Our Generation

rackfocus · by **rackfocus** on Sun Mar 23, 2008 4:21 pm

First, an interesting article.
http://www.washingtonpost.com/wp-dyn/co ... 7.html?g=1

We are the children of a generation that has grown up in the most prosperous half of the 20th century. As a result, we are a pretty spoiled generation. I'm the first to admit I am spoiled. My parents rarely deny me anything. But then again, I rarely ask for anything, so there is a difference between being spoiled and being spoiled rotten. But being spoiled doesn't mean that you'll make bad financial decisions. In my group of friends, it seems to be the least spoiled people who end up making very poor financial decisions.

Being in college, it's easy to see that is where it starts. I was a freshman when I got my first credit card. It was from Citi Bank, and they promised us 10$ worth of food from a local Mexican place. We jumped at the chance, not really realizing what we were signing up for. A month later, all three of us had two credit cards. I locked mine away in my parents' safe and didn't touch it, but the rest of my friends maxed their cards out.

I kept the cards, and actually closed one and rolled that limit to the other one, giving me a 2500 limit. I then opened another credit card to help build my credit. I use that one often to build up rewards, but I always pay it off at the end of the month. Still, it's easy to get carried away.

The problem is that credit card companies are ruthless. They should not be allowed on college campuses, and colleges should require their students to take a basic finance class as a freshman. Every single one of my friends either has a card with a balance on it, or refuse to get a credit card. Both are very bad. You need a credit history to make sure you can get a loan for a house, car, etc... So get a credit card early, but make sure you don't abuse it. The longer the credit history, the higher your FICO score.

A great documentary about people who fall victim to credit cards is Maxed Out.

VIP · by **VIP** on Mon Jun 02, 2008 7:58 pm

The do call this, "the age of entitlement" the age where people want to buy what they can't afford, receive what they didn't work for or deserve, be paid for negligence and blame it on everyone else. If you're dumb enough to fall for credit card companies. You deserve it.

rackfocus · by **rackfocus** on Tue Jun 03, 2008 11:28 am

VIP wrote:The do call this, "the age of entitlement" the age where people want to buy what they can't afford, receive what they didn't work for or deserve, be paid for negligence and blame it on everyone else. If you're dumb enough to fall for credit card companies. You deserve it.

It isn't an issue of intelligence; it's an issue of ignorance. Most of our generation are not being properly educated about credit cards. They see their parents surviving off of credit cards and they think that is the way it is.

VIP · by **VIP** on Thu Jun 05, 2008 5:07 pm

I bet to differ. It's very difficult to be intelligent and ignorant. You're not entitled to knowledge. No one is going to hand it to you on a golden platter (with the exception of the basic stuff you get in high school) You really have to go out a look for it.

rackfocus · by **rackfocus** on Thu Jun 05, 2008 11:04 pm

Someone can be intelligent and be completely illiterate. Intelligence is the ability to learn or understand. Ignorance is the lack of knowledge, education, or awareness.

So, I'm intelligent (I like to think), but I didn't know that 25% of your bones are located in your feet until I googled "random fact". That means I was ignorant to that fact.

You are right, however, that you have to take the initiative. Most students do not know to take the initiative. They are too trusting in the system because that was how they were raised. You trust that your university is acting in your best interest, so you think that the credit card companies can't be that bad since the university lets them on campus. Not to mention your parents have credit cards, and you can't do anything without a good credit rating. Besides...you aren't really going to use the card unless there is an emergency. Suddenly, you have 200$ on that card because of a last minute road trip during Spring Break. Who cares? You are already in debt with you 20,000$ worth of loans...what's an extra 200$? It snowballs.

I think colleges should require a finance class. It couldn't hurt. Look at our economy and the housing market. A large majority of the problems we are having is because so many people are having the banks foreclose on their house. They buy houses they simply can't afford. But the bank approved them for the loan, so the people think they can afford it or why would the bank agree? As a result, banks lose money and interest rates on savings, CDs, etc... plummet. My savings account has dropped from 4.25% to 3.00% in less than a year. That's ridiculous.

