September 26, 2008

What Really Caused the Economic Crash in America

I said I wasn't going to get political again, but this is a must-see video before voting this November. Sorry, but some of it was news to me. I figured everyone would want to know the truth about why they can hardly afford to get around town and buy groceries. We're coming up on a really ugly tax season with an escrow shortage. I can totally relate to the fear a lot of folks are having about their mortgages. Seems like the only rate that hasn't gone up in the past two years is PAY.

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Sallie said...

Good Morning, Heather!

The lyrics to the song in the background tell the story, too...

I have my own post up this morning about this crisis... it's probably a little bit too blunt but this is all just crazy! Personally I think everyone is at fault cause we all feed the need to keep up with everybody else. YIKES! We can't afford to keep doing that and its gotta change.

God bless,

Sprittibee said...

Yes, the fault lies with most - but the banks are responsible for who they loan to. Not only that, the government is responsible for suing the banks because they weren't loaning enough subprime loans to those with bad credit. The govt. (Fannie May) saying they will back the loans and forcing the banks to go out on a limb was not right - neither is it right when they allow the banks to take the hit when the cookies crumble. I think that it is wrong of them to expect the American people to bail out their poor choices - both of them.

I can't speak for everyone, but I don't try and keep up with the Jones'. We have a 4 bedroom house, but it was a choice we made because my mother lives here part of the week. When we bought it, she was planning to move in permanently and sell her land. I thought she was going to be helping with the bills some. That was my poor decision. So we're in a little over our heads - but at least we aren't in the shoes of 7% of our nation who's mortgages are HALF of their income.

Hopefully when tax season gets here, I won't be closer to that mark. Praying for a 3,500$ miracle to drop in my lap before Christmas!

As for vehicles, we also have older ones - and are trying to keep them well past when their notes end. It is the only way we'll be able to afford the gas to put in them - if we keep older cars without notes. Right now we have notes on both of them, but hopefully in a year, one of them will be paid off. Three years from now, the other one will be paid off. We made the mistake in 2004 of buying on a 7 year auto note. :( That was BEFORE gas prices went up and the economy tanked. It was also before we thought we would need another vehicle (husband had a company car back then).

Through all of our financial trials, we have never foreclosed or had a bill written off because we refused to pay. So in one sense, we have not contributed to this mess. We pay what we owe because we signed papers agreeing and promising to pay it. It hasn't always been easy - there have been times we had to make hard choices (like move out of State and live away from family for 2 years, me go to work for a while and put the kids in private school, stay home and not go see movies or buy things we want... etc). In the end, we believe that God will reward us for being faithful. We know He's in control.

Anonymous said...

Thanks for posting this. It is a very concise way to have a better understanding of the whole mess! We, too, are financially conservative - not an easy task with two kids in college and still homeschooling, but God is faithful. Blessings to you and your family,
Jan in Virginia said...

That is so interesting! Thank you for sharing that with us!

It has been so difficult for us the passed year, and I praise God that it is getting better. We went from being nearly debt free to being in a LOAD of debt due to shady financial agreements in buying a restaurant from family that we should have had a lawyer look into beforehand. (Its crazy that my husbands family would do the things they have done to their flesh and blood!)

We live very simply, and don't try to "keep up with the Joneses". We pay for everything in cash and keep a tight belt on our budget so we can save up and pay off things (mostly taxes from a restaurant we no longer own!).

Sallie said...

Heather -- I know not everyone tries to keep up with the Jones' but I also know an equally fair share of people who have nearly half a million dollars in debt (home, vehicles, LOTS of credit cards, student loans, etc..) and those are all due to choice. People who make $50,000 a year (or less) shouldn't have debt like that! It was the banks fault for giving it to them, but it was their fault as well for not curbing their spending habits.

As an example, one of the guys in my husbands office yesterday was freaking out totally because he just bought a house -- hasn't even made the first payment yet -- and then a week later got orders overseas. He feels his only option is probably just let foreclosure happen. When in all actuality, he has several options.. first of course would be to sell before he leaves for whatever it would cost to get payoff. Heck, it isn't like he's made any improvements or anything so why should he expect to make anything? Another option would be for his family to stay put until the house actually sells. This might mean him being a "geographical bachelor" for a short time period, but it would be a responsible solution for a debt he created of his own choosing. A third option would be renting it out, for the cost of the mortgage, but often times people want the house to make money for them and try to set the rental too high. Military people know they move. He's been here for years and just now decided to buy knowing orders might come up. He could have made some different choices.

