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Old January 22nd, 2007, 09:29 AM
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Default Cruising toward bankruptcy

Happened to catch 20/20 Friday night--they were doing a show about consumer debt, mostly credit card debt.

After profiling one couple with $60,000 in credit card bills, they brought in a financial planner to help them out. The guy was very tough with them, and told him that they were so far down the dumper that they'd have to sell their house, among other very draconian measures. These people had also bought two timeshares as investments (oy!), one of them costing over $100,000. Naturally, the advisor insisted that these be sold, even at a loss.

Later in the show, they checked back in to see how our destitute couple was doing, and found that they had just booked a cruise. How nice.

My newest pet peeve is the glut of current commercials that promise to give you your tax refund based simply on your last pay stub, since many W-2's aren't out yet. That's right folks, all you have to do is show your pay stub, and they'll lend you your own money back at usurious rates until the real refund arrives from Uncle.

This, of course, is money that never should have left your pocket if you'd adjusted your withholding properly. If there's an idea that's more evil than a payday loan, this is it. But it's a great deal for the storefont tax preparers: they've got short-term, super high-interest loans secured by US obligations to the borrower. Is this a great country or what? I think it would be nice if these folks would stick to the tax business and get out of the loansharking business.

Of course, I fully understand that a lot of people overwithhold as a form of forced savings, and use the springtime returns of their own money as windfalls to do things like book cruises. It's a terrible way to save by any measure, but now insult is being added to injury by these tax preparers, who are supposed to be on your side, but who really want a piece of your refund.

As Yogi famously said, "Don't nobody here know how to play this game?"

Of course, I once heard a financial advisor say with a wink that we need people who do all the wrong things in their financial lives. He said that they're the ones who make the rest of us rich. I couldn't believe how cynical that was. But then I thought about it and realized that you can be cynical and right at the same time.
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Old January 22nd, 2007, 09:56 AM
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AR, tell it like it is!
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Old January 22nd, 2007, 10:38 AM
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AR:

This is a sign of the times and a sad one at that. We are in a time of immediate gratification. It's an attitude of: "If I have credit I can get whatever I want and worry about the paying it off at a later time."

The problem is that "the later time" catches up with you.

People will come to a board like this and see all of the people taking cruises, many doing so on borrowed money and time, and think "I also, want to book one or two." That's great, except if you can't really afford it.

I have to admit, that on a personal level, I often cringe when I see people who want to make time payments on cruises because they don't have or can't get a credit card. Whatever happened to the old idea of "saving" for something and then doing it.

I know people become envious when they see those who have two or three cruises booked. Some of those folks may be older and have no bills and saved their entire lives or may have the luxury of having been lucky or skilled enough to have managed their money in a way so they can enjoy cruising or these people may be just like the folks in the report and are mortgaged to the eyeballs.

It's something to think about: Don't ever buy something, on credit, other than a "big ticket necessity" unless you have the money for it.

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Old January 22nd, 2007, 10:46 AM
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Well, said! Does it irritate you, as badly as it does me, when you see your friends make STUPID financial moves! And you know you HAVE to keep your mouth shut!

I have to add: Not that I'm all that smart, but some of it is just plain common sense!
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Old January 22nd, 2007, 11:00 AM
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I think there's ebbs and flows in people's financial lives. Of course, we should realize that thing will happen and save for them, but reality is you can think things are going pretty well for you financially, until a couple of major bumps in the road occur to eat up your savings, and throw that "financial life" into turmoil.

I don't think many people actually set out to run up their debt. The optimist in them tells them it's going to get back on track, and the debt will be a temporary solution. Sometimes it does get better... but in other cases larger bumps appear, and it gets worse. That's how we see new stories about once successful people becoming homeless.

While we should, the majority of people don't plan for the worst case scenarios.

