Friend in financial trouble

[FairestOfThemAll37]

My disagreement with you is that you are not holding people accountable for their poor choices. Until people take responsibility for the stupid stuff they do, no one learns a lesson and we all pay for it.

Not necessarily the OP's friend situation, but I think we have a really interesting take on "personal responsibility" in the US. I think personal responsibility is incredibly important and may often be the issue (as I believe it is with the OP), but often times we're so used to the rhetoric that we ignore the fact that sometimes it is a macro problem.

I hear this a lot about millenials and student loans. Sure, individuals make choices on their loans etc. etc. but over 1 trillion dollars in student loan debts with a good chunk of that in default is not a micro problem. It's a macro problem on a systematic level.

I see this approach a lot-whether it's poverty, obesity, student loans, etc. They all have and individual component and a societal component. I think it's easier to say these people just need to make better choices than to try to solve the issue from a larger perspective.

 

[Anthony1971]

Warning- boring economics nerdfest lol: For what it's worth, I think our generation was totally exploited. Some people are frugal, they learned it from family lifestyle & such while others are not. Truly it's a deeply rooted personality thing defined by the 'propensity to consume' theory and everyone has a spot on the range. Credit cards like we have now did not always exist. They sprung up in the 70's/80's as a market response to that recession. It used to be that high interest was outlawed by usury laws prohibiting loansharking after the Great Depression (they would be helpful now). After the Great Depression the system was set up so that the Fed had tight control over the economy via Federal Reserve via Money Supply via the Fed Fund Rate & Fed Reserve requirements on "loans" - this doesn't work anymore & here is why... Because the majority of our money no longer comes from what they call "loans". Of course, when the 70's recession hit people were desperate for money & the market discovered a way round that with credit cards & fool/uneducated politicians looked the other way towards our country spending our way out of the recession- which is why we had 'Stagflation'. Lots and lots of people made lots and lots of money with a very high cost & we are paying the bill now but back then either nobody understood or cared about was coming because, as always, people refused to get educated and learn from history (yes it's hard but it's necessary). Result is credit card debt is no longer called a loan but it still behaves the same way. So it's all in the name & apparently that's everything. This mess morphed into the monster loansharking going on now by banks and no one has the guts to stand up to it and enforce laws that already exist to protect us. Ever wonder why foreign money back's US debt? It's because our laws are unenforceable in the international arena & unless someone somewhere closes that ethereal abstract business border the best we can hope for is that our kids generation avoids the snares.

So in the end, I don't really think people should be shamed for what happened to virtually all of generation x; I just hope the next generation, our kids, can learn from it & change things. As for me, I'm teaching my kids everything I know... Time will tell

Having a credit card does not equal irresponsible....
We are talking about people who are in responsible positions within a company and need to make responsible decisions that directly effect how a company runs or the position they in or the company itself will not exist. This is not a person who is dreaming of owning and stretching themselves to afford a BWM it is a person who can afford one and in fact is entitled to one should they wish and have their finances in order. You do NOT get a high paying job because you are you... you get it by proving you can and will make responsible decisions and bare all of the responsibility and headaches that come with a title.... while I can estimate where this person will title within a company I can tell you should he want to move up higher to a position where he will making closer to what both make or even change companies for a lateral position he could have a difficult time as a lot of companies run credit checks these days for responsible positions. why... If you are not responsible within your own life how can you be for a company.
What you wrote is in the end is an excuse to behave irresponsible that will hamper anyone who chooses to pursue a high level position.
Simply put a theory is something that looks great on paper but it is just that... Truth is theoretically time travel is possible... But if you try to build and test a machine capable of such results you will have a bad outcome..... unless you think you can travel at the speed of light of course.

 

[tinkerone]

I would not trade the experience of living on my own in my twenties for any amount of money. This delay of adulthood is a disturbing trend. Sometimes saving money isn't everything. Life experience trumps saving moeny in my book.

I think its how its handled. I don't necessarily see it as a delay of adulthood. Who defines that? How do you define that? I feel to many young people get sent off to deal with issues, such as rent and credit cards, before they learn how to handle these situations. They are not taught, so how can we expect that they will make the right choices? That is the beginning of what this whole thread is about.
What is the proper age for a child to leave home? Its so individual.

 

[FairestOfThemAll37]

I would not trade the experience of living on my own in my twenties for any amount of money. This delay of adulthood is a disturbing trend. Sometimes saving money isn't everything. Life experience trumps saving moeny in my book.

