My assesment of the housing market crisis (including blame)

[Joshex]

right, so.. yeah I like to think about things in great detail, and when I do that for long enough I tend to realize things that were not as apparent before hand.

lets talk about the housing crisis, what really caused it and who is to blame from #1 the most to blame to #2+ the least to blame. (as there are multiple people to blame)

but lets write the facts first in a non-biased objective form and see where logic takes the conclusion:

We know there was bad paper associated with mortgages that individuals had taken out. now the government (especially obama) stopped the Investigation buck right there and blamed the general populace for abuse. and so now we have to pay it off for the next 200 years.

well lets continue the Investigative male deer then shall we?

What would/did cause people to in mass hoards suddenly follow a fad of mortgage abuse? were people really that alert to the market that they knew they could get that extra money? I think not, the people in question were too gullible and ignorant to realize what the banks were offering seemed fishy, so I hardly see the intent of theft in the minds of such ignorant people. they just sheerly didn't have the intellect to figure out this scam in the first place.

Watson: ok Holmes, so, then it's the banks fault for issuing bad paper right? I mean after all they admitted to it!

Don't be so quick to take a conclusion watson, that is until you view all the evidence from all parties involved. I bring you the question of "why would the banks knowingly issue bad paper that at the end of the day would hurt them?" they knew it was bad paper, they knew it would blow up in thier faces eventually! no person with a banker's financial education would willingly pull such a stunt, and further to that conclusion I find it Very improbable that all the banks would begin the same trend at the same time! the banks are not the start of the issue, someone else forced them to begin the issue!

lets go back a bit in our deer's life before it lost it's antlers and was defenselessly eaten by savage wolves shall we?

something or someone forced the banks to issue these rediculous loans. well the only thing that can Force a bank to do anything is the law, which would bring the blame to the government, now if you go back to the start of the housing crisis, when the bad paper first started to be written a law had been passed by our smoothest president ever, thats right good old William Clinton. the law he signed (of which he was a strong influence into the laws writing) was intended to help the average american afford things they otherwise couldn't afford by demanding that the banks issue loans to everyone regardless of credit history or yearly salary. this stipulation would force banks to give everyone the highest loans available if anyone would come asking for such!

watson: so clinton haphazardly has committed criminal neglect on a national financial scale that errupted into the whole world due to the bank's bad paper?

I'm sorry watson but not all the culprits have been taken into questioning yet! it is too soon to make a conclusion.

So, clinton signs a law to make loan issuing by banks mandatory no matter who comes for a loan. but inorder for this to happen the general populace would have to know of this law's existence, and that law is not known by any of the citizens effected by this circumstance.

Watson: so, someone else put these citizens upto it!

Correct watson! but who did it? let us continue in our invesitgation. now I believe the answer of where to go from here in the investigation comes from one of my previous deductions which has left a blatant opening. "the law he signed (of which he was a strong influence into the laws writing) was intended to help the average american afford things they otherwise couldn't afford" the hole is blatant here, our next culprit is the people charging the price of coarse!

Watson: but who would charge such a price that people can't afford?

Realtors selling newly built houses after demolishing old ones that the banks foreclosed on. and Colleges charging 30,000+ for one semester of education. as well as some car manufacturers.

Watson: obsurred!! you are saying that the people we respect most for thier Education and intellect are responsible for bad paper? this would be outrulled by the same thing you said gave the banks amnesty! intelligent people wouldn't create bad paper that would negatively effect them!

hmm, you are correct but we have yet to fully investigate the parties I merely listed with an example of thier overcharging. and to be clear they were overcharging, so part of the problem definitely exists here, why don't we look in closer detail!

Why such high prices? I have talked with actual construction companies about the costs to build a house and buy the land, and they gave me an esitmate of $45,000 at normal construction hourly rates which were average considering the dangers of the work. and that $45,000 house was being sold for $400,000, I talked to city officials and realtors to try and ascertain how much ti costs to keep one of these houses till it's sold (taxes and electricity and water fees for showing the house, and advertisement fees, plus commision) I found that inorder to do all that, it would only cost another say $55,000 on average, so the price should be around $100,000, why on god's green earth is it $400,000? thats 400%!!

and while sniffing around the clue hit me right in the face as they spoke about trying to sell me property, they would need my credit information and income information before they would consider selling me a house. same with colleges they want credit info and income info if they can get it. cars? the same.

I see a trend the things people can;t afford require us to give these companies access to our financial records, they actively look at these records to see if we can afford thier products and services!

Watson: well thats a normal part of business, I hardly see anything wrong there..

to the untrained eye that would be the case, but there is another side to this visibly innocent issue and it is malicious in it's intent and filled with greed.

Elementary My Dear Watson; Any Credit sniffer would immediately notice the law clinton made, and see that it gave the average citizen the ability to get loads of money from mortgages, with thier new found knowledge they were encouraged to find out just how high they could push the market's cieling in the intent of fleecing this wolly sheep of a market, milking the cash cow, savagely taring appart our poor defenseless buck!

so the credit sniffing companies raised the price of houses and college and cars because they knew that people could get these loans of $400,000 and had income on top of that. and they didn't just want some of the money, they wanted all of it!

so They told the citizens about the bank's mortgage situation, they pushed people to get loans to afford thier wares the people then went to the banks and were amazed at what they could get! then they told thier friends, who some of them would abuse this system! and others would avoid it realizing it was a scam and instead would by houses for sale by owner for a decent price and used cars and try hard to afford thier kid's education with family help. the banks however now had a severely bad issue, the general populace had somehow figured out how to use clinton's law to exploit them and get tons of money, they knew they couldn't keep this up, and they didn't want to have to foreclose on everyone's house, nor did they want to have to pass the blame to the general populace! so they bundled all the bad loans into mortgage backed securities and tried hard to sell them internationally, which was surprisingly successful. however eventually they could no longer keep up this pace, and the bubble burst as the banks lost tons of money from thier clients not paying enough back each term because thier clients couldn't pay it back at a fast enough rate.

and there we have the crisis!

I have already named the culprits, and now to prove thier motive;

 they were the only ones who made actual money off this without government reimbursement. all the money that the world lost went to them.

thats right the credit sniffing new house salesmen and colleges charging too much money and cars getting more expensive than normal. though car companies are less to blame.

I promised a listing of who is to blame starting with the most responsible and leading to the least responsible, I shall keep my word;

#1: Realtors of new houses upping prices to obscene values as they knew they could get it due to the average citizen's ability to pull in that money from a mortgage.
#2: colleges, as not all of them were doing the above.
#3: car companies as only a few companies had really substantial prices to begin with
#4: Bill Clinton through negligence
#5: last on the list and least responsible; the general citizen who was used as nothing more than a cash currier during this event. even those who willingly abused it out of thier own knowledge got thier punishment already in the bank reclaiming everythign they own and putting them on the street.

that is the conclusion, all parties have been thoroughly investigated, and only one stands out as undoubtably guilty at intentionally trying to fleece the market once they relaized the huge exploit they had been given.

I rest my case.

[FatherXmas]

First, as a home owner let me say the whole "American dream to own your own home" is so full of pitfalls and booby traps that it only works if you are never planning on moving ever again.  Also the collective wisdom that home ownership is a good investment is bunk.  Take a look at the inflation adjusted price of homes over the last 100 years.  Unless you got in before this last bubble and sold near the top, it's pretty flat.

Next, the nature of a loan is that early on you are paying mainly interest and very little principle.  So if you bought on the upswing in home prices, when the bubble burst you will be underwater, owe more than what you could sell the house for, for years.  If you are forced to move due to work, you are SOL.  Lose money by selling or become a long distance landlord.

What happened to people in the 2000s was due entirely to a break down in checks and balances due to the reward structures in place at all the various institutions involved.  Back when I got my mortgage, at a bank, I had to present a ton of paperwork, have a large down payment and still had to get it cosigned by my folks and that was a sub 100K mortgage at over 10%.  At least I didn't have PMI.