Most certainly have to agree that the "bottom feeders" , like the instant tax rebaters, and payday loan companies, should disappear. They just take advantage of people who have already dug their holes too deep.
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Old January 22nd, 2007, 11:43 AM
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also add teh companies that buy potential personal injury settlements; they also charge usurpious rates and loan you money before you settle a personal injury case and perhaps a person only borrowed $10K to pay their bills during recovery etc and by the time the lawsuit settles they owe upwards of $20K. it is truly disgusting that companies are allowed to do this and the guy trying to feed his family and get better almost has no choice as the bills are coming in and insurance companies rarely pay 100% of lost income, med bills, rx and all the other stuff
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Old January 22nd, 2007, 12:17 PM
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AR thats one show I wanted to see but missed! I agree with you 100%. WE don't carry any credit cards or debt<well except mortgage and car> and if we want something we pay for it. I do disagree with the paying of a cruise. I sometimes pay for a cruise a little at a time with my money in my bank. Shorter count down times like my previous 3 Disney cruises that I had to leave within 30 days I had to pay in full again with money I had in the bank. I know of people who use credit cards and charge cruises and then make payments over a long time. Why would I want to pay interest on that? Others are older or have less commitments or are rich due to the selling of a business<Kuki > and have enough funds to do many things. But I agree the american way of living is borrow,borrow and pay later. The refunds of tax money that is given early should be outlawed!
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Old January 22nd, 2007, 12:58 PM
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AR: ...We missed the follow-up on that couple... I think the phone rang or something...

Anyway...I did noticed that when the financial adviser was explaining to them what they would have to do to get out of their dire circumstances...the wife looked like she wasn't going to have any of it! Looks like they decided to go for BROKE...

I guess there are some people who just like to do things the Roman way..."Live for today, for tomorrow we die".
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Old January 22nd, 2007, 05:02 PM
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I agree with what everyone has said, but I am guilty of charging cruises. This next one will be paid off with cash, but the Christmas before Jim left for Iraq was charged all the way. I have just now finished paying it off. Why would I do something like that?

..."Live for today, for tomorrow we die".

I wanted precious memories of our time together. I wanted him to see us as a family, and the laughter, and the joy, that only a cruise can provide.

If I had saved and he died in Iraq, then I would have just had money. What we ended up with are memories, and as the saying goes, "They are priceless"
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Old January 22nd, 2007, 05:56 PM
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Luanne--

That's interesting, and in a sense we can put that financed cruise in the "special case" department (espcially because you've paid it off, although probably at tremendous incremental cost). You'll agree, of course, that 99% of people who go in hock for cruises aren't in your situation. They're just doing the instant gratification thing that Mike describes.

It's also an interesting insight into how some people on this board think of cruising. It's not just that they enjoy it, but cruising seems to be the definition of happiness to the exclusion of a lot of other things. I make no judgment about that; I just find it fascinating. "The joy that only a cruise can provide" (my emphasis) is something that is said directly or implied by lots of people who write here, and I think it's one of the things I find interesting about CM.

I love to cruise, and I'd feel like I was missing something if we didn't take our typical two or three a year. But I don't put cruising on that "definition of happiness" pedestal alone. That's just me. Too much else to do.

But in any event, the point about spending now and paying later applies to whatever kind of dollar-denominated happiness floats your boat. If you can't afford it, you can't afford it.

And while I agree with Kuki that people get in trouble because they're optimists, I would probably substitute the word Pollyanna for optimist. What they really are is naive, because there really are ways to protect yourself from the kinds of unexpected issues Kuki describes. The trick is to expect the unexpected.

A financial planner I know (not mine) tells this story: he said he woke up with a toothache one morning, called his dentist and was told to come right in. As the dentist was fixing him up, the planner started to apologize for screwing up the dentist's schedule. The dentist waved him off and said he didn't screw it up at all. "I was expecting you," he said.

"What do you mean. I didn't know I was going to call you. How could you have known?"

"I didn't know it would be you, but there are emergencies every day. I build them into my schedule every day."