Anyway...those of us that are fiscally responsible need to teach our peers so our interest rates don't continue to plummet.

VIP · by **VIP** on Fri Jun 06, 2008 7:51 pm

Wow, I'm sitting at less than one percent but I'm at a credit union.

rackfocus · by **rackfocus** on Fri Jun 06, 2008 8:42 pm

VIP wrote:Wow, I'm sitting at less than one percent but I'm at a credit union.

I use ing.com. Online banking gives much better interest rates since they don't have to pay for ATMs or physical bank locations. I wouldn't recommend them for their checking, but their savings account can't be beat. Same with their CDs. And I just totally agree with their policies.
http://home.ingdirect.com/about/about.asp

I had a savings account with my bank that was attached to my checking account. It was only a .45%, which is abysmal. It also had a 100$ minimum. So I decided to move my 700$ or so dollars to the ing account after extensive research. I went to the bank, and the lady said that they could convert my checking into a direct deposit checking account and I could keep 50$ in the savings account for overdraft protection. I specifically asked if there was a minimum amount needed. She said no. So I did that.

A month later, my savings account is charged. I called to ask why, and the woman (the lady I talked to had transferred to another city) said that it was a fee because I didn't have a minimum balance. I explained the situation with the other teller. The woman said okay and took it off. The next month the same thing happened. Again, I called and they took it off. Then it happened again. This time, I asked if it would continue to happen and the woman said yes. So I closed the account completely.

That's another reason why I like ing.com. Everything is in writing on their site, so you don't have to rely on the word of a worker; you can just read it for yourself.

envisageworks · by **envisageworks** on Tue Jun 10, 2008 5:01 pm

Discussion of the "smart people"? Ill stay out...

Neighborhood Studios · by **Neighborhood Studios** on Tue Jun 10, 2008 5:15 pm

I had an account at Key Bank, and the interest rate keep on dropping and dropping until it hit .01% - one hundredth of a percent! I probably had about 600 some odd dollars in it, getting 30 cents a month on it. I switched over to a credit union, the interest rate is steady at 4%. Not a bad deal.

rackfocus · by **rackfocus** on Thu Jun 12, 2008 12:47 pm

Since we are on the topic of foreclosures and such:

http://www.cnn.com/2008/US/06/11/beck.f ... index.html

NEW YORK (CNN) -- "One death is a tragedy; a million is a statistic."

If you replace the word "death" with the word "foreclosure," you could easily apply Stalin's famous quote to the current state of America's housing market.

Over a million homes are now in foreclosure, the highest rate ever recorded. Nearly 3 million homeowners have now missed at least one payment. As of the end of March, one in 11 loans were in trouble.

But until Ed McMahon went on "Larry King Live" last week to talk about his own housing trouble and, according to The New York Times, "humanized" the problem, all of that just seemed like, well, statistics.

McMahon explained that, despite earning millions during his career, he is now about $644,000 behind on his mortgage payments. Foreclosure, he said, is now a real possibility.

It was a pretty shocking revelation, and it generated a typical American response: overwhelming generosity. Within minutes of McMahon's admission, a caller was on the phone wondering how he could donate. McMahon went on to say that "wonderful things have happened" recently, and he's now optimistic that the house will sell.

That's great news, but lost in the outpouring of compassion is a hard look at the very thing at the center of the problem: the McMahon McMansion itself.

Listed at $6.25 million, the house is a six-bedroom, five-bathroom, 7,000-square-foot Beverly Hills estate. It's in The Summit, a gated hilltop community off Mulholland Drive. Britney Spears is among the celebrities who live in the area.

McMahon bought the house in January 1990 and, despite Los Angeles home prices being up 106 percent since then, reportedly still owes about $5 million on it. In other words, like so many other Americans, McMahon used his home as an ATM over the years. But unlike most other Americans, a sale at his asking price would allow him to pay off his lenders and still pocket several hundred thousand dollars.

None of that means McMahon's problems aren't important or relevant; it's just that we need to have some perspective. A celebrity who's made millions of dollars, won a $7.2 million legal settlement and owns, at least on paper, a home that has more than doubled in value, should not be the person who "humanizes" the problem for us.