Let me step back for a minute.  Back when mortgages were primarily handled by banks, they had a very high bar set on who they would loan such a large amount of money to.  That's because that money was the depositors' money at the bank.  Then mortgage companies came into being.  They would buy the mortgages from the bank, bank gets it's principle back sooner than later so they're happy, and the mortgage companies would handle the loans.  They got their money by selling shares in bundles of mortgages to investors as well as back to banks and the investor got X amount per month, and as long as the return is better than AAA bonds those investors were happy.

Now in the later part of the 2000s the large Wall Street institutional banks, who mange the money of corporations and the very wealthy, decided to get into the mortgage company business, sort of.  They were sitting on a big pile of money and they were looking to turn it into a bigger pile of money but nothing was paying a good rate of return.  So they provided the money to mortgage brokers who got a fee for every mortgage made.  Wall Street would collect the mortgages, package them, chop them up and then sell them to whomever, under the assurance that the loans were highly vetted to qualified individuals.  Wall Street got it's money back and then some so they started the cycle over again.  There was no penalty to mortgage brokers if they fudged the numbers of the "qualified" borrower.  The brokers were incentivized to sell mortgages.  It wasn't their money if the borrower defaults.  Wall Street bundled and sold off shares in mortgages as fast as they got them, so they got their money back quickly.  They either trusted the mortgage companies or turned a blink eye to them.  So the people who got stuck holding shares in less than high quality mortgages were smaller banks or overseas banks who bought these mortgage backed securities as a supposedly good investment with a nice rate of return.

Now as for home prices.  It's all supply and demand.  If mortgages are easy to get and there is plenty of money to lend, and not a lot of homes for sale, prices will go up.  Whole new neighborhoods get built as fast as possible (sometimes too fast = shoddy) to alleviate demand, but those new homes were also selling for a high price.  Who wants a 50 year old raised ranch when you can get an open floorplan with vaulted ceilings mini-mansion?  The more money available, the higher the prices went.  That's OK because interest rates were so low you could borrow more for the same monthly payment.  Someone somewhere simply ignored that home prices can't keep growing at that rate indefinitely.  Mortgage brokers were refinancing the same people who they loaned to originally because the home was now worth more than the first time the load was made and as rates dropped the homeowners could actually end up with "free" cash for the same monthly payment.

And that brings me to the evils of adjusted rate mortgages.  A good idea if you plan to get out before the rate gets jacked up, bad idea if you could only afford the payment at the low interest rate.  So the economy went into recession, as an economy does from time to time, a number of first time homeowners who qualified for the first time to get a mortgage, and in the past wouldn't for a good reason, found themselves in homes they could no longer afford and couldn't sell to payoff the loan.

So the homeowners got screwed because they got loans they really shouldn't have qualified for, for homes that were significantly overvalued simply because it was a sellers market, low interest rates and lots of available money to loan.  For the people who paid to own MBSs got screwed because their quality of the investment wasn't as good as it was implied.  Wall Street on the other hand, as long as they weren't sitting on unsold shares of their last, actually poor quality bundle of mortgages when the bubble popped, made money and simply turned to oil and gas futures as the next playground to grind for profit.

So 1) don't buy a home unless you are absolutely sure that you will not move anytime in the next 10 years, minimum; 2) it's not an investment or hedge against inflation; 3) start modest, don't borrow your max because when life gives you lemons you can't use them for shelter from the weather.

[MindBlender]

My boss was telling me that he bought a home in the late 70s and he lucked out big time as rates changed in a big way.  If they had gone in the opposite direction, to the same degree of change, he would have lost his house.  ARMs are bad news even if capped.

[eabrace]

If you are forced to move due to work, you are SOL.  Lose money by selling or become a long distance landlord.

Speaking from first-hand experience:  this is absolutely correct.  I tried for two and a half years to sell the house I had in Texas after I moved to Ohio.  I finally gave in and started renting the house out.  I can't refinance the house because the remaining principle on my loan (after 10+ years) is higher than the price the property would currently carry on the market - mostly due to foreclosure sales and short sales so massively outpacing traditional sales in that market.  Between principle and interest payments, insurance (which is higher now that the property is a rental rather than my own residence), and taxes, I've been losing about $25/month on the house charging the highest rent I can get away with.  And that doesn't even take into account any repairs that I end up having to pay for (like a new AC unit in 2011.)

So 1) don't buy a home unless you are absolutely sure that you will not move anytime in the next 10 years, minimum; 2) it's not an investment or hedge against inflation; 3) start modest, don't borrow your max because when life gives you lemons you can't use them for shelter from the weather.

All good advice.  Especially that last one.  Before you start looking at properties, know how much you intend to spend.  Don't let a realtor try to talk you into spending any more than that.  If you don't see any properties in your price range, don't just buy the next best property that's just out of your price range.  You're far better off waiting for other properties to come onto the market later.

[Heroette]

I started a reply with a whole long story but it comes down to this.  Banks just wanted me to go into debt and gave me money, regardless of my ability to pay it back (I had a job but not enough for that kind of loan amount).  It backfired on them and I filed bankruptcy a few years ago.  But the good news is that I LEARNED ALOT from that experieince.  I don't get loans for more than I can afford.  I waited it out and bought a condo last year at a rock bottom price and now I know how to manage my money better and never, ever refinance. 

[Mistress Urd]

TL:DR

F.M. /done

[Joshex]

I started a reply with a whole long story but it comes down to this.  Banks just wanted me to go into debt and gave me money, regardless of my ability to pay it back (I had a job but not enough for that kind of loan amount).  It backfired on them and I filed bankruptcy a few years ago.  But the good news is that I LEARNED ALOT from that experieince.  I don't get loans for more than I can afford.  I waited it out and bought a condo last year at a rock bottom price and now I know how to manage my money better and never, ever refinance.

see, now that was one of the principle american freedoms in our constitution, it was what created the american dream, the ability to file bankruptsy if you get in over your head, where as in britain they just pull out your teeth and smash your thumb bones with a mallet if you don't pay.

However, I'm not sure if you noticed it but that constitutional freedom was challenged and a law was made (I'm not sure when or by whom) that states this: Student Loans are exempt from bankruptsy. meaning they are legally allowed to stay with you till you die, at which point they transfer to your next of kin and become thier problem. you cannot get rid of them by filing bankruptsy.

that is yet another constitutional american freedom that has been removed, they sed the student loan market as a testing grounds for it, and if no one speaks up and protests it then they will assume they can expand this ruling onto all loans!

and then, you will never be able to clear your debts not even by bankruptsy. I don't mean to be the sort of guy that suddenly posts a thread and asks for an insane mob rally, but I have to say, let your voice be heard, tell the government that this practice on student loans is unconstitutional!

[Kederren]

There's a Constitutional Right to bankruptcy?

[JaguarX]

Yeah I always thought it was the individual responsibilty to know how much they can afford and cant and not take just any and all offers that is presented. On the other hand the housing finance is not easily understood so many people believed the bank had the home buyer's interest at heart and would never offer something they might put them in a situation that would cause them to quelch on the deal.

There is a saying in the car buying world. Just because the bank offers 60,000 no money down and you only make 25,000 a year doesnt mean you have to get a 60,000 car if you cant afford it and probably shouldnt. Although,  many people assume these people are the financial expert and know what they can afford better than them so just go with what ever offer is thrown at them when in reality, the bank is trying to make money.

[TonyV]

I'm really tempted to lock this thread.  I'm not sure exactly what it's for, and it's really damn close to being flamebait.  I'd rather just let it die a natural death, but just keep in mind if you're going to reply or post in it that it's about this close ->||<- to being nuked...

[Heroette]

Nuke it from space, its the only way to be sure.