It's a great parable for financial planning. And it can be done.
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Old January 22nd, 2007, 06:21 PM
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When we were growing up we often heard the phrase "pay as you go and you'll never owe". I wish I could say I've ALWAYS lived by that but have been way better about it in the last few years.
I wanted to see that 20/20 and will have to catch it in a rerun.
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Old January 22nd, 2007, 07:31 PM
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Each year my son comes down here for his winter vacation that usually takes place shortly after we've returned from our annual cruise. That means an extra expense for us because it turns out to be a second vacation as we drive him around and eat out and stay at motels in a different city. But, we want to see him and never say not to come.

This year, it came to a head, because we spent more than anticipated on the cruise, that was later in the Fall than usual and really didn't have a lot of extra cash flow. In fact, Trevor almost wasn't going to go anywhere because we had a high interest credit card to pay off. As luck, or timing would have it-I received a bond from my parents for Christmas and had some money from work that the Residents give staff each year as a gift.
I offered that up and we pooled our resources and were able to pay off said card--for about 24 hrs! With the ability to pay it off, Trevor agreed to go to Ft. Lauderdale and we booked a place to stay. Of course, the reservation service charged the credit card right away and those expenses went right back on the card! My son was going to pay for half the apt. cost.

In the midst of all of that, one comment my son made to me privately was, "if you can pay for a cruise every year , then why can't you save money for our time together, knowing that I'm coming?" I told him it would be a perfect world for that to happen and that the world doesn't work that way, with other expenses creeping in-and we don't have the discipline to do that--other priorities come up along the way.

Now, in the meantime, my younger son has offered to pay for the one room apt--and has the money to do so--so that NONE of us have to pay for the room. A nice gesture, which we accepted.

Next year?--my elder son will be making his own reservations and getting himself a rental car. If he can work us in during his visit--that will be nice. But, like the younger boy, who will be arriving here 5 days after the elder one, he'll have his own car, stay here a night or two, go off and do his thing and perhaps come back for a night before going home.

We try to keep our debt down as much as possible-but when it creeps up above a certain level, the brakes are applied and we cut back on expenses.

Our pastor mentioned the 20/20 episode in his sermon on Sunday--basically it was about people living only for material things---but you can't take them with you.

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Old January 22nd, 2007, 07:34 PM
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AR,

As I said, I completely agree with you. I also realize that my situation is a little different. I have said this before, but one of the reasons we love to cruise, is that my hubby must stay in contact with the military 24/7 They can and do call at any time, and for some reason cruising gets us away from it all. We do have to let them know what ship, and all that, but they do not call. I was probably one of the few who were disappointed that the cruise ships were connecting to the cell phone world.
although what could they do, ask us to swim back?

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Old January 23rd, 2007, 12:24 AM
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Hi all
I felt the need to chime in with Katlady's top 3 bad money moves:

1. Refinancing your house to pay off credit cards debt. Why because you are taking short term unsecured debt and turing it into long term secured debt. You miss to many house payments you lose your house. The credit card company can't do that. Just for the record I have done this one. Everyone makes mistakes.

2. 100-120% financing on a house at a varible interest rate. If you can't afford any down payment you can't afford a house. Also house rates were at a 75 year low and people were getting varible interest rates I don't get it. Lock in a low fixed and pay off early.

3. Another thing some fiancial advisors (and for these people I use the term lightly)suggested that homeowner take a 2nd on their house and put it into the stock market. So take a safe invest which is also the roof over your head and a large part of your retirement and gamble it in the market. This was mostly suggested while the stock market was at record highs. Which makes it worst. If the stock market is at a record high which direct do you think it's going next? Whenever you have money in any invest and a fiancial expert says you can't lose we beat market cycles.
WATCH YOUR MONEY THE MARKET IS ABOUT TO DROP!!!! Unless it's Warren Buffet
Alright I will step off the soap box and head to bed. Good night and good investing.
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Old January 23rd, 2007, 02:12 AM
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Yes, I over withhold. A whopping 20 bucks every check. thats only 520 a year. I messed up my credit when I was younger. So I have no credit cards and want no credit cards. I pay my cruise every week. My g/f and I get paid on different weeks so we can pay like that. Besides there is no interest on the total.

