about money/finances/credit.  My parents taught me the value of a dollar.  I'm a saver with zero balance on my cards.  my girlfriends parents were spenders and gave her money whenever she wanted, didn't make her get a job etc....   shes a spender.   Guess which one of us has more money?  Guess which one of us has debt....?

not saying "blame the parents" but consumer responsability stems from consumer education.

same thing with smoking and eating - nobody is putting that cigarrette or big mac in your mouth - consumers TODAY (in the past i think we were lied to/misled) have enough info about the harms of smoking and eating fast food to know they shouldn't be doing either in excess.

And that's all fine and good, but you're still missing my point. The reason why people fuck up is because they live in a system designed for them to do just that. You ever wonder why the education system doesn't teach you the value of a dollar? It's because it's all part of the same rotten and corrupt system designed to limit your freedom, ability of free thought and lifting your pockets in the process.

well, thats an entirely different topic and I for one don't truly believe the corporations own the schools too.  Some schools DO have a business class as an elective.  There is an entire industry where people give out financial advice via books, tv, radio.....consumers can get educated if they choose to.   There are plenty of people who DO NOT fuck up b/c they are responsible for themselves.  The system isn't perfect, but its not designed so we all fail.  You can definitely succeed if you are smart enough to realize you don't need the best apt. you don't need the best car, you don't need the best clothes etc....

I think too often in todays society people point the finger at everyone else but themselves.  You have to own up to your own accountability.  Its not the system that made you go out and rack up $20,000 on your credit card - its your own inability to realize you don't need a 1,000 Prada hand bag....

[polluxlm]

well, thats an entirely different topic and I for one don't truly believe the corporations own the schools too.? Some schools DO have a business class as an elective.? There is an entire industry where people give out financial advice via books, tv, radio.....consumers can get educated if they choose to.? ?There are plenty of people who DO NOT fuck up b/c they are responsible for themselves.? The system isn't perfect, but its not designed so we all fail.? You can definitely succeed if you are smart enough to realize you don't need the best apt. you don't need the best car, you don't need the best clothes etc....

I think too often in todays society people point the finger at everyone else but themselves.? You have to own up to your own accountability.? Its not the system that made you go out and rack up $20,000 on your credit card - its your own inability to realize you don't need a 1,000 Prada hand bag....

There is a problem in todays society with people blaming everyone but themselves, I acknowledge that and I despise the liberals for focusing on it. But that does not change the fact that the system is corrupted and wrong. I don't know who manages our educational systems, but I do know that it's based on repeating the information you're being told instead of encouraging creative thought, and that's a system that benefits the corporations. The old romans always asked one question when facing a criminal trail Who benefits?.

Just look at the greatest contributors to the Bush election, oil and arms industry. That isn't proof of anything, but every intelligent person can see the smoking gun.

And it's true you can succeed in society if you're smart, that's one of the greatest things about America, but when the country has a system that deliberately tries to marginalize the 'smart percentage' something is wrong. You gotta look out for yourself, but it's also our responsibility as human beings to look after the ones that can't.