This is definitely a growing trend with the mounting student loan debts. I am technically a millenial though I'm on the tail end of the generation. My peers largely escaped the trend of living at home with parents, but we are generally running later than previous generations on "adult milestones." We're getting married and having children later and buying houses later in life because of school loans. Plus due to their circumstances the baby boomers aren't leaving the workforce so for the younger millenials you have even higher school costs and no jobs.

It's a vicious cycle. Today's advanced degree is yesteryear's undergrad degree and it's all costing more and more.

 

[barkley]

If you go back to see what caused the Great Depression there are many similarities and I don't think everybody that makes bad choices does so because they are willfully self-destructive

My disagreement with you is that you are not holding people accountable for their poor choices. Until people take responsibility for the stupid stuff they do, no one learns a lesson and we all pay for it.

I don't like the idea of blaming the banks- how did they force anyone to take on debt?

there ARE similarities, but I for one don't feel that excuses personal choices people make-we study history so we ideally learn not to make the same mistakes-or to at least be in a position wherein if there are major financial downturns out of our control we haven't made choices that further threaten and compound the difficulties for ourselves/those in our care. it's not shaming someone-it's stating a general opinion about financial choices.

we DO all pay for it, and to some extent I DO hold some banks/lenders accountable-

with the burst of the housing bubble I saw it coming, knew it would happen-that's why we sold when we did and were spared the financial devastation so many others experienced. how did I know? I listened to new neighbors, friends and co-workers talking about their recent home purchases and knew they could in no way, shape or form afford what they were buying into w/interest only loans, adjustable rate loans, let alone 'traditional loans' that I knew there had to be monkey business w/justifying loan amounts given what I ABSOLUTLY knew to be the household incomes (easily known if you work w/both spouses in civil service jobs).

I blame the banks/lenders for selling people on buying homes they no way could afford-granted, people should be capable of using their common sense and knowing what they can/cannot afford but with a mix of inexperienced consumers and those of us who grew up during a point in time when we were educated to let the 'professionals' tell us what the numbers showed (and trust they were telling us the truth) it was deceptive enough that (at least in the area we moved from) there were high profile prosecutions and prison sentences handed out to brokers and lenders who knowingly and with intent misled buyers on their eligibility (and ability) to pay for homes they purchased. I hold individuals ultimately responsible though-no one holds a gun to someone's head to enter into a mortgage, or to get a credit card. it's a personal choice-people know what their incomes are, know what they can/cannot afford to pay IN FULL/CASH for at a given point in time-and I feel there's a HUGE difference between an unexpected large expense that has to be spread out over time in payments (that a person KNOWS they can afford) vs. ignoring the realities of one's finances and just choosing to unrealistically overextend themselves financially as the primary mechanism of their household 'budgeting'.

'we' paid for it by virtue of devalued homes in areas that were never subjected to the huge upturns in prices-people through their own choices bought, and over bought (often buying multiple new homes while retaining existing homes w/the mindset of huge financial windfalls w/no regard to their inability to self pay for the mortgages) so when the homes went into foreclosure and ultimately sold at auction-neighboring homes saw their values drop, 'we' paid through higher homeowner's insurance premiums b/c neighborhood's filled with empty foreclosed homes were prime targets for crime/vandalism and as a result rates escalated. 'we' continue to pay for it for it by virtue of higher standards for lending that entail higher costs that are passed on to consumers despite stellar credit, sufficient incomes/spending habits.

frankly, I'm glad some years ago the standards for bankruptcy were tightened-I knew too many people that did it over and over (it had become their go-to and they had it timed out/knew how to work it). the process was never meant to be anyone's 'back up plan'.

 

[VillainFavs]

It's OK for people to disagree but if your disagreement is simply because it deprives you of the right to shame people - that I can't really get on board with. If you don't like it, just say it for what it is but in order for it to be a discussion tell me where the facts are wrong, tell me where the lineage is wrong and that's fine but that's not what I see. I don't really know what to do with people who just want to make other people feel bad, that to me is not helpful.

If you go back to see what caused the Great Depression there are many similarities and I don't think everybody that makes bad choices does so because they are willfully self-destructive

My disagreement was not about shaming people. It was about not excusing them entirely. It was about making them responsible for their own position. You would have it appear that they got where they are through no fault of their own. I totally disagree with that.

It's not about shame. It's about responsibility.

 

[Vijoge]

My disagreement was not about shaming people. It was about not excusing them entirely. It was about making them responsible for their own position. You would have it appear that they got where they are through no fault of their own. I totally disagree with that.

It's not about shame. It's about responsibility.