Yes I am in debt, 95% of what I owe is medical, but you know what? The old saying that " they dont look at medical " is a huge lie.
We take our cruises because you never know if you will be able to do it later. Can we truely afford to pay for a cruise outright, no. Thats what makes it attractive to people like me.

The tax return thing is a joke. I have used the block heads ( you know who ) before. Will I ever do it again..........NO! I can file for free and my money is direct deposited in my account in 7-10 business days. Heck I waited all year, whats another 10 days?

Now, how would I adjust my withholding to not have anymoney taken out of my check and not have to pay at the end of the year? Im a single man who makes less than 15000 a year. even if I claim single/1 I would have to pay at the end.

OK enuff

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Old January 23rd, 2007, 04:01 AM
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Kuki, I agree that peoples' financial situation does ebb and flow. People tend to outspend their income during good times and suffer for it during the bad times.

I have made it a point to concentrate on the future and assure that my retirement is NOT going to be living from day to day, hand to mouth. I have 10 months of income in savings, keep a checking account that fluxs from 4 to 5 figures, and I have two other savings accounts that are doing well.

These are just the liquid assets.

People should save for the future and make it a habit. It really isn't hard. I used to be flat busted, more than a couple of times, but determination has brought me out and now I can weather any tough times, as is obvious from my recent health issues.

Just Do It!!!!!!
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Old January 23rd, 2007, 04:06 AM
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Another "crime" recently being perpetrated on the financially ignorant are the so-called Reverse Mortgages..... most people think it is only their equity that is at stake...... ummm......no.

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Old January 23rd, 2007, 04:17 AM
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Quote:
Originally Posted by katlady
Hi all
I felt the need to chime in with Katlady's top 3 bad money moves:

1. Refinancing your house to pay off credit cards debt. Why because you are taking short term unsecured debt and turing it into long term secured debt. You miss to many house payments you lose your house. The credit card company can't do that. Just for the record I have done this one. Everyone makes mistakes.

2. 100-120% financing on a house at a varible interest rate. If you can't afford any down payment you can't afford a house. Also house rates were at a 75 year low and people were getting varible interest rates I don't get it. Lock in a low fixed and pay off early.

3. Another thing some fiancial advisors (and for these people I use the term lightly)suggested that homeowner take a 2nd on their house and put it into the stock market. So take a safe invest which is also the roof over your head and a large part of your retirement and gamble it in the market. This was mostly suggested while the stock market was at record highs. Which makes it worst. If the stock market is at a record high which direct do you think it's going next? Whenever you have money in any invest and a fiancial expert says you can't lose we beat market cycles.
WATCH YOUR MONEY THE MARKET IS ABOUT TO DROP!!!! Unless it's Warren Buffet
Alright I will step off the soap box and head to bed. Good night and good investing.
Katlady, don't see anything wrong with number 1; especially if you are in a high tax bracket. Why not let the government help you out? As for credit cards, I have paid total balance every month since 1991. As for car debt, they immediately went into a home equity loan. As for the home debt, the sale of our closes tomorrow and we will be debt free!!!!

It sure is strange bringing up your balance sheet on-line and have nothing on the right side.

Do I use credit cards; you bet. A great way to get frequent flyer miles. I just make sure I can pay them off.
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Old January 23rd, 2007, 07:44 AM
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:
I find the above statement very intersting and I agree with you too. I used to think cruises brings me joy but after going to Kenya on a missionstrip everything changed. I still want to cruise but I would rather help others with my time and money. Thats where true happiness lies for sure! I can't take it with me and what good is it to take 100's of cruises if I see others suffer? If everone would have this revelation just imagine how the world would be!