[houtex]

http://www.youtube.com/watch?v=aCbfMkh940Q

[FatherXmas]

I will admit it is a little out there.  But this is general discussion.

Personally I find the youth of today shockingly ill-informed about basic economic facts and matters of personal finance.  It is way to easy to get over your head in debt.  True people may blame the institutions that let them do it so easily but what about personal responsibility.  You know what your income is.  You should know how much you can afford to pay toward loans and credit card debt.  Yet I keep seeing young people, fresh out of high school or college go nuts with their Visa/MC/Discover and simply don't think about the things they buy.  I had one young friend forced to face this when he couldn't get approval for a used car loan he desperately needed (we are talking bailing wire and good intentions was keeping his current car running) because of his mounting credit card debt due to his Amazon/iTunes habit.  He was forced to take a 30 hr/week part time job, sucking up his nights and weekends, so he could wipe out the credit card just so he could get that loan.  Sure he had a thousand CDs, a hundred anime series as well as a great movie/TV collection on DVD and a mounted broken Narsil but he couldn't drive them to work.  So he became responsible, took classes, got a better job, learned to save for a rainy day.

This was in the late 90s, before the home bubble.

[Electric-Knight]

I grew up learning money matters from my parents...
Don't spend what you cannot afford, period. Extreme (see the true definition of extreme, not a 13 year old's moment of crisis due to acne and/or someone walking by them in the hall)... ahem... Extreme circumstances/emergencies may force you to temporarily put yourself into a hole in which you must get out of as quickly and as reasonably as is possible.
Be smart.
Figure out and plan your budget. Overestimate your expenses... and they'll likely still be higher anyway.
The goal is to save money (for emergencies and for fun stuff)... good luck...

Of course, there is always the aspect of "you can't take it with you".
So, you have to find your balance.
Anyway, I'm just chiming in on general common sense money talk.
While the corrupt, the stupid and other factors have indeed all contributed to real estate craziness... Being smart about yourself and controlling your own money, budget and investments will do you well. Not that you can't still get screwed, of course. C'est la vie.

Then, other times... I think the joke is on me. Build debt as you have everything you want for a minimum credit card payment... The way of most people, it seems. Living above their means, building debt on bills they have no way of actually paying. 

[JaguarX]

I grew up learning money matters from my parents...
Don't spend what you cannot afford, period. Extreme (see the true definition of extreme, not a 13 year old's moment of crisis due to acne and/or someone walking by them in the hall)... ahem... Extreme circumstances/emergencies may force you to temporarily put yourself into a hole in which you must get out of as quickly and as reasonably as is possible.
Be smart.
Figure out and plan your budget. Overestimate your expenses... and they'll likely still be higher anyway.
The goal is to save money (for emergencies and for fun stuff)... good luck...

Of course, there is always the aspect of "you can't take it with you".
So, you have to find your balance.
Anyway, I'm just chiming in on general common sense money talk.
While the corrupt, the stupid and other factors have indeed all contributed to real estate craziness... Being smart about yourself and controlling your own money, budget and investments will do you well. Not that you can't still get screwed, of course. C'est la vie.

Then, other times... I think the joke is on me. Build debt as you have everything you want for a minimum credit card payment... The way of most people, it seems. Living above their means, building debt on bills they have no way of actually paying. 

Funny thing. I always pay for everything cash. Never had a credit card until recent.

Decided to try out my newly aquired VA loan stuff. Lo and behold they said I didnt qualify yet because I didnt have a credit card nor other loans. *Doh!*
It seems to get a good score and rate you have to use some form of debt thing and make some bank money. Got a card now but use it for menial stupid stuff, like a candy bar then pay it off the next day crap, about once a month so it stays active and or to avoid them blasted fees. Freaking credit card.

[FatherXmas]

If there is no annual fee and no interest if you pay it off every month, a CC is a convenient way to pay normal day to day expenses.  Food, gas, occasional night at the movies.  Even some periodic bills can go to your CC, like cable.  Again, if you always pay it off, no sweat.  However once you have a balance then even new purchases will get tacked with interest until you pay the balance off entirely.

That brings us to debit cards, overdraft protection and the order DC and check transactions are processed.  Debit cards for the most part avoid that nasty interest business while still being convenient like a CC.  However since they are tied to your checking account you can overdraw and "bounce" a transaction.  That's where overdraft protection kicks in as long as you have a savings account that money could be pulled from.  It won't bounce but there's a fee.  Now it use to be that the bank could order the withdraws for that day in the order that would generate the most fees for the bank.  I believe this has been changed via Congress (which was why BoA wanted to charge for DC use) as well as needing to opt in to overdraft protection.

Anyways give it 5 years and payment via smartphone and/or biometrics will be the norm.  It's a far difference from the days when I was a child, before direct deposit, when my dad had to go to the bank to cash the check, deposit some in savings, most in checking and bring home a wad of cash so the family could buy gas, groceries and the occasional night at the drive-in.

[Aggelakis]

Please note that if you pay off your entire bill each month, the credit score companies still don't see that as utilizing credit and you are doing very little for your credit score.

They want an occasional roll-over. They want to see you using credit... e.g. "money you don't have right now"... that is why it is a credit score - it's scoring how well you use your credit. Pay off 75% of the bill one month, pay off everything the next, rinse and repeat. Roll-over some of the bill and you'll build credit *FAR FASTER* than paying it off every month: you're utilizing "credit" (even if you technically have the money to pay for it) and thus actually making a difference to your "CREDIT" score.

Even better is to get a small loan - I got a $1000 "car loan"...though all I did was pay off all my bills and sit the rest in my savings account. By doubling the payments (one automatic payment and one payment "when I had extra" - which was most months), I paid it off in half the time agreed to. Now I have a completed "line of credit" that is in good standing, never late payment, etc., on my credit history.

I'm currently doing this again with a $5000 "car loan" that paid for my wedding.

[JaguarX]

Please note that if you pay off your entire bill each month, the credit score companies still don't see that as utilizing credit and you are doing very little for your credit score.

They want an occasional roll-over. They want to see you using credit... e.g. "money you don't have right now"... that is why it is a credit score - it's scoring how well you use your credit. Pay off 75% of the bill one month, pay off everything the next, rinse and repeat. Roll-over some of the bill and you'll build credit *FAR FASTER* than paying it off every month: you're utilizing "credit" (even if you technically have the money to pay for it) and thus actually making a difference to your "CREDIT" score.

Even better is to get a small loan - I got a $1000 "car loan"...though all I did was pay off all my bills and sit the rest in my savings account. By doubling the payments (one automatic payment and one payment "when I had extra" - which was most months), I paid it off in half the time agreed to. Now I have a completed "line of credit" that is in good standing, never late payment, etc., on my credit history.

I'm currently doing this again with a $5000 "car loan" that paid for my wedding.

Interesting. I'll try rolling over some next month.

I can never find a place that does $1,000 "car loans" or the likes. The ones I come across either have a minimum of $7500 and or minimum of car with less than 60,000 miles and less than 5 years old. Or some like my bank require actual purchase of car meaning the vehicle purchase paper work from dealer must be sent to them before they even release the funds. What places do that $1,000 or something small in that ballpark loans?

[Aggelakis]

Both loans were through Wells Fargo. If you don't have enough credit, or if you have bad credit, you may have to put something up for collateral (most common thing is the title to your vehicle if you own one - since you know you'll be paying it off (since the loan is small enough to keep the payments reasonable), it's not in danger).

Before I did the loan, I first set up a "secured credit card" from Wells Fargo, in which I paid them $300 to have a $300 credit limit, and in 18mo they gave me back my $300 and raised my limit to $1200 after successfully showing that I can both utilize credit (not always paying it off every month) and shop within my budget (not having a high roll-over, and paying it off entirely occasionally). If you've been able to get a "real" credit card, this isn't as big a deal though. You have enough credit to GET a card. I didn't have any credit at all, so I started with this.

