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What credit-card payoff? Consumers are dumping debt

RightinNYC said:
I agree that there should be more financial management classes, but there are some things that are pretty elementary.
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Even if the schools are teaching such info, the kids might have the opposite being demonstrated at home.
Most of my financial wisdom comes from watching what my parents did, and going the opposite direction...:(
 
RightinNYC said:
So the solution to people being susceptible to peer pressure is...?
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Change the peer pressure. Better education, an end to glorifying greed, promoting living a less materialistic/healthier life, promoting charity over business investments, valuing people more than corporations... Social change, back towards when we were caring more about your fellow man and the next generation than yourself and your personal comforts.
 
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RightinNYC said:
You mean that by the time people have finished 13 years of free schooling, we shouldn't have expected them to learn that you can't pay off a $600k mortgage on a $40k salary?
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Oh, I think they've learned enough math by that time to figure that out.

However, here's the rest of the story:

Houses have been increasing in price by double digits for several years. That HS grad knows of people who have made thousands of dollars by buying and then selling a house. His choice is to buy a $200 K house that he can afford, and see it increase in value by 20% for a gain of $40K, or buy the 600K house with a "creative" mortgage and hang on to it as long as possible. When it goes up by 20%, he's made $120K instead of 40. The buyer probably realizes that doing so is a gamble, but gambling with other people's money can be a pretty good deal most of the time.

Quite a lot of people gambled and won.
 
NoJingoLingo said:
Change the peer pressure. Better education, an end to glorifying greed, promoting living a less materialistic/healthier life, promoting charity over business investments, valuing people more than corporations... Social change, back towards when we were caring more about your fellow man and the next generation than yourself and your personal comforts.
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When exactly did this mythical period of caring and sharing exist?

Dittohead not! said:
Oh, I think they've learned enough math by that time to figure that out.

However, here's the rest of the story:

Houses have been increasing in price by double digits for several years. That HS grad knows of people who have made thousands of dollars by buying and then selling a house. His choice is to buy a $200 K house that he can afford, and see it increase in value by 20% for a gain of $40K, or buy the 600K house with a "creative" mortgage and hang on to it as long as possible. When it goes up by 20%, he's made $120K instead of 40. The buyer probably realizes that doing so is a gamble, but gambling with other people's money can be a pretty good deal most of the time.

Quite a lot of people gambled and won.
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And I'm sure a lot of people watched the World Series of Poker on ESPN, spent a weekend in Vegas, and left with a small profit. That doesn't mean I think we should be making excuses for those who went there and lost every penny they had.

Again, I can understand why people did what they did, I just don't see the value in placing the blame on society rather than expecting people to act with a modicum of common sense.
 
NoJingoLingo said:
Change the peer pressure. Better education, an end to glorifying greed, promoting living a less materialistic/healthier life, promoting charity over business investments, valuing people more than corporations... Social change, back towards when we were caring more about your fellow man and the next generation than yourself and your personal comforts.
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There is no alternative to people accepting responsibility for their own actions. There is no government program that can replace basic social skills.
 
Catz Part Deux said:
There is no alternative to people accepting responsibility for their own actions. There is no government program that can replace basic social skills.
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Who said this change should come from government? I think we found out that that is NOT going to happen.
It should come from the people.
Personal responsibility needs to be taught and reinforced by society as a matter of daily life. Do we really need to flip cars every 2-5 years? Do we really need a flat screen in the bathroom of the "master suite"?
 
Catz Part Deux said:
There is no alternative to people accepting responsibility for their own actions. There is no government program that can replace basic social skills.
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I agree. Individuals need to be held accountable for decisions they make. Parents should teach their children that it is ok to live within your means. That wealth alone won't bring happiness or determine if you are a successful person. Govt. does not need to be involved.

NoJingoLingo said:
Who said this change should come from government? I think we found out that that is NOT going to happen.
It should come from the people.
Personal responsibility needs to be taught and reinforced by society as a matter of daily life. Do we really need to flip cars every 2-5 years? Do we really need a flat screen in the bathroom of the "master suite"?
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You are correct that their is a difference between a "need" and a "want". Do we need to swap vehicles every 2-5 years. No, However, if a person can afford to swap vehicles every 2-5 years or have multiple tv's without running themselves into debt, why not? It is not the indiviuals decision to make?
 