Luanne you did the right thing btw! I always keep you and hubby in my prayers btw[img][/img]
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Old January 23rd, 2007, 09:01 AM
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Interesting topic, I saw this as well. We dont pay for land trips or cruises unless we can pay for them. We dont live on credit, and because of saying no to many things before, we can do much more today, but even so, if it cannot be paid, then it is not the time to go. Health, education, Family events are always first, everything else is secondary. We like vacations, alot, but it is not the living driving force in our life. Life is rich and full at home, I dont need a land trip or cruise to make me feel better about life. I have often seen people say they cannot pay their heating, their condo fees, their dogs vet bill, their own medications, but some how they do manage to take a cruise or land trip and are even insulted when it is suggested they dont take a trip. I remember one person who came in the office and paid back heat, fees etc, dumped it on the desk( house was going to be seized if he didt) and said and I quote "I hope your happy now, I can't take my cruise". He was serious as well, they went once or twice a year. I use credit cards, like Mark, we never have a balance. It is just an easy way to pay safely.
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Old January 23rd, 2007, 09:18 AM
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Everyone is entitled to their own opinion. Before you decide what is and isn't right for another family, consider other situations such as a loved one with a limited time on earth wanting to spend one final holiday with his/her family. If we had known my brother would have been taken from us so suddenly, I might have been one of those who mortgaged everything I owned to make his final days happy ones. The circumstances are not always what they seem. Some people do not share this personal information with every human they meet. I've served grandmothers who were raising their grandchildren. I encouraged them to save for a vacation. Show the children another part of this world. Let them see what is in this big world. Inspiration to achieve comes from so many sources. Break the cycle of poverty and addiction! A cruise may not have been right for her, but if she had planned one, I would have said HURRAY for her and the children.

I believe I was placed on this earth to be of service to mankind. I will never be wealthy, but I am a very rich woman. I walk through every day looking at God's children who are in difficult situations. Some are there through no fault of their own, others have made different choices. I can't judge them. That is not my job. I have taken them into my home when they had no place to go. I can buy them a meal, give them clothes and even more important...I can smile and talk with them so they know they have been seen and are not invisible to me.

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Old January 23rd, 2007, 09:22 AM
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This string is getting interesting. . .

Katlady--My first impression about your idea of refinancing to pay off credit card debt is that it might be a very good idea, as long as you've really learned your lesson and don't return to plastic purgatory. The problem for some people will be that they won't qualify for the refi because of their overall financial picture. Obviously, it worked for you.

Cynic--I agree that for the huge majority of people, reverse mortgages are a terrible idea. The thought of the consequences for many unsuspecting seniors sends shivers up my spine.

Which is one reason, by the way, that I'm a real contrarian when it comes to regular mortgages. I believe in carrying a huge, long mortgage simply because these days it's the cheapest money you can find. While I don't believe you should take out a second and put it in the market, I find that keeping equity out of the walls of the house is a very lucrative strategy over time. There are a zillion reasons why this works, but basically it boils down to a personal arbitrage play, and you have to treat investing as a long term proposition, so you don't worry about the peaks and valleys of the market that katlady talks about. Bottom line, over time you can easily earn more on the money you would have used to pay off the mortgage than the interest you pay on the loan net of the part Uncle pays for you. And when you crunch the numbers you realize that you can do this without breaking a sweat.

Therefore, we carry a big, long mortgage and invest the equity elsewhere. We've been doing this for 20 years (with a couple refi's along the way to pull more money out and beat the rate down), and the results have been more than gratifying. Obviously, at this point, we could pay off the mortgage with a phone call if we wanted to, but we find we're far better off letting Uncle help us pay the already low interest rate on the mortgage, and letting the equity work for a far higher return elsewhere. The key, as with all investing, is that you can't look at it as a trip to Vegas; you must do it for the long haul, which makes you very boring with the "hot tip" people at cocktail parties.