I suppose it may sound harsh to some, but I've been there and I agree. Our financial problems were a direct result of our irresponsible spending habits.

I work with a young woman who recently started her first "real" job. She's still in school (with many years left if she's going to realize her dream), and is at the bottom of her career ladder. She recently rented her first apartment-the most expensive one in our area, because she wants her infant daughter to have a nice place to live. (Oh, I didn't mention she has a child). She has student loan debt. She has a hefty car payment (needed this particular new car to keep her child safe). She purchased furniture for her new expensive apartment on credit. She purchased breast augmentation for herself, again on credit. And she said to me "I'm a responsible adult, right?"

Duh, no. . .

 

[crisi]

I agree that its both.

Banks should be more responsible for easy credit - and deny it more often. They take on the risk of the loan, they should be responsible for that risk.....they'd stop making so many poor loans.

But, when everyone else is jumping off a cliff, you don't jump off. Just because your car goes to 120 MPH doesn't mean most of us drive 120 MPH. The liquor store will sell me booze by the case, and despite a genetic predisposition to alcoholism, I've managed to stay a social drinker. That my sister became an alcoholic - she can blame on a genetic predisposition and an abusive relationship, but she also needed to take personal responsibility if she wasn't going to die of liver failure (she's been sober five years) - the liquor store wasn't going to stop selling it just because she couldn't handle it.

 

[Jake&IzzyLand]

I don't believe my kids are Generation X as they are early to mid-twenties, but I can you that they all make decent money, but are very frugal. They all pack their lunches, most of their clothes are gifts from me, and they don't eat out much. I know people my age (early fifties) that have plenty of money and some who live pay check to pay check. Yes, illness can play into some people's problems, but there still are many that do not make smart financial decisions. There are choices that people have to make to be fiscally responsible. I don't think the husband in this family is there yet.

I have a 26 year old that has close to $100k saved as he lives at home, drives and old Lexus that was given to him, and is very judicious with his money. He is looking at the big picture and loves to watch his money grow.

I hope your friend can convince her husband they need to sit down and set up a budget and stick to it so they get out of this mess.

That's awesome that you have allowed for him to have such a nice head start. Sounds like he has a nice cushion to start off financially sound. There is more to success than finances though, hopefully he will be prepared to be on his own in other ways. I have a large home and often dream of my now young kids staying and building wealth such as yours, but I just don't know where to draw the line??

 

[kamik86]

I think some things are a cyclic problem due to society as a whole not wanting to go without or wait for things.

Like student loan debt. One of the reasons colleges are so expensive is they keep building million dollar stadiums, huge fancy new dorm rooms, and many other things that have no educational benefit. However they do this because these are the schools that attract the best students. Until students actively look for schools that aren't spending ridiculous amounts of money on other things and are cheaper most schools aren't going to go that route. Instead they will raise tuition to build that new football stadium.

 

[Jake&IzzyLand]

I would not trade the experience of living on my own in my twenties for any amount of money. This delay of adulthood is a disturbing trend. Sometimes saving money isn't everything. Life experience trumps saving moeny in my book.

I agree somewhat. Financial security is important and allows for other aspects of life to fall into place. I would worry about the level of experience though. Mistakes are often necessary for growth. But yes, large amounts of money won't help a person without any sense of the world.

 

[FairestOfThemAll37]

I think some things are a cyclic problem due to society as a whole not wanting to go without or wait for things.

Like student loan debt. One of the reasons colleges are so expensive is they keep building million dollar stadiums, huge fancy new dorm rooms, and many other things that have no educational benefit. However they do this because these are the schools that attract the best students. Until students actively look for schools that aren't spending ridiculous amounts of money on other things and are cheaper most schools aren't going to go that route. Instead they will raise tuition to build that new football stadium.

Actually many of the things you mentioned are usually funded by alumni endowment funds.

The skyrocketing tuitions generally go to "administrative costs" and are allowed to continue to grow because the government is making a ton of money off students loans. That and the ease of which students can get private loans means that the schools can charge whatever they want without affecting their student pool.

 

[tinkerone]

That's awesome that you have allowed for him to have such a nice head start. Sounds like he has a nice cushion to start off financially sound. There is more to success than finances though, hopefully he will be prepared to be on his own in other ways. I have a large home and often dream of my now young kids staying and building wealth such as yours, but I just don't know where to draw the line??