A lot of people hear the word "foreclosure" and immediately picture a family living in an alleyway or in a city shelter, but that's not usually the reality. Take the McMahons, for instance. In a worst-case scenario, they would probably end up renting a luxury condo nicer than what 99.9% of Americans will ever live in. Is that ideal? No. Would their credit score be dinged up a bit? Sure. But is it really the terrifying scenario that most of us imagine?

Again, I'm not trying to beat up on McMahon here; it's just that he represents how people put compassion ahead of common sense. Compassion makes you want everyone to keep their homes and live happily ever after. Common sense tells you that your donation will do nothing to make that happen. Besides, is donating money to help keep a celebrity out of a luxury condo really the best use of your charity dollars?

Unlike many others, McMahon was not looking for a handout or to put the blame on anyone but himself. "Well, if you spend more money than you make," he told Larry King, "you know what happens."

Unfortunately, that's exactly the problem: Most people have no idea what happens when they overspend. And even if they do, they're not willing to take responsibility for their own actions.

"How can this be?" they demand. "I was guaranteed the American dream! I was told to buy as much house as a bank would let me, and then take out another loan to make the house even bigger. I was told to buy big televisions and luxury cars and to take great vacations and drink great wine."

It all went according to plan until real life intervened. And now, something worse is intervening: our government.

The same night the McMahon interview aired, I got a spam e-mail from Matthew Lesko, the guy who wears a question-mark suit on infomercials. He was informing me that, no matter my income, there are plenty of free government programs that I can take advantage of to help me pay my mortgage.

Perfect. Just what we need: free money for those who got into trouble by spending money freely.

Do we need to help the people who would legitimately be out on the street if they lost their home? Absolutely. But those programs are already in place. We have strict bankruptcy laws, unemployment benefits, welfare programs and health care plans -- all financed by taxpayers.

Why should there be a taxpayer-funded mortgage bailout program on top of it all?

Whether one person loses a home, or a million do, it isn't a tragedy, it's a lesson. And like all lessons, we can learn from it.

Since I started with a Stalin quote, I'll end with one from Henry Ford: "Failure is simply the opportunity to begin again, this time more intelligently."

For proof, just ask anyone who's been foreclosed on if they'll ever buy a home with some exotic "negative-amortization option ARM" mortgage again. Their answer will probably be a resounding "no," and that's a lesson that money can't buy; unless, of course, that money happens to be a huge check delivered by Ed McMahon and the Prize Patrol.

Exactly my point. People think they are entitled to the big house, the big tv, etc... That's just not reality. Spending more than you make is setting yourself up for failure.

For me, I hate the idea of paying 3,000$ for a 2,000$ tv by putting on my credit card and paying it in payments. I'd rather go without until I can pay cash. I'm frugal like that. I have serious buyer's remorse, so I never buy anything right away. I always have to think about it and go over the pros and cons, even if it's 20$.

It all comes down to lack of education. Most uneducated people are not able to see the big picture. They don't realize that their actions affect others. When you have millions of houses in foreclosure, the economy suffers. Everyone suffers when the economy suffers. That and our president is made of epic fail, but that's a whole other debate...

VIP · by **VIP** on Fri Jun 13, 2008 9:15 pm

There's a lot more to an economy than one president can fix, although I really don't agree with what he spends money on that's a rather cheap shot.

rackfocus · by **rackfocus** on Sat Jun 14, 2008 12:21 am

VIP wrote:There's a lot more to an economy than one president can fix, although I really don't agree with what he spends money on that's a rather cheap shot.

What do you mean fix?
When you spend trillions of dollars that don't exist, and throw international relations down the toilet, what do you think is going to happen? Do you think our astronomical gas prices are a coincidence? The Middle East, which holds about 80% of the world's oil reserve, is very protective of Islam, and though Saudi Arabia, the UAE, Qatar, and Kuwait are all "on our side", there is only so much pressure they can withstand from their own citizens and neighboring Islamic states.

It was not a cheap shot, but rather a pithy throwaway statement.

EMW

Our Generation

Our Generation

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