The saddest situation--and it happens every day--is the senior citizens who proudly pay off their home and burn the mortgage (because that's what their depression-era parents told them to do), but are relatively cash-poor. Suddenly, a health crisis or other financial need hits, and guess what, they're broke. Virtually all their net worth is tied up in the walls of the house. So what happens? They either have to sell the asset that everyone told them would be theirs forever if they paid it off, or they get trapped into one of these reverse mortgage deals. It's very sad. And it doesn't have to happen. But people first have to learn that our grandparents' rules are not our rules.
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Old January 23rd, 2007, 10:00 AM
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A/R you make very good points and are very Financially Savvy. To make certain I understand, you are in a high tax bracket and prefer to keep a home mortage as a deduction well using some of the money borrowed against your equity to invest into something yielding a higher level of return then you pay on your money. This is a good idea for you.

For me my house payment is much higher and my tax bracket lower. I'm also 37 years old. for me the goal is to paid off the house as quickly as possible then invest the increased monthly income into my retirement accounts. I also work for the State and will be vested in a defined benefit plan at the time of retirement.

The point I was making about refi to pay off credit cards is a general one. Most people do it then think they paid off the credit card debt because they no longer see that bill. They haven't paid off anything they just moved it into a longer term loan. Doing this makes it easier to start with new credit cards and new debt.

mstill I agree with you that there are times when you need to throw the financial plan out the window because of emotional reasons. I would in a second build up credit card debt to go visit a dying relative. No amount of money can replace the loss of a love one or showing someone there is a life outside of poverty. I just want people to make financial decisions well understanding what the result from those decisions is. The world doesn't just happen to you the financial and emotional decisions you make impact that.
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Old January 23rd, 2007, 10:14 AM
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What I found most disheartening was the show that gave a homeless man $100,000.00 and then filmed him to see how he spent the money. He had NO concept of how long this money would or would not last. Had he been given a little guidance, he would not be penniless today.

The most uplifting moment of the show was when the homeless man helped those in need, including other homeless people. It just goes to prove the point some may make. Those with the least amount of money are the people who would give you their last dime.
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Old January 23rd, 2007, 10:56 AM
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Ms Still, I also agree there are times you just go for it. But the guy in question at the condo, was simply put a dead beat, it was a lifestyle, they dont pay their bills, they live high on the hog, and there are NO health problems. I know them well. I also in fact went into debt five years ago, to help my brother dying of lung cancer. He wanted to try an experimental treatment, that had little chance to help, from the USA. It didnt help, but I had no hesitation to get out my card and help him at least with hope. Had he wanted a cruise with his four kids, I would have put every penny on my card, but he was to sick for that. When all was said and done, I then made sure to put every penny to paying it off not to be dragged down by it, using the credit line with significantly less interest than credit card. What I wrote was health, family education are first, (even if that means debt,) but cruises and land trips for pleasure are NOT FIRST in my life. I know what serious illness is, my family has had one to many calls saying I am back in Intensive care and they better come fast, my child lives with it every day, if I am not home when I say, he always goes into panic mode thinking something happened, I am at hospital three days a week, you better believe if I feel in my heart its up tomorrow, I will go for it today. It is also why I forgo the diners out, the new dress, the expensive shoes( walmart girl here!) so I can put that money saved to a family vacation once or twice a year to make those memmories.
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Old January 23rd, 2007, 11:08 AM
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I'm one of those people the credit card companies hate. I pay off my bill every month and have never carried a balance in 25 years. I've always had a formula on my standard of living since I was 18 years old. Never pay more for living quarters and a vehicle to drive than what you earn in 2 weeks pay. Has always worked for me. By the way, I buy used cars and pay cash for them, then drive them until the wheels fall off.

I am appalled at the financial irresponsibility of those who work for me though. These youngsters are paving their way into financial hell and don't think anything about it. For instance, a server went to buy a new (used) car and came back all smiles because she said she only paid $4000 more than book value, "and I didn't think that was bad."

Good grief.

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Old January 23rd, 2007, 11:17 AM
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Well if you know them...then you know.

As far as your situation, that is exactly what I was talking about. I'm sure you don't tell every single person about your personal life. Someone (and it surely isn't me because I love WalMart! ), somewhere may judge you to be unworthy of a cruise. Well, they say, she doesn't wear designer shoes.....she doesn't look like she can afford a cruise...why is she wasting her money like that. She should..........(fill in the blanks). Things like this totally blow me away......who are they to assume this about anyone!