For us, drawing the line would come when the child abused the situation. I'll give you an example. I have a friend who paid all tuitions for their children to go to university. The did not want the children to work while going to school because it would interfere with their studies. Most of the assignments were done by the mother as the children were to busy partying. The mother felt this was alright because they were young and should have some fun. To us, the mother earned two university degrees that she 'gave' to her children. After school was out and the children went to work, they not only lived at home but they spent their money as they wished. When their money was gone they would turn to mom and dad who would give them more money. They were given cars, trips with friends, cloths, pretty much everything that they should have bought with their wages were bought by mom and dad.
One child took a job in a big city. She was making very good money but she cried to mom and dad that she could not afford her rent (she would not share and apartment) so mom and dad paid for her. Then she quit her job and moved back home. The other child didn't even go to work at first and when he did he took a job with a lawn care company mowing lawns, he had no reason to do anything that would be 9 to 5 52 weeks a year. They still continue to draw money from mom and dad and the parents just seem oblivious to this. Neither child lives at home and neither can go a week without having money problmes solved by the parents. Mom and dad want to retire but because of their debt it will be a while.

Now, we on the other hand put money away our childrens schooling from their birth, it was always there. When that money was gone and they still needed money for school we got them a student line of credit, which they had to pay for. They had jobs and were trained to put 50% of their earnings away and could spend the rest on what ever they wished. Once they completed school they got good jobs, continued to stay at home and continued to put the 50% of their income away. they bought their own cloths and paid for everything that they needed. They also paid rent to us for staying here. They were told that if they lived on their own they would be paying rent and a lot more than they would be giving us. They were fine with it. They bought new cars and have had the cars for over ten years. They left our home and moved into their own house, never having to pay real rent. If I had felt that they were abusing their stay by not learning financial steps I would never have let them stay. I have been retired for years and the only reason DH still works is because he likes his job. We have no debt.

So, scenario one, my friends, I would have drawn the line years ago. The children are ungrateful (IMO) and have been handicapped by their well meaning parents. Scenario two, us, I would have allowed the children to live here longer because they were taking steps to assure their futures and being responsible for themselves. It did not cost us anything out of pocket other than a bit more water and a bit more food. We have never had to put a penny towards them since they started working. They learned a lot and came a long way. They have no debt other than mortgages which they have sped up the time on these so they will be paid off long before the actual term.

That is my idea of when to draw the line and not everyones, we are all different and should do what is best for us.

 

[Disneybuckeye]

That's awesome that you have allowed for him to have such a nice head start. Sounds like he has a nice cushion to start off financially sound. There is more to success than finances though, hopefully he will be prepared to be on his own in other ways. I have a large home and often dream of my now young kids staying and building wealth such as yours, but I just don't know where to draw the line??

I agree with the above poster that there is helping versus taking advantage. The costs associated with him living at our house are negligible. If I am cooking dinner I ask if he wants to join us. Most nights he is in his room or out and about and does his own thing. We don't charge him rent or make him pay for food in the house (unless he wants something special I don't normally buy), but otherwise he covers all his own expenses. He does use some of our toiletry items, but I keep the hall closet well stocked as our other two kids come visit and I let them help themselves to anything they would like in there, or in our pantry.

He lived in an apartment when he was in college and he is saving up to buy a house and have some friends move in to help defray costs. We are also building a lake house and he goes down there with us many weekends and helps us work. He also deals with trash and lawn mowing and keeps me company when DH is travelling. It really is a win-win situation for now.

 

[lustergirl]

Bankruptcy.....great solution. Live above your means till you have accumulated so much debt that the monthly payments are greater than your income....file bankruptcy and wipe the debt clean. Makes me so angry.

Why would it make you angry? It is the people who are in this situation that mess up their own credit for quite some time. As long as it is not you then why care?

 

[barkley]

Why would it make you angry? It is the people who are in this situation that mess up their own credit for quite some time. As long as it is not you then why care?

perhaps because in the long run the cost to the creditors whose debt is written off by the bankruptcy roll those costs into their operational expenses so it gets passed on to rest of us who do business with them through higher purchase/fee/interest charges.