After I'd had it a couple months (used it to purchase gas and "commute stuff" only) and paid off/rolled over/paid off a few rounds, I put up for the $1k loan - terms asked for 18mo repayment, I repaid in 10. I put up for the $5k loan last summer for my fall wedding. The first loan would probably have been a higher interest rate had I not done the secured card. The second loan would have been denied entirely had I not done the first two - and I put my car title up for collateral for a lower rate even though I would have been approved anyway.

The main thing about credit is allowing the people to make a little money off of you to show that you're willing and able to use credit. That's what things like mortgages, business accounts, etc., are - credit - so you need to show you're good on it or you'll get either a flat no or you'll get reamed with fees and interest charges.

[eabrace]

Useful tools if you're trying to get a better handle on budget and credit:

www.mint.com
www.creditsesame.com

Mint is run by Intuit (the folks who publish Quicken and TurboTax).  If you're comfortable entering in your login info for other financial sites (bank accounts, loans, credit cards), you can track all of your activity in just about real-time from their site and use their tools to help set up budgets and see where your money is going each month.

Credit Sesame is good for monitoring and analyzing your credit score.  The site provides you with a monthly update to your credit score (I think it's the Experian score) and can provide some advice in how to help improve your credit.  When your credit score changes from month to month, if there was any particular reason (e.g. "Your balances decreased by $5,000"), it will tell you what drove that change in your score.  Today's Tip for the Day:  Keep your credit card balances low. High amounts of available credit improves your score.

[dwturducken]

The infuriating thing, to me, is the quasi-parasitic nature of the credit rating system. For instance, if you have a lot of credit cards (I have no idea how many), that has a negative affect on your score, but cancelling a card also has a negative affect.

[eabrace]

The infuriating thing, to me, is the quasi-parasitic nature of the credit rating system. For instance, if you have a lot of credit cards (I have no idea how many), that has a negative affect on your score, but cancelling a card also has a negative affect.

I find that it's better to have a few cards with moderate to high limits than a lot of cards with low limits just because they're easier to keep track of.

Cancelling a card will cause your score to take a temporary hit.  If nothing else changes, you've reduced the amount of credit you have available without changing the amount of credit you are using, making the percentage of your total credit being utilized higher.  However, if you cancel a card with (as an example) a $1000 limit and simultaneously raise the limit on another card by $1000, you will reduce the hit to your score by maintaining the same percentage of credit utilized.  You could also do the same by cancelling the card and then making a large enough payment on a loan or other credit account to maintain the same percentage.

Remember:  keeping the value of (credit used)/(credit available) as low as possible is a big part of your credit score.

[JaguarX]

Both loans were through Wells Fargo. If you don't have enough credit, or if you have bad credit, you may have to put something up for collateral (most common thing is the title to your vehicle if you own one - since you know you'll be paying it off (since the loan is small enough to keep the payments reasonable), it's not in danger).

Before I did the loan, I first set up a "secured credit card" from Wells Fargo, in which I paid them $300 to have a $300 credit limit, and in 18mo they gave me back my $300 and raised my limit to $1200 after successfully showing that I can both utilize credit (not always paying it off every month) and shop within my budget (not having a high roll-over, and paying it off entirely occasionally). If you've been able to get a "real" credit card, this isn't as big a deal though. You have enough credit to GET a card. I didn't have any credit at all, so I started with this.

After I'd had it a couple months (used it to purchase gas and "commute stuff" only) and paid off/rolled over/paid off a few rounds, I put up for the $1k loan - terms asked for 18mo repayment, I repaid in 10. I put up for the $5k loan last summer for my fall wedding. The first loan would probably have been a higher interest rate had I not done the secured card. The second loan would have been denied entirely had I not done the first two - and I put my car title up for collateral for a lower rate even though I would have been approved anyway.

The main thing about credit is allowing the people to make a little money off of you to show that you're willing and able to use credit. That's what things like mortgages, business accounts, etc., are - credit - so you need to show you're good on it or you'll get either a flat no or you'll get reamed with fees and interest charges.

I'll go check them out. Yeah I got real credit card or rather unsecured one as they call it. I'll play around with it for a few months and try Wells Fargo for one of those small loans.

I find it funny I get denied for small loans like $1000 unsecured but they happily turn around with $8,000 unsecured loan offer. lol.

[Joshex]

I'm really tempted to lock this thread.  I'm not sure exactly what it's for, and it's really damn close to being flamebait.  I'd rather just let it die a natural death, but just keep in mind if you're going to reply or post in it that it's about this close ->||<- to being nuked...

you know me tony, or at least you are starting to, I always like to take things to the edge of the line!, heck thats why the stories I write can be so entertaining and thats why I think modern games are trash and have started to make my own.

meh, didn't mean to post flamebait. I am just being observant. (that and I talked to a guy who owns several tropical islands now, he was a realtor but now doens't need to do anything for work lol) no he wont fund CoH or buy it, he has no interest in spending money. except on islands and cruiseliners that is.

yeah, not all realtors are at fault nor is every mortgage agency, nor is every college, bt the ones who were at fault|.... ok I hit the line, I cannot finish that sentence in a constructive manner.

I just don't like the idea that the Gov will force the average citizen/home owner to pay for the country's debt when alot of them were just ignorant pawns in the whole scheme. yeah they abused it but alot abused it to afford over priced stuff to move forewards in life. my family isn't effected cause we were smart and didn't take a large mortgage only what we needed and could afford, we paid that off already so we fully own our house.

I don't like to see other people trodden on, and yeah the financial advice in this thread is very helpful to those people.

[SerialBeggar]

I ordered a free credit report from Equifax a couple of years ago.  You can ask for a free one once a year.  Note, Equifax was the only one where I was able to order it easily online.  The other two, Experian and Transunion, were such a confusing hassle that I gave up on them. 

Here are the copy and pastes of the categories and their descriptions from my report for you to see what to keep in mind.

Credit Summary
Your Equifax Credit Summary highlights the information in your credit file that is most important in determining your credit standing by distilling key credit information into one easy-to-read summary.

Accounts
Lenders usually take a positive view of individuals with a range of credit accounts - car loan, credit cards, mortgage, etc. - that have a record of timely payments. However, a high debt to credit ratio on certain types of revolving (credit card) accounts and installment loans will typically have a negative impact.

Account Age
Usually, it is a good idea to keep your oldest credit account open, as a high average account age generally demonstrates stability to lenders. Also, especially if you have been managing credit for a short time, opening many new accounts will lower your average account age and may have a negative impact.

Inquiries - Requests for your Credit History
Numerous inquires on your credit file for new credit may cause you to appear risky to lenders, so it is usually better to only seek new credit when you need it. Typically, lenders distinguish between inquiries for a single loan and many new loans in part by the length of time over which the inquiries occur. So, when rate shopping for a loan it's a good idea to do it within a focused period of time.

Potentially Negative Information
Late payments, collections and public records can have a negative impact on your credit standing. The more severe and recent they are, the more negative the potential impact might be.

Mortgage Accounts
Mortgage accounts include first mortgages, home equity loans, and any other loans secured by real estate you own.

Installment Accounts
Installment accounts are credit accounts in which the amount of the payment and the number of payments are predetermined or fixed, such as a car loan.

Revolving Accounts
Revolving accounts are charge accounts that have a credit limit and require a minimum payment each month, such as most credit cards.

Other Accounts
These are all accounts that do not fall into the other categories and can include 30-day accounts such as American Express.

Inquiries
A request for your credit history is called an inquiry. Inquiries remain on your credit report for two years. There are two types of inquires - those that may impact your credit rating and those that do not.

Inquiries that do not impact your credit rating
These inquires include requests from employers, companies making promotional offers and your own requests to check your credit. These inquiries are only viewable by you.

Negative Accounts
Accounts that contain a negative account status. Accounts not paid as agreed generally remain on your credit file for 7 years from the date the account first became past due leading to the current not paid status. Late Payment History generally remains on your credit file for 7 years from the date of the late payment.