Count me as part of the $10 million then. At 25, me and my family are completely debt free. I was on the wrong side of debt for quite a few years, but I don't plan to see another cent of mine go towards debt. :2razz:


If I can figure it out, anyone can. ;)
 
RightinNYC said:
When exactly did this mythical period of caring and sharing exist?
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Must have been the Age of Aquarius, which happened in the '60s, or so I'm told. I remember the '60s pretty well, but still don't remember anything like that happening.

RightinNYC said:
And I'm sure a lot of people watched the World Series of Poker on ESPN, spent a weekend in Vegas, and left with a small profit. That doesn't mean I think we should be making excuses for those who went there and lost every penny they had.

Again, I can understand why people did what they did, I just don't see the value in placing the blame on society rather than expecting people to act with a modicum of common sense.
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Correct. The blame goes to the individuals involved. Nevertheless, people who bought houses that they couldn't afford didn't act out of ignorance. They knew exactly what they were doing, and a lot of them did make money on it.

It's just that no one expected the housing market to collapse quite as suddenly as it did.
 
Dittohead not! said:
Must have been the Age of Aquarius, which happened in the '60s, or so I'm told. I remember the '60s pretty well, but still don't remember anything like that happening.



Correct. The blame goes to the individuals involved. Nevertheless, people who bought houses that they couldn't afford didn't act out of ignorance. They knew exactly what they were doing, and a lot of them did make money on it.

It's just that no one expected the housing market to collapse quite as suddenly as it did.
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Well not quite true

There were plenty of people expecting the housing market to collapse and quickly, they were just drowned out by the "my house went up in value by 30% last year, time to take some equity and get a new car" voices
 
Lord Tammerlain said:
Well not quite true

There were plenty of people expecting the housing market to collapse and quickly, they were just drowned out by the "my house went up in value by 30% last year, time to take some equity and get a new car" voices
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Voices of warning do get ignored, especially when they say things we don't want to hear.
 
mike2810 said:
I agree. Individuals need to be held accountable for decisions they make. Parents should teach their children that it is ok to live within your means. That wealth alone won't bring happiness or determine if you are a successful person. Govt. does not need to be involved.

You are correct that their is a difference between a "need" and a "want". Do we need to swap vehicles every 2-5 years. No, However, if a person can afford to swap vehicles every 2-5 years or have multiple tv's without running themselves into debt, why not? It is not the indiviuals decision to make?
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Every day when i drive my kids to school in our 2001 Camry, I feel like I'm reinforcing this lesson. No, we don't have an expensive car, but it's PAID FOR. No car payment. No, we don't have the biggest house in the neighborhood, but it's ALMOST paid for.

My daughter has suddenly become critical of the kids at her school who have everything handed to them.

I love it.
 
Lord Tammerlain said:
Well not quite true

There were plenty of people expecting the housing market to collapse and quickly, they were just drowned out by the "my house went up in value by 30% last year, time to take some equity and get a new car" voices
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Yep. I saw it coming, as well. Houses in our area went up in value too quickly. Anyone who took the time to think about it had to realize that they were overvalued.
 
theangryamerican said:
Count me as part of the $10 million then. At 25, me and my family are completely debt free. I was on the wrong side of debt for quite a few years, but I don't plan to see another cent of mine go towards debt. :2razz:


If I can figure it out, anyone can. ;)
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and you have made yourself a bit more free from worry becuase of it...

The idea that we "need" a tax deduction so we should carry a mortgage is part of the problem. Realtors preach that, but then they have a personal motive to see you go into debt.
Yes, you will pay more in taxes without a mortgage, but you will also have more money to spend on other things. The govt only returns a portion of that interest to you in your tax refund, the rest is GONE to the bankers.
Our govt, as sorry as it can be in some ways, actually does more for us than the bankers will ever do....I don't mind paying taxes.:shock:
 
UtahBill said:
and you have made yourself a bit more free from worry becuase of it...

