Americans learn to live without debt

[FarCenter]

As Dawn chips away at paying back her $18,000 debt load, the 45-year old swears she'll never use credit again.

Like many Americans bruised by the recession, she says she has changed her lifestyle for good.

That may be positive for the long-term health of the economy but poses a challenge for policymakers trying to get it to grow again.

When Dawn's husband got a promotion three years ago, they moved the family to Georgia from Florida, using credit cards to pay for the expenses and adding on to their existing debt amount.

They had expected a pay raise and bonuses would cover the bills. Within six months, Dawn's husband had been laid off.


http://www.reuters.com/article/2011/09/09/us-usa-economy-deleveraging-idUSTRE7886CV20110909

[Liberal_in_LA]

1. good for Dawn. Get rid of the debt if you can.

[Name removed]

2. Deleted message

Sub-thread removed by moderator. Click here to review the message board rules.

[Shagbark Hickory]

3. It changed me too. I have become very against morgages and car loans

but especially mortgages.

[kelly1mm]

6. What do you think should replace mortgages for buying property? I think

a cash sale would be a stretch for all but the wealthy.

[FreeJoe]

9. Nothing wrong with traditional mortgages

I think the availability of low cost traditional mortgages with substantial down payments (at least 10%, preferably 20%) for 15 and 30 year fixed loans in amounts that the borrower can realistically pay on are a good thing.

The problems I saw were the "trick" loans like balloons and zero-interest loans and the extension of far more credit than people could realistically carry. That made credit to easy to obtain, which boosted home prices into a bubble.

[Shagbark Hickory]

12. The problem with traditional mortgages is they are designed so that most people will always owe.

That's because most people only stay in their home for 7 years on average.
New home, new contract, another 10-15 years before a significant portion of the monthly payment is applied towards the principle.

Our houses can not be relied upon as investments. Even before the crash, housing in my area usually didn't appreciate hardly at all because there was always a surplus of new construction offering the same thing at the same price without all the wear and tear.

[FreeJoe]

15. I would assume that when people move...

I would assume that when people move, they switch to a shorter term and/or make a larger downpayment. It's not rocket science.

I don't think of a house as an investment in a tradiontal sense. It's sort of like one in that it gives you a hedge against home price/rent inflation and pays back in terms of imputed rent, but it's not something on which I would ever expect to "make money".

[Shagbark Hickory]

11. Limited interest free federal loans should replace for profit glorified rental contracts we call

mortgages

[BeyondGeography]

4. The problem for the U.S. is it became overly dependent on consumer frivolity

2/3 of GDP rides on consumers, so the numbers were much better when people were irresponsible. Now that they're trying to do the right thing, it penalizes a warped economy. One solution: less sales and marketing more manufacturing.

[RebelOne]

5. I had to file a Chapter 13 bankruptcy in 2006.

Credit cards got me in big trouble. After paying off my debts and being discharged from the bankruptcy, I vowed never to have another credit card or buy anything unless I have the cash in the bank. That is how I was able to retire debt-free in 2010 after I was laid off my job. I have no debts other than the usual utilities, phone and Internet, My car is paid and even though it is getting old, it still runs perfectly. I live in a mobile home that I own and only pay a lot rent of $367 per month, which includes water and garbage pickup. I collect Social Security and have some savings, so it will be a few years before I will have to eat cat food.

[elocs]

8. I live in a mobile home as well ($225/month),

Been here for 20 years and the living is dirt cheap. I live 2.5 miles from the downtown and the mall, and a nice little river is just a block away and in the spring eagles are as common to see as sparrows. I will retire in another 3 years and hope to be debt free by then with an 8 year old car. Then I may just buy me a little teardrop trailer and embrace minimalist living, ditch the house and be a nomad and travel the country.

[RebelOne]

16. Yes, I am fortunate that I have all the shopping conveniences

practically around the corner -- Publix, Kroger, Walmart, Target, Old Navy, Petsmart and a host of others. I would love to buy a travel trailer and hit the road, but I am not that brave.

[Shagbark Hickory]

13. Not if the retubbies have any say in the matter.

[RebelOne]

17. What do you mean by that? n/t

[Rex]

7. Did that long ago.

Fuck the CC industry. If you get a debt card, make it an in-house card (ie Best Buy). Keep the money directly with the vendors and FUCK the parasitic organizations that offer you their money (for a high interest rate).

[hunter]

14. The "in-house" cards are bank cards.

Most all these house brand credit card programs are run by the big banks like chase, citibank, hsbc, etc.

Best Buy's credit card is Chase.

[Dreamer Tatum]

18. You might want to do a little research...nt

[Owlet]

10. Our economy is based on debt

If folks stop buying on credit, the economy stagnates (like now) or goes into depression (like 3 months from now - bad Holiday buying). It's not just us, it's the whole global thing. The corporate race to the bottom for the lowest labor costs have put folks in this country out of work and reduced their buying power for the stuff made in China, Surinam, Vietnam, wherever. Meanwhile, our President talks about trade deals which will probably reduce jobs in this country some more. All of this makes sense and none of it makes sense. That's the paradox we live in. The new normal.

[LadyInAZ]

19. and they say... its the american dream

all want to come live here...but they don't realize its expensive to live in united states of america... not all neighborhoods are safe... most of us do live on credit...debit... etc... i have tried for years to get out of debit.. it seems the more you try the harder it is...