Collections
A collection is an account that has been turned over to a collection agency by one of your creditors because they believe the account has not been paid as agreed.

Public Records
Public record information includes bankruptcies, liens or judgments and comes from federal, state or county court records.

Personal Information
The following information is added to your file either when creditors enter requests to view your credit history, or when you report it to Equifax directly.

Other Identification

Employment History

Alert(s)

Consumer Statement

[Electric-Knight]

Please note that if you pay off your entire bill each month, the credit score companies still don't see that as utilizing credit and you are doing very little for your credit score.

They want an occasional roll-over. They want to see you using credit... e.g. "money you don't have right now"... that is why it is a credit score - it's scoring how well you use your credit. Pay off 75% of the bill one month, pay off everything the next, rinse and repeat. Roll-over some of the bill and you'll build credit *FAR FASTER* than paying it off every month: you're utilizing "credit" (even if you technically have the money to pay for it) and thus actually making a difference to your "CREDIT" score.

Even better is to get a small loan - I got a $1000 "car loan"...though all I did was pay off all my bills and sit the rest in my savings account. By doubling the payments (one automatic payment and one payment "when I had extra" - which was most months), I paid it off in half the time agreed to. Now I have a completed "line of credit" that is in good standing, never late payment, etc., on my credit history.

I'm currently doing this again with a $5000 "car loan" that paid for my wedding.

I'm not 100% positive about this, but...
More than 5 years ago, when we were buying a house, everyone reacted in shock at our great credit scores. And we had no history of letting monthly bills roll into the next.
Same for when we were being checked at a car dealership a few years afterward.
I don't know if things have changed or what, but we had super duper credit scores and we never had any roll overs. Just always paid our bills by the due date with zero hanging balances.

[Rangle M. Down]

Differing viewpoints on what/who caused the housing market crash. These are only the tip of the iceberg.

http://www.nytimes.com/2008/12/21/business/21admin.html?pagewanted=all&_r=0

http://www.nytimes.com/2008/12/21/business/worldbusiness/21iht-admin.4.18853088.html?pagewanted=all

http://www.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877320,00.html

http://www.policymic.com/articles/1646/bush-policies-played-little-part-in-economic-collapse

http://bubblemeter.blogspot.com/2009/10/is-bush-to-blame-for-housing-bubble.html

[JaguarX]

I ordered a free credit report from Equifax a couple of years ago.  You can ask for a free one once a year.  Note, Equifax was the only one where I was able to order it easily online.  The other two, Experian and Transunion, were such a confusing hassle that I gave up on them. 

Here are the copy and pastes of the categories and their descriptions from my report for you to see what to keep in mind.

Credit Summary
Your Equifax Credit Summary highlights the information in your credit file that is most important in determining your credit standing by distilling key credit information into one easy-to-read summary.

Accounts
Lenders usually take a positive view of individuals with a range of credit accounts - car loan, credit cards, mortgage, etc. - that have a record of timely payments. However, a high debt to credit ratio on certain types of revolving (credit card) accounts and installment loans will typically have a negative impact.

Account Age
Usually, it is a good idea to keep your oldest credit account open, as a high average account age generally demonstrates stability to lenders. Also, especially if you have been managing credit for a short time, opening many new accounts will lower your average account age and may have a negative impact.

Inquiries - Requests for your Credit History
Numerous inquires on your credit file for new credit may cause you to appear risky to lenders, so it is usually better to only seek new credit when you need it. Typically, lenders distinguish between inquiries for a single loan and many new loans in part by the length of time over which the inquiries occur. So, when rate shopping for a loan it's a good idea to do it within a focused period of time.

Potentially Negative Information
Late payments, collections and public records can have a negative impact on your credit standing. The more severe and recent they are, the more negative the potential impact might be.

Mortgage Accounts
Mortgage accounts include first mortgages, home equity loans, and any other loans secured by real estate you own.

Installment Accounts
Installment accounts are credit accounts in which the amount of the payment and the number of payments are predetermined or fixed, such as a car loan.

Revolving Accounts
Revolving accounts are charge accounts that have a credit limit and require a minimum payment each month, such as most credit cards.

Other Accounts
These are all accounts that do not fall into the other categories and can include 30-day accounts such as American Express.

Inquiries
A request for your credit history is called an inquiry. Inquiries remain on your credit report for two years. There are two types of inquires - those that may impact your credit rating and those that do not.

Inquiries that do not impact your credit rating
These inquires include requests from employers, companies making promotional offers and your own requests to check your credit. These inquiries are only viewable by you.

Negative Accounts
Accounts that contain a negative account status. Accounts not paid as agreed generally remain on your credit file for 7 years from the date the account first became past due leading to the current not paid status. Late Payment History generally remains on your credit file for 7 years from the date of the late payment.

Collections
A collection is an account that has been turned over to a collection agency by one of your creditors because they believe the account has not been paid as agreed.

Public Records
Public record information includes bankruptcies, liens or judgments and comes from federal, state or county court records.

Personal Information
The following information is added to your file either when creditors enter requests to view your credit history, or when you report it to Equifax directly.

Other Identification

Employment History

Alert(s)

Consumer Statement

already monitor my credit. It's about using credit and getting credit at this point.

One thing they never mentioned on that credit score thing. You must have debt to get more. It's like dating. You dont talk, date goes bad. You talk to much aka go over some invisible line, date go bad. Say the wrong thing date go bad. It seems that it's some piano wire thin line that has to be walked to be debt free while haveing good credit score. Be financially responsible and never have debt, according to the lenders ya just as bad as someoen with bunch of credit cards and never pay their bills. Yet, use some debt, they throw money at ya in any amount. I just need a few token loans not the large ones they always be offering. They wont give me $1,000 but try to get to me sign for $8,000.

[Illusionss]

My boss was telling me that he bought a home in the late 70s and he lucked out big time as rates changed in a big way.  If they had gone in the opposite direction, to the same degree of change, he would have lost his house.  ARMs are bad news even if capped.

I am old enough to remember the first time we as a nation had problems with ARMs and plenty of people lost their houses:  this was back in the late 1970s. I was a teenager at the time, but I still remember a huge flap about it.

It stuck in my mind well enough that when it came time for my husband and myself to purchase a home in the mid-80s, we insisted on a flat rate, even though it was high, and the mortgage co. was pushing the idea of an ARM on us. Around 11% IIRC. When it dropped to 8% we refinanced.

Luckily due to my husband receiving a large payout when his place of work closed years ago, our house has been paid off for years. It is so wonderful to not owe a house note, I doubt we will ever move again. But yes: ARMs are the devil, and why anyone anywhere ever thought that would be a good idea is simply beyond me.

[FatherXmas]

It's because they are told, over and over again that owning a home is the best thing since sliced bread.  Once you give into that argument then there's the whole trying to afford it.  And 10 times our of 10 what you want, you simply can't afford.  Sure you can afford a home with the features you want, but it's a 40 minute commute from the boondocks.  So "creative" financing is needed if you want to get closer.

If you aren't about building equity then you simply think of your mortgage just like rent.  So as long as your home doesn't lose value you can treat it like a rental.  Pay X per month and leave whenever.  So yes that cheap rate for the first 3 years look good if that means it cuts an hour commute time off per day or even keeps you in the same town/city you were renting in.  And if you don't want to move, well you should be making more than enough in three year to handle the jump in the mortgage.  It's not like they don't raise rents, it's expected.

It's a terrible trap.  We don't live in a time where we would end up working at the same or nearby companies for a good chunk of our lives like our parents did.