 

[halfpintpeggy]

Warning- boring economics nerdfest lol: For what it's worth, I think our generation was totally exploited. Some people are frugal, they learned it from family lifestyle & such while others are not. Truly it's a deeply rooted personality thing defined by the 'propensity to consume' theory and everyone has a spot on the range. Credit cards like we have now did not always exist. They sprung up in the 70's/80's as a market response to that recession. It used to be that high interest was outlawed by usury laws prohibiting loansharking after the Great Depression (they would be helpful now). After the Great Depression the system was set up so that the Fed had tight control over the economy via Federal Reserve via Money Supply via the Fed Fund Rate & Fed Reserve requirements on "loans" - this doesn't work anymore & here is why... Because the majority of our money no longer comes from what they call "loans". Of course, when the 70's recession hit people were desperate for money & the market discovered a way round that with credit cards & fool/uneducated politicians looked the other way towards our country spending our way out of the recession- which is why we had 'Stagflation'. Lots and lots of people made lots and lots of money with a very high cost & we are paying the bill now but back then either nobody understood or cared about was coming because, as always, people refused to get educated and learn from history (yes it's hard but it's necessary). Result is credit card debt is no longer called a loan but it still behaves the same way. So it's all in the name & apparently that's everything. This mess morphed into the monster loansharking going on now by banks and no one has the guts to stand up to it and enforce laws that already exist to protect us. Ever wonder why foreign money back's US debt? It's because our laws are unenforceable in the international arena & unless someone somewhere closes that ethereal abstract business border the best we can hope for is that our kids generation avoids the snares.

So in the end, I don't really think people should be shamed for what happened to virtually all of generation x; I just hope the next generation, our kids, can learn from it & change things. As for me, I'm teaching my kids everything I know... Time will tell

Gen X-er here...these things did not "happen" to myself or my friends...please don't include all of us in your blanket statements about Generation X. Thank you.

 

[LuvOrlando]

Seriously when you talk about the Great Depression and what happened then you discuss what was "typical" of the time- that does not mean absolutely every person on the planet was impoverished as evidenced by the Rockefellers other families that did very well for themselves. Same goes for WW2 generation, obviously not every single member of wartime generations actually went to war and yet when you think about that time period you think about WWII because rations and missing loved ones were such a huge part of their identity. So it's normal to typify the entire generation based on the experiences of the majority, experiences that shaped who they are and how they behaved and the problems they had to deal with as a large group, not the outliers and I am just doing the same thing. I am a generation X myself and then not in that personally troubled financially boat but it feels a bit ivory tower of me to pretend that I am the norm or that I did something special to avoid it because I don't think that that's true. Anyone who really thinks that credit is not an issue at all for generation X as a whole has not been reading the news because even if an individual did everything right that individuals property values went down and that regions tax revenues still have depleted, social services and road maintenance and infrastructure maintenance has fallen short. As a result, you & the rest of us are going to have to deal with the fallout of the credit issue regardless of my/your/our own behavior. It is very much a generational issue, I stand behind that statement 100%.

Frankly, if it wasn't a serious issue & if people didn't recognize that the fall out touches their lives, I don't think it would be quite as polarizing as it seems to be

 

[havaneselover]

Seriously when you talk about the Great Depression and what happened then you discuss what was "typical" of the time- that does not mean absolutely every person on the planet was impoverished as evidenced by the Rockefellers other families that did very well for themselves. Same goes for WW2 generation, obviously not every single member of wartime generations actually went to war and yet when you think about that time period you think about WWII because rations and missing loved ones were such a huge part of their identity. So it's normal to typify the entire generation based on the experiences of the majority, experiences that shaped who they are and how they behaved and the problems they had to deal with as a large group, not the outliers and I am just doing the same thing. I am a generation X myself and then not in that personally troubled financially boat but it feels a bit ivory tower of me to pretend that I am the norm or that I did something special to avoid it because I don't think that that's true. Anyone who really thinks that credit is not an issue at all for generation X as a whole has not been reading the news because even if an individual did everything right that individuals property values went down and that regions tax revenues still have depleted, social services and road maintenance and infrastructure maintenance has fallen short. As a result, you & the rest of us are going to have to deal with the fallout of the credit issue regardless of my/your/our own behavior. It is very much a generational issue, I stand behind that statement 100%.

Frankly, if it wasn't a serious issue & if people didn't recognize that the fall out touches their lives, I don't think it would be quite as polarizing as it seems to be

For me the polarizing part was the victimization of those who choose to live beyond their means.

 

[crisi]

Of course credit card debt is an issue, but its a self inflicted issue for the majority of young people. Just like obesity, or addiction.

You did do something special to avoid it. You understood the difference between needs and wants. You understood the difference between affordable and "not in my budget." You very likely accepted that life was going to involve some stuff acquired secondhand - a dining room table. Dishes. Some clothes from the consignment store. You maybe skipped cable and do your media streaming. You kept a handle on your entertainment budget, knowing that eating out and cocktails aren't cheap.

Either that, or you got an incredible job out of college - and still lived within your means - or are a trust fund kid.