The idea that we "need" a tax deduction so we should carry a mortgage is part of the problem. Realtors preach that, but then they have a personal motive to see you go into debt.
Yes, you will pay more in taxes without a mortgage, but you will also have more money to spend on other things. The govt only returns a portion of that interest to you in your tax refund, the rest is GONE to the bankers.
Our govt, as sorry as it can be in some ways, actually does more for us than the bankers will ever do....I don't mind paying taxes.:shock:
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What do you suppose would happen to the housing market should the mortgage interest deduction be ended?

On the other hand, it is hardly fair that buyers get to deduct the lion's share of their monthly housing costs, while renters do not, is it?
 
Dittohead not! said:
What do you suppose would happen to the housing market should the mortgage interest deduction be ended?

On the other hand, it is hardly fair that buyers get to deduct the lion's share of their monthly housing costs, while renters do not, is it?
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Canadians buy houses without a mortgage deduction.....and houses still get bought and sold there....
 
UtahBill said:
Canadians buy houses without a mortgage deduction.....and houses still get bought and sold there....
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Really? I heard you have to pay a sales tax on real estate, also. is that correct?
 
mike2810 said:
I agree. Individuals need to be held accountable for decisions they make. Parents should teach their children that it is ok to live within your means. That wealth alone won't bring happiness or determine if you are a successful person. Govt. does not need to be involved.



You are correct that their is a difference between a "need" and a "want". Do we need to swap vehicles every 2-5 years. No, However, if a person can afford to swap vehicles every 2-5 years or have multiple tv's without running themselves into debt, why not? It is not the indiviuals decision to make?
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I don't disagree, what I'm suggesting is getting a social mindset that finds no value in replacing things that still work or do the job.
 
Dittohead not! said:
Really? I heard you have to pay a sales tax on real estate, also. is that correct?
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I dont know about provincial sales taxes but on new homes yes we pay the GST on it

For a new home that is going to be lived in by the owner, it is rebated (cut in half of the 5%. For an investment property you pay the full 5%

Alberta does not have a sales tax so I dont know if provincial sales taxes cover home sales

Used homes are excempt from the GST
 
Lord Tammerlain said:
I dont know about provincial sales taxes but on new homes yes we pay the GST on it

For a new home that is going to be lived in by the owner, it is rebated (cut in half of the 5%. For an investment property you pay the full 5%

Alberta does not have a sales tax so I dont know if provincial sales taxes cover home sales

Used homes are excempt from the GST
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New homes in the USA may not have a sales tax, but there are impact fees up the a$$ collected by the city for any new home being constructed....
 
UtahBill said:
New homes in the USA may not have a sales tax, but there are impact fees up the a$$ collected by the city for any new home being constructed....
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yes, that's so. Maybe out home taxes aren't so different after all. Still, how many people could afford a new home mortgage if they couldn't deduct the interest? It seems to me that eliminating the interest deduction would bring down the price of houses.

Maybe real estate is cheaper in Canada, but watching the HGTV channel that my wife loves for some reason, it looks about the same to me.
 
Dittohead not! said:
yes, that's so. Maybe out home taxes aren't so different after all. Still, how many people could afford a new home mortgage if they couldn't deduct the interest? It seems to me that eliminating the interest deduction would bring down the price of houses.

Maybe real estate is cheaper in Canada, but watching the HGTV channel that my wife loves for some reason, it looks about the same to me.
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I think outside of California, NYC and Honalulu and some other desirable locations I believe it is more expensive in most Canadian cities

The cheapest new condos for sale in Calgary are selling for $174 000 or so. They are on the intersection of 2 major roads, wood frame construction and in the least expensive area of the city

A 700 square foot condo closer to downtown in a concrete building sells for at least $280 000. New homes, with a two car garage with a 30 min drive with no traffic to downtown sell for around $300 000.
 
Lord Tammerlain said:
I think outside of California, NYC and Honalulu and some other desirable locations I believe it is more expensive in most Canadian cities

The cheapest new condos for sale in Calgary are selling for $174 000 or so. They are on the intersection of 2 major roads, wood frame construction and in the least expensive area of the city

A 700 square foot condo closer to downtown in a concrete building sells for at least $280 000. New homes, with a two car garage with a 30 min drive with no traffic to downtown sell for around $300 000.
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Sounds like it is on a par with most of our metropolitan areas, the San Fransisco area excepted. Maybe we could survive not having an interest deduction after all. We will need to raise more taxes somehow, if we're ever going to balance the federal budget.
 
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