[TonyV]

[FatherXmas]

Keep in mind that this is my banker--someone who is supposed to be a fiduciary authority, someone who is supposed to have my best interest at heart.  It was even a credit union, where supposedly looking out for the member is even more important.  The guy treated me like I was an idiot, as if I were disregarding hundreds of years of sage wisdom by going with a fixed rate mortgage instead of an ARM, but I was insistent.  And in case you're interested, I ended up going with their preapproval to buy my house--for $200,000--but I went with a different company to actually make the loan.

And that's the problem, you assumed that they were looking out for you, a person who works for an entity who you will be paying your mortgage to, an entity that will own the property as collateral until the debt is paid off.  It's like believing the car salesman is actually looking to give you a great deal or a politician is looking out for the good of their constituents.  Same is true with real estate brokers, they want you to spend as much as possible because they work on commission.  Traditionally they get 2% of the price (another 2% goes to the broker of the seller and 2% to the agency of the broker who represents the seller so big payday if they own the agency and represent both sides).  If via an ARM or some other "new" style mortgage can get you to spend more, it's good for them as well.

Same is true with stock brokers.  Simply you can't trust anyone in "sales" to look out for you because their incentives are based on what's good for them NOT you.  That's why you're shown homes just outside of your "hard" maximum.  That's why they present creative financing (60 month car loan to keep the payments the same, ARMs or interest only mortgages, constant refinancing while the housing market is on the rise).  Who makes the immediate money?  Always ask yourself that.  And the more money that's involved, the more likely that these "helpful" experts aren't looking out for you.

And it's the unintended consequences of these incentives that lead to catastrophic unintentional results.  I'm sure the broker and banker didn't intend to put hundred of thousands of families into homes whose value will crash when the bubble burst.  Who wouldn't be able to pay when the economy took a downturn.  Which in turn drove the economy downwards even faster as billions of dollars property value evaporated virtually overnight.

And right now it's scaring me that home prices are increasing again and I'm hearing commercials again about cheap refinancing or first time mortgages.  The housing market IMO is still inflated, that it hadn't yet returned to a "proper" value.  Sure it's down a lot but it was up even more.  I hate to say it but it's a lot like NCSOFT's stock price.  It blew up really huge and then crashed back toward where it "should" be but now some people now think it's too low as oppose to just right and the price is ratcheting higher again, up over 20% since it's low right after the 4Q/annual numbers were published.

[TonyV]

More than 5 years ago, when we were buying a house, everyone reacted in shock at our great credit scores. And we had no history of letting monthly bills roll into the next.

My sister has the best credit score I've ever seen.  She's never made more than $50,000 in a year (and only came close one or two years), but her credit score is well over 800.  To be honest, when I saw it, I told her, "I didn't even know that credit scores could go that high," and I really didn't.  I saw her credit report.  It was green as far back as it went.  She had never missed a payment or been late with one on anything.  Never.  Not even once.  It blew my mind.  My score is pretty good, and I make most of my payments on time, but I have forgotten something once in a while or accidentally done something like screw up the autopay thing on my bank's web site and ended up underpaying.  Needless to say, I'm pretty proud of her.  She could probably go buy a yacht if she wanted to.  (But of course, being all responsible, she would never do something crazy.)

P.S. I wasn't just nosy, she actually came over one weekend because someone had stolen her identity and it was the beginning of a very long and arduous process of cleaning her credit back up.  She filled out police reports, sent dozens of letters, and still ended up having to sue Capital One, Equifax, and TransUnion (and won, to the tune of around $20,000) because they kept jerking her chain and wouldn't take the stuff off her reports.  Five years later, she's finally back in the clear and has a spotless report again.

As a side note, I will NEVER do business with Capital One.  They refused to acknowledge the police reports and, even though the identity theft happened under her old married name that she had legally changed around five years prior, they refused to clear her name off the credit reports.  During the legal proceedings, her alleged credit card application was subpoenaed, which they couldn't (or wouldn't) produce, yet they still refused to relent.  It cost her around $10,000 in all in legal fees to clear the case, and while she won legal fees, of course she had to have that money up front to pay her lawyer.  And the whole time, they were robocalling her up to eight times a day on her cell phone, at work, and at her house.  She would call me on the verge of crying and saying that she wanted to just pay the money they said she owed, it was that harassing.  Together (more her than me), we managed to get through it, but she still has to check every single credit report four times a year to make sure nothing else fishy is happening as a result.  She'll probably have to for the rest of her life.

[TonyV]

And that's your problem, you assumed that they were looking out for you, a person who works for an entity who you will be paying your mortgage to, an entity that will own the property as collateral until the debt is paid off.

Most people don't have the money to pay an independent financial consultant, and to be blunt, they shouldn't have to.  There should be tougher regulations keeping bankers from screwing over their customers, plain and simple.  There should be disclosure requirements showing people what they'll be paying on a loan five, ten, and/or fifteen years out under various assumptions of interest rate movement, and there should be in big red letters under the biggest number, "If you cannot afford this, you should seriously reconsider this loan."  I'm not a financial guru either, though I consider myself probably a bit smarter than the average bear.  I'm sure that people who work specifically in this field could come up with some good ideas.  It's also why I support people like Elizabeth Warren who have made this a priority.

[eabrace]

her credit score is well over 800

I tell ya, man, it feels good to be up in that range.

[TimtheEnchanter]

Personally I find the youth of today shockingly ill-informed about basic economic facts and matters of personal finance.  It is way to easy to get over your head in debt.  True people may blame the institutions that let them do it so easily but what about personal responsibility.  You know what your income is.  You should know how much you can afford to pay toward loans and credit card debt.  Yet I keep seeing young people, fresh out of high school or college go nuts with their Visa/MC/Discover and simply don't think about the things they buy.  I had one young friend forced to face this when he couldn't get approval for a used car loan he desperately needed (we are talking bailing wire and good intentions was keeping his current car running) because of his mounting credit card debt due to his Amazon/iTunes habit.  He was forced to take a 30 hr/week part time job, sucking up his nights and weekends, so he could wipe out the credit card just so he could get that loan.  Sure he had a thousand CDs, a hundred anime series as well as a great movie/TV collection on DVD and a mounted broken Narsil but he couldn't drive them to work.  So he became responsible, took classes, got a better job, learned to save for a rainy day.

This issue has always been one of the most ironic ones in the modern age.

It's very easy to blame the individuals. But did you ever ask WHY so many people are ill-informed about basic economic facts and personal finance? First of all, we live in a business-centric society. This is an age where a government regulation on soft drink size can create more rage in its citizens than the chipping away of our private lives. Business is being treated as more sacred than general life. I'm not going to make an argument for or against that. I'm just using it as an example of just how high a pedestal Business has been placed on.

I'll simplify what you said about the ill-informed and ask it in the form of a question. "Why are people so stupid now?" Simple. It's good for business.

Think about it. If you want to profit from selling a product to the masses, who would you be more confident in selling it to? A nation full of penny-pinchers? Or a nation full of impulsive spenders who don't have a clue how much they can afford to borrow? Obviously, you're going to get more sales with the latter.

With the exception of a handful of necessities, business isn't about giving somebody something they want. It's about making somebody think they want it and then giving it to them. Most commerce is dependent upon consumers who buy before they think.

Of course it didn't start out that way, but the trend has always been there. Con-artists have always been searching for the suckers. Every advance in mass-communication has done its part to create more of them. Whether or not this was an intentional process, I'm not sure. But it's a sad truth that fools are the easiest to sell to, and that makes them the most important demographic. Now, factor that into entertainment. All entertainment relies on sponsors, and that means advertising. But sponsors want their ads to be accessible to the people who are most likely to buy the product. And who is that? The suckers. Therefore, entertainment that is most attractive to suckers, is most likely to draw in sponsorship. And as we all know, whether we like it or not, the behavior of humans is heavily influenced by entertainment. See where this is going? The age of fools is self-perpetuating. We've created a media-driven world that encourages us to be stupid. We just reached an unbelievable new level of this with the introduction of reality shows. The 'celebrities of the future' are people the likes of the cast of Jersey Shore and the Kardashians. Not only is it trendy to be stupid and impulsive, we're now being taught that it's a viable road to fame and success. Sure one could argue that entertainment has always had idiots, but we always knew it was scripted and staged (except for pro-wrestling). Now we're having it shown to us through the Blair Witch lens, and we're being told it's real life. It's going to get even worse in another couple of years, when computerized eye wear devices such as Google Glass enter the market, enabling corporations to subtly program us during every minute of our daily lives, and not just when we're in front of a computer or a television.

