I was watching CNN and saw that 1 in 47 households have for bankruptcy...isn't it amazing how many people live outside of their means?

I love watching so many of my friends get married to these chicks that spend all day at pottery barn, then they complain to me about not being able to get their debt under the tens of thousands.

I guess it is that whole keeping up with the joneses that kills people. I think it is funny.

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Not entirely about being outside your mean, but well above average.
One of the big things that bites people is tapping equity in their homes.

If you're disciplined, it's fine, but if you're not, it's a quick way to loose your house and car.

Consider this- normally, you buy a car or furniture from a vendor,
you pay a higher rate on the balance, but if you don't pay, they just sue you, or repossess the items.

If you take out a home equity loan to buy the same stuff, you get a lower rate, more money, more stuff, but then when you can't pay you loose the stuff and loose the house-

Then the usual way people avoid loosing the house and car is by going into bankruptcy.


Yep, I once got this quizzical look from my sister when I talked about the balance between people's hourly income compared to their hourly outcome. I just look at what people make each hour they work, then get an estimate of how much they tend to spend per hour shopping or eating or barhopping.
People who make $50 an hour and work 60 hours a week
can still get themselves into trouble if they shop and eat at $150 per hour
for 2 or 3 hours a day.

Hal

I don't think it's funny. I think it's sad.

It's not just chicks at Pottery Barn. I knew a girl who was married to this big fat loser who could not hold a job to save his life. He once bragged to us that he'd been fired for punching his supervisor "thirty feet" across a room (as impressive a story as it is believable). He suffered from diabetes and was constantly going to the ER for things like passing out in the middle of the supermarket. This girl was the main breadwinner in the family, trying to hold a steady job with benefits for both of them while also going to school. I doubt either one of them ever set foot in a Pottery Barn. Eventually, they filed for bankruptcy. Hopefully, she's woken up by now and filed for divorce as well.

I also know of someone else who has filed for bankruptcy twice. She definitely spends beyond her means (she's addicted to that stupid QVC) but I feel sorry for her. She's had a few abusive people in her life and she suffers bouts of depression. This might sound mean, but she's just not a very bright person, and I think that's why she didn't learn from her mistakes the first time around, and probably won't the second time either.

I do think it's way too easy to obtain credit, go crazy, and then get out of it through bankruptcy. The Pottery Barn chicks and their ilk make me sick, but I think there are also a lot of people who just get down on their luck-- lose a job and have a tough time finding a new one, get some horrific illness with medical bills in the hundreds of thousands-- who genuinely need to file for bankruptcy, and in the future it might be tougher for them to do so.

I am amazed at the number of people taking ARMs for homes that are way over their head. When I was making a $55k salary, the bank approved me for a 250k mortgage. Yeeeeeaa, sign me up :roll:

Plenty of people are jumping on this, getting low interest ARMs and deferring responsibility for a few years.

In a few years I will be bidding on their home. Idiots.

You can almost always get a job...for many of us, the jobs we could get are "below us", the guy with the diabetes should have known better, and it is sad, but he should know that none of us gets along with everyone at work, but to keep out benefits and paychecks we put up with a lot of stuff. It is called life...I feel bad for your friend who stayed with this guy, he sounds troubled at best.

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My parents have filed bankruptcy twice. Why? Stupidity! Their rowhome only cost them $55K. But they've gotten new car after new car and on one of those cars they took a $13,000 loss that they rolled over on a new 04 car which cost them like $35,000. It's ridiculous and embarassing.

The reason... they (and I) grew up in the projects in Brooklyn, NYC. They are recovering drug addicts (sober for the last 14 years). It's a mixture of "We finally made it!", keeping up with the Jones', and a replacement of their addiction.

During my late teens and earlier 20's (I'm 25 now), I took that same attitude. "I gotta keep up. I finally made it." I didn't make sh#t. I was just living beyond my means. Since I've been married. I have learned my lesson. I'm currently trying to clean up the credit mess I created back then.

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IMPAQ, I got a similar story...my dad grew up on welfare and continually takes big losses on cars...it is a funny mentality, and while obviously stupid, I can't blame him.

I can totally blame friends my age though, who haven't struggled and are looking for the finer things in life. I have a friend who bought a $100 trash can (stainless steel), I bought 2 (stainless too) at home depot for $35 bucks.

The idea of spening 100 bux on a trash can will be ludicrisp (a-la mike tyson) regardless of how many millions I could ever have.

The funny thing is that combined this couple can't make more than 100-120k, can you imagine the other stuff she buys if she's willing to drop 100 bucks on something to hold the freggin garbage.

It is funny all my single friends...tight with money....once they get married...many of them just let wifey, spend, spend, spend, talk them into the big house, blah, blah blah.

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Yeah, my wife gets a little out of hand sometimes, but so do I, as well. I just have to reign it in. Distract her. Take her out to eat. Something, anything to not buy jewlery or clothes she doesn't necessarily need or can't wear to work.

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There was a Dateline / 20/20-type show called "The Millionaire Next Door." It was about people who became millionaires not so much with huge income, but because they maintained their frugal spending habits from when they had very little money. I had so many friends who stupidly bought big ticket items with the reason, "because I can."

Compulsion can have a lot to do with spending, I'm sure. A friend's mom is spending hundreds of dollars a week on religious items. She's obsessed with God, which in a way can be a good thing, but when it manifests itself through things like this... in her mind, the spending reaffirms her faith.

Question of the week (not to be really answered here): Is it human nature to have a compulsion to at least one behavior?

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Meatwad get the honeys, see.

Another big factor in the bankruptcy explosion is the unethical extending of exhorbitant amounts of credit at loan-shark like rates. It's happening because a few people are profitting greatly from it. Yet another way to screw over the poor. Most foreclosures happen to people who shouldn't have been loaned the money in the first place.