I just think in general there must be a change in thinking across the board -- consumers, capitalists, banks, government, everyone -- or we won't really be out of this mess.

I'm for an across the board tax rate.. everyone pays 20% (arbitrary # but shouldn't be higher than that for sure cause we do still need to live) no matter what they make. It's not fair to make "rich guys" pay my way. I really appreciate child tax credit and all but is it really fair to all Americans? Probably not if their is a bracket you have to be in to get it. Simplify the tax code... make it a flat rate.. but then again, can we even afford to do that now? If we don't have a huge bailout we probably could.

I'm terrible I guess but I'm a button pusher... go ahead and push the mega colapse button and let the chips fall where they may. I personally think Americans are still tough survivalists and if we don't have the handouts being given to us, then we'll rise up and take care of ourselves because the option otherwise isn't really an option. That was what I really appreciate about the New Deal -- men had to work to be able to get government help through programs like CCC. There was no free money. You worked or you didn't get paid.

OOPS... I guess I should have just written on my blog...LOL..

How is the pregnancy going? Over sickness and all now? Hope so!!

God bless,

Heather said...

I totally agree about being responsible for your choices, Sally. We haven't ever foreclosed although we have been in VERY tight spots. We put our house for sale when we knew we might loose it. We were able to make a little money and pay the realtor - and all our extra money paid off debt. We are financial conservatives and as frugal as we can be... but to say that the average American who has school loans is irresponsible just because he doesn't make more than 50K is not exactly true.

Take for example our case. Yes, we had credit card debt when we first got married. We bought in to the "just do it" Nike credit mentality like the rest of the Jones'. But then we grew up and started to worry about paying things off. We didn't write them off. We worked our butts off and spent every tax refund on debt. We rolled some in to mortgages and paid them off at the sale of our homes.

However, my husband did get a school loan (after his employer promised to pay him back). We had a new 10K loan to pay off - and the employer paid him in a trickle of money that came over a year's period... and we were unable to use it to pay off the loan and interest - so we still pay monthly and after five years have 8.5 K left on it! That was a choice we made - an agreement we signed, so we continue to pay even though some of the blame was his employer. It puts strain on our finances but we are committed to keeping our promises (which in turn is helping out the economy).

I agree that your friend at your husband's office needs to make some better choices about his new house. He signed the papers. He is responsible. Throwing up your hands and letting the government and banks take the fall for you is what got our economy in this shape. I'm in agreement that many people too quickly think that someone else should bail them out. We have become a nation of whiners and complainers. The government isn't there to give out handouts. I think that handouts should be reserved to those who really need them - not every Joe Shmoe who makes a poor financial decision.

I'm for a fair tax, too. I liked Huck's plan. 15% across the board (and that is still high - because I only give 10% to charity). I don't think I should give God less than government. I think everyone should pay 10% on purchases and the IRS should be done away with - that way we tax everyone *INCLUDING ILLEGALS*.

I could go on and on. But I'm not running for president. ;) Too bad, eh? If I was president, we would be drilling for oil in Alaska and the coastlines, illegals would not be getting to vote or have free health care/schooling/social security, we would have a flat tax rate, there would be a fence being built across the Texas border, hospitals and doctors would be investigated for their fees if they were excessive (that catheter I got - which took all of 10 minutes cost my insurance company 980$ last month - twice), and sentencing reform for prisoners would be a DONE DEAL. Oh, and banks would be unable to charge more than the amount of your overdraft! No more 30$ charges on $2.50 cups of coffee. LOL

About the baby... everything is quiet right now. I'm at 13.5 weeks and counting. The nausea is mostly gone. I'm hungrier now. I can eat some sweets (my favorite now is Sorbet). I still have an aversion to chocolate. I'm able to cook more now - the smells and sights don't bother me as much (which is good for our budget and my arteries). Thanks for asking!

akhmmm said...

Thanks for posting this. I'll do what I can to spread the word. We are all to blame to one degree or another as we really aren't as independent as we like to think.

We all need to be more responsible in the decisions we make both personally and in the poll booths. Who we vote to represent us in our local governments, state governments and federal governments will impact not just us but our children and their children as well.

In all things seek the will of God, He, at least, will never fail us.

Anonymous said...

I just tried to view this and it is gone.... sorry I was too late.




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