But that's just the media aspect. We've also been made dependent. For instance, try to find a public school that still teaches home economics, or wood shop. My father's old high-school in NYC even had a metal shop and a garage for teaching auto-repair. You'll have a hard time finding any of this now, at a time when less parents are around to teach their kids practical skills than at any other time in history. It was once all considered mandatory knowledge. It was a society where people were expected to help themselves. Today, the opposite is true. Even if we had the skills, we probably wouldn't have the time for them (too much of our time is swallowed up by even mundane things). But businesses don't want us using those skills anyway. they don't want us fixing cars ourselves. They want us to pay someone else to do it for us. They don't want us making our own clothes. If we made our own clothes, where would fashion lines be? They don't even want us to know how to patch a hole in our pants. They'd rather we throw the thing out and buy a new one. If we grew and made our own food, they couldn't sell us pre-packaged goods stuffed full of preservatives and addictive substances like MSG. But most importantly, they don't want us worrying about finance. They want us to be impulsive. If we go broke afterward, it's not the concern of a business. They made their sales. This is the price of business having no conscience.

Only now, now that all of this has contributed to people being lazy and dependent upon government safety nets, have the businesses really started to complain. I don't know if people just didn't realize that all of this would eventually come full circle, or if they just didn't care. Either way, this was engineered. They're reaping what they've sown now. People became dependent upon corporations to provide everything. And now that they're out of money, with no understanding of how to help themselves, they've turned to the government for help.

If this is to ever be reversed, Businesses need to understand how much power they really have over society, and take some actual responsibility for it. Because whether they like it or not, powered by the media, they actually have more control over the ebbs and flows of society than government. Oh sure, government can be a mad dictator if it wants, force us to do or not do things, but it's advertising that tells us what we think of it.

[Ironwolf]

Let me help you understand what happened and why, note these articles are written BEFORE the collapse:

This article was not written by a right wing source - in fact it was written by a SOCIALIST website.
http://www.wsws.org/en/articles/1999/11/bank-n01.html

This article was written by a more conservative source.
http://www.city-journal.org/html/10_1_the_trillion_dollar.html

They both make it really this simple Clinton and the Democrats are making a huge mistake by basically giving free money to people and Republicans just signed on and let them. Along with this is a couple of simple facts: Goldman Sachs was a direct competitor with Lehman Brothers and most of congress had money in GS.

So one got bailed out and one didn't. Guess which ones were which?

The damage to the country and the economy were intentional. Cloward and Piven had a theory on how to collapse the economy and introduce a socialist government http://nicedeb.wordpress.com/2012/11/15/is-cloward-piven-strategy-finally-reaching-its-sorry-conclusion-and-should-conservatives-go-along-and-let-it-burn/

The mistakes being made are obvious and yet they are cheered for.

Consider this simple and elegant speech:
http://www.youtube.com/watch?v=YZQlo1jS8ic

[JaguarX]

Tim that is truth spoken there
Although its ironic that with the amount an access to knowledge more so than in any point in human history it seems humans as a whole are becoming less aware of what's going on. Well of course they probably can tell you every Jersey Shore cast and their life story but have not a clue of figuring out their spending limits.
Is there an incentive for business to take responsibilty? Maybe but the reason they have this power over society in the first place is because individuals rather fuss and fight over trivial matters and not take responsibility for their own lives. When they overspend many people don't learn because they view it as "not their fault." "Someone should have stopped them." Or "someone should tell them to leave money on the side for food" So as a whole how can we expect business to take responsibility when individuals refuse to do it? Business is to make money. Like offensive line is there to score
 It is nit their responsibilty to stop scoring because the defense doesn't want to do anything and rather stare at the cheerleaders.

[Heroette]

This issue has always been one of the most ironic ones in the modern age.

It's very easy to blame the individuals. But did you ever ask WHY so many people are ill-informed about basic economic facts and personal finance? First of all, we live in a business-centric society. This is an age where a government regulation on soft drink size can create more rage in its citizens than the chipping away of our private lives. Business is being treated as more sacred than general life. I'm not going to make an argument for or against that. I'm just using it as an example of just how high a pedestal Business has been placed on.

I'll simplify what you said about the ill-informed and ask it in the form of a question. "Why are people so stupid now?" Simple. It's good for business.

Think about it. If you want to profit from selling a product to the masses, who would you be more confident in selling it to? A nation full of penny-pinchers? Or a nation full of impulsive spenders who don't have a clue how much they can afford to borrow? Obviously, you're going to get more sales with the latter.

With the exception of a handful of necessities, business isn't about giving somebody something they want. It's about making somebody think they want it and then giving it to them. Most commerce is dependent upon consumers who buy before they think.

Of course it didn't start out that way, but the trend has always been there. Con-artists have always been searching for the suckers. Every advance in mass-communication has done its part to create more of them. Whether or not this was an intentional process, I'm not sure. But it's a sad truth that fools are the easiest to sell to, and that makes them the most important demographic. Now, factor that into entertainment. All entertainment relies on sponsors, and that means advertising. But sponsors want their ads to be accessible to the people who are most likely to buy the product. And who is that? The suckers. Therefore, entertainment that is most attractive to suckers, is most likely to draw in sponsorship. And as we all know, whether we like it or not, the behavior of humans is heavily influenced by entertainment. See where this is going? The age of fools is self-perpetuating. We've created a media-driven world that encourages us to be stupid. We just reached an unbelievable new level of this with the introduction of reality shows. The 'celebrities of the future' are people the likes of the cast of Jersey Shore and the Kardashians. Not only is it trendy to be stupid and impulsive, we're now being taught that it's a viable road to fame and success. Sure one could argue that entertainment has always had idiots, but we always knew it was scripted and staged (except for pro-wrestling). Now we're having it shown to us through the Blair Witch lens, and we're being told it's real life. It's going to get even worse in another couple of years, when computerized eye wear devices such as Google Glass enter the market, enabling corporations to subtly program us during every minute of our daily lives, and not just when we're in front of a computer or a television.

But that's just the media aspect. We've also been made dependent. For instance, try to find a public school that still teaches home economics, or wood shop. My father's old high-school in NYC even had a metal shop and a garage for teaching auto-repair. You'll have a hard time finding any of this now, at a time when less parents are around to teach their kids practical skills than at any other time in history. It was once all considered mandatory knowledge. It was a society where people were expected to help themselves. Today, the opposite is true. Even if we had the skills, we probably wouldn't have the time for them (too much of our time is swallowed up by even mundane things). But businesses don't want us using those skills anyway. they don't want us fixing cars ourselves. They want us to pay someone else to do it for us. They don't want us making our own clothes. If we made our own clothes, where would fashion lines be? They don't even want us to know how to patch a hole in our pants. They'd rather we throw the thing out and buy a new one. If we grew and made our own food, they couldn't sell us pre-packaged goods stuffed full of preservatives and addictive substances like MSG. But most importantly, they don't want us worrying about finance. They want us to be impulsive. If we go broke afterward, it's not the concern of a business. They made their sales. This is the price of business having no conscience.

Only now, now that all of this has contributed to people being lazy and dependent upon government safety nets, have the businesses really started to complain. I don't know if people just didn't realize that all of this would eventually come full circle, or if they just didn't care. Either way, this was engineered. They're reaping what they've sown now. People became dependent upon corporations to provide everything. And now that they're out of money, with no understanding of how to help themselves, they've turned to the government for help.