Why should we care what this person assumes about anyone? How is their opinion anymore important than mine? Because if I were there, I would be asking, "Where did you find those cute shoes!?"
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Old January 23rd, 2007, 11:33 AM
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Quote:
Originally Posted by mstill
Well if you know them...then you know.

As far as your situation, that is exactly what I was talking about. I'm sure you don't tell every single person about your personal life. Someone (and it surely isn't me because I love WalMart! ), somewhere may judge you to be unworthy of a cruise. Well, they say, she doesn't wear designer shoes.....she doesn't look like she can afford a cruise...why is she wasting her money like that. She should..........(fill in the blanks). Things like this totally blow me away......who are they to assume this about anyone!

Why should we care what this person assumes about anyone? How is their opinion anymore important than mine? Because if I were there, I would be asking, "Where did you find those cute shoes!?"
Hmm, first of all , very few people looking at me would think I dress in such a way I cannot afford a cruise, and even fewer looking at my home would think this as well. I am careful with money, I have right now a new expensive jacket, that ended up at 80% off, as I am able to wait for a sale and I dont need to " have it now." I can wait till I either save the money or it is on sale. I am not in the habit of judging where people go or what they do, only if they come crying they can't pay for heat but they got no problem to buy the latest computer gadget or change their three megapixel camera for a six. I think I am aloud to give my opinion on what works for me and what my feeling is on it and I hope no one thinks that I am imposing that for them. I have always been a person who does alot of community work, I am well know for taking out of my own pocket to help a student who is in need, and don't even ask how many food hampers I have prepared, how many kids I have taken into my own home, how many clothes I have taken from our closets to some one who needs, I worked many years with drug detox and alcohol abuse patients, I didnt agree with the life style, but it doesnt mean I wont work with them and try and help in what ever way I can. My goal was to try and teach my kid the art of saving for a goal, and he has and you can see his face light up when he gets what he saved for! It means alot more. My coments are not directed to the small percent who go into debt for what I consider good reasons, Like Luanne, I would have spent to the max for that cruise, it would be worth every penny of interest, but I would not spend if there was not a reason such as this. I dont want to be like friends of mine now who are declaring bankruptsy after years of always wanting more and more and more, the best camera, the best computer, the first flat screene, cruises, trips, new cars, and so on and so on.
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Old January 23rd, 2007, 11:35 AM
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mstill
In my job I have seen people drive fancy cars (leased), live in fancy houses (rented) and wear fancy cloths (bought on credit). These people don't have any real money. They live by appearance only it's all make believe. I would prefer to wear my payless shoe source shoes that I paid cash for then to take a 2nd on the house to buy a pair of Jimmy Cho shoes. However, it would be nice to be able to afford those.
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Old January 23rd, 2007, 12:11 PM
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katlady--

I sent you a private message re the mortgage issue.

mstill--

Seems to me that what does or does not constitute a "special circumstance" that justifies violating prudent money management practices is in the eye of the beholder. In my own view, Luanne's situation and some of the other circumstances mentioned in this string might very well fall into that "special case" category. For sure, there's no bright line that defines these things.

But it's also for sure that lots of people rationalize these decisions to an absurd degree. Taken to the extreme, any visit we make to or with any family or friends might be our last, because any one of us could get run over by a bus any day now.

A little over a year ago our nation slipped into an overall negative savings rate. Is there a lot of rationalization going on? I think so.

At the end of the day, of course the individual must decide whether imprudent money management practices are justified by exigent circumstances. I simply say that most times these "exigent circumstances" boil down to nothing more than instant gratification self-indulgences.

But it doesn't matter what I think, because the math doesn't change. People will still have to pay the same price for their actions whether they were "justified" or not. So the real calculus is, "Is the financial pain worth the psychic gain?" People who are honest with themselves will look at the question that way.

But most people are not honest with themselves. Like that couple on 20/20.
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