If this is to ever be reversed, Businesses need to understand how much power they really have over society, and take some actual responsibility for it. Because whether they like it or not, powered by the media, they actually have more control over the ebbs and flows of society than government. Oh sure, government can be a mad dictator if it wants, force us to do or not do things, but it's advertising that tells us what we think of it.

What you say is accurate.  I rarely watch tv and I really hate commercials, I try not to watch them.  I don't need to know what I should "Want" next.  I have everything I need.  All the rest of stuff is fluff (hey, I made a rhyme!).  I actually looked up on the internet why are the Kardashians famous. 

I guess what I want to say is that you put a lot of thought into your assessment and it is right on.  Good job.

[TimtheEnchanter]

[Heroette]

And I wish sometimes someone was actually tracking how many times we've seen the same slow-motion head turn used in shampoo ads, or how many times chocolate has been advertised like it was porn.

And speaking of porn, alot of commercials put sex into their ads.  I know sex sells but I don't see how it goes with a cheeseburger (Carl's Jr.).  And chocolate is good but NOT that good.

[FatherXmas]

Listen back when I was high school (late 70s) everyone was required to take a civics class for one semester.  Besides the usual coverage about the Constitution, government at all levels (Federal, state, local) and social/personal responsibility, it also dealt with personal finance.  From writing checks and balancing checkbooks, credit cards and longer time loans like car and home. 

Of course courses like this has gone to the wayside, an unintended outcome due to wanting to raise basic skills and knowledge.

[TimtheEnchanter]

it also dealt with personal finance.  From writing checks and balancing checkbooks, credit cards and longer time loans like car and home. 

They could so easily incorporate this into the math curriculum and forget the insanely advanced trig that 90% of people will never have any practical use for.

But then I feel classes that help teach kids to be self-sufficient were removed, at least partially, to increase our dependency on purchased goods.

If we were expected to be able to make decisions with good judgement, a course in psychology would also be mandatory.

[JaguarX]

They could so easily incorporate this into the math curriculum and forget the insanely advanced trig that 90% of people will never have any practical use for.

But then I feel classes that help teach kids to be self-sufficient were removed, at least partially, to increase our dependency on purchased goods.

If we were expected to be able to make decisions with good judgement, a course in psychology would also be mandatory.

All part of the Nemesis plot?

In my high school psychology or sociology was actually mandatory.

I remember the civics class and personal finance in 5th grade. But alas a few years after they took personal finance, balancing budget, checkbook writing out of the curric. The super intendent said it was waste of time because checks were becoming obsolete.  . Not sure what checks becoming obsolete whether true or not have to do with balancing a budget and knowing how to count your money and save.

The times has changed in school stuff. I think by the time I got to high school, shop ad home economics (real home economics where it didnt talk about just cooking but also the cost of owning a house, how to bu ya how financing, bill paying, and utility use and the usual household stuff.). Now, you be surprised at how many people usually 25 and under have not a slightest clue of how to take care of a house or even how to change a tire. I at least get one call a week because someoen is stuck on the side of the road and have no idea how to change a flat and me having to try to explain to them over the phone (some call as far away as DC and i'm in west tip of texas that no one cares about).


But I think a lot of us are showing our ages. Mentally and physically.  . Old age, bring it on as long as I can learn something new everyday and see through the nonsense that try to turn people into dependent sheep.

[TimtheEnchanter]

Well, since I was speaking of Google Glass before, I guess those situations are one 'arguably' good thing that will come of it. Someone will write an app for it. If I was doing it, I'd probably call it the Hitchhiker's Guide to Earth (don't panic), and it will do for us exactly what that did. And you'll have a HUD showing you exactly how to change a tire as you're doing it.

(1st minute of the video: rather prophetic scene from Demolition Man) https://www.youtube.com/watch?v=9bOQitInC84

Of course, I expected something like this even when I was in junior high. While I was driving myself absolutely nuts figuring out Algebra, all I could think was, "The next Generation is just going to have math coprocessors in their heads that do all the busywork for them." Looks like I was half-right. We're just not quite at the point of implants. Yet.

[JaguarX]

Well, since I was speaking of Google Glass before, I guess those situations are one 'arguably' good thing that will come of it. Someone will write an app for it. If I was doing it, I'd probably call it the Hitchhiker's Guide to Earth (don't panic), and it will do for us exactly what that did. And you'll have a HUD showing you exactly how to change a tire as you're doing it.

Of course, I expected something like this even when I was in junior high. While I was driving myself absolutely nuts figuring out Algebra, all I could think was, "The next Generation is just going to have math coprocessors in their heads that do all the busywork for them." Looks like I was half-right. We're just not quite at the point of implants. Yet.

We'll get to the implant soon. There is estimation within the science community that is one of the techonlogies that will be available by 2045. Although these are the same circle that said fossil fuels would be no more, and flying cars would be normal occurance by 2013. Yet...here we are, still got gas guzzling SUVs and no flying cars on every corner.  So I'll guess we'll have to see.

[TimtheEnchanter]

We'll get to the implant soon. There is estimation within the science community that is one of the techonlogies that will be available by 2045. Although these are the same circle that said fossil fuels would be no more, and flying cars would be normal occurance by 2013. Yet...here we are, still got gas guzzling SUVs and no flying cars on every corner.  So I'll guess we'll have to see.

They'll develop implanted network device far faster. Flying cars, jetpacks, etc... are industrial improvements. Building the better mouse trap started to become a non-issue once the real power of marketing was realized. Why make something better if you can just convince people that something is better when it actually isn't?

Electronic media implants? That's the holy grail of advertising. Salesmen literally in our heads. That is the point where advertising will become as invisible to society as water is to a fish. Oh yes, we're definitely going to see that one become a reality.

[JaguarX]

Why make something better if you can just convince people that something is better when it actually isn't?

Electronic media implants? That's the holy grail of advertising. Salesmen literally in our heads. That is the point where advertising will become as invisible to society as water is to a fish. Oh yes, we're definitely going to see that one become a reality.

Yeah soon commercials will be played in our heads every 10 minutes.

Apple have been experts at convincing people that something is better when it actually isnt. Especially with their phone upgrades. Half the time, they remove previous nice features or dont change nothing at all but convince people that the new one is better than the old one.

[TimtheEnchanter]

Apple have been experts at convincing people that something is better when it actually isnt. Especially with their phone upgrades. Half the time, they remove previous nice features or dont change nothing at all but convince people that the new one is better than the old one.

Apple is the company that seemed to be able to convince people that computers are actually fashion statements. It always disturbed me to a degree, that they were actually able to gain more of the market just by giving a choice of colors for the Mac.

PC users on the other hand...  used spraypaint.

The portable movement in general never managed to grab my attention though. No matter how much power gets put into them, the screen and keyboard will still be too small for me to enjoy. I also don't do social networking, so I have little use for a phone that allows me to tweet stuff that nobody pays attention to.

Really, the only reason I've wanted a 'smart phone' (and if I had one, it'd be a Droid) was so I could develop games for it.

[JaguarX]

The portable movement in general never managed to grab my attention though. No matter how much power gets put into them, the screen and keyboard will still be too small for me to enjoy. I also don't do social networking, so I have little use for a phone that allows me to tweet stuff that nobody pays attention to.

You and me both.

[MindBlender]

Heck, once I went over 700 for my score I was thrilled!  Tony, tell sis GJ!  One house and 2 cars in 4 years have dented my credit, but I was assured by some friends of mine in the world of Finance that in a couple of years it will go back up and perhaps with NO late payments it may go higher 

[emu265]

Lord above.  I graduate (college) in less than two months.  This thread has thoroughly terrified me.

[eabrace]

Lord above.  I graduate (college) in less than two months.  This thread has thoroughly terrified me.

Just make at least the minimum payment each month on your student loans and you'll be well on your way to building a good credit score.