May
14
Why do Americans abuse credit cards and home loans? Why do most people in this country live out of their means?
Filed Under Other - Society & Culture
While I don’t owe any debt and pay off my credit card bill in full why are banks so stupid to give credit cards and home loans to just about anybody?
Part of the reason so many banks have gone under is because they were stupid to loan money to people who didn’t desrve the loans.
If someone wants to buy a flat pannel TV for $2,000 why can’t people save money in an envelope for a year or 2 until they have the cash to actually buy the $2000 TV? Most people won’t end up paying the bank for the money they borrowed to buy a TV?
Why do people who have a household income of $40,000 per year buy houses for $600,000 on loans. Shouldn’t the bank have realized that a couple with a houshold income of $40,000 can’t afford to make the payments on a $600,000 home.
Why should we the taxpayers bail out these banks when they made bad loan decisions?
People need to realize to live withing their means.
There was an article about Apple computer giving a loan to a person on welfare to buy a $2,500 laptop? Why does someone on welfare need a $2,500 computer?
Enough is enough! Banks need to get strict again on who they loan money to.
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3 Responses to “Why do Americans abuse credit cards and home loans? Why do most people in this country live out of their means?”
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I totally agree. The auto industry too! They made the poor decision to make non- fuel efficient vehicles during a time when gas prices have been sky rocketing. A lot of things need oversight in this country so we aren’t wasting so much.
The government told the banks they had to lend to morons to combat “redlining” under the Clinton administration. Banks ARNT stupid, they were forced to make bad decisions.
It’s not just the banking sector whose at fault at this, it’s also the borrowers and middle class people who insist on living beyond their means.
I do agree that loaning money to people who are high risk is a stupid business practice, but financial guru’s have made a tool that would make loans profitable – that is the CDS or Credit Default Swap.
It means that it’s alright for them to lend money to high risk borrowers because they repackage this loans and sell them to investors. These are insured wherein if that borrower defaults – the loss is mitigated in such a way that it wouldn’t reflect on these banks books because basically, banks are paying premiums to insurance companies to insure these kinds of loans.
AIG is the best example of this.
Now the problem is – there isn’t enough cash to go around to cover for these loses.
For living beyond means – I would point a big finger towards the media. I watch tv and see these shopping channels wherein they tell you you can’t live w/o this, or this is the best thing to have right now, or everybody has this so you should too…. it’s unbelievable.
Many people want what they see on tv or in movies or in magazines. That new ipod? Let’s charge it to the plastic so I can have the latest – even if your old ipod is still working.
That new shoes? use plastic to purchase that “must have” boots – even if you still have last year’s “must have” boots.
My favorite actor is wearing this outfit in this magazine, so I have to buy one just like it – even if I can’t afford it.
This bag is so popular right now – I must have it. Even if you already have a lot of “popular” bags that you couldn’t live w/o.
I gotta have that new laptop, or that new iphone. Because that’s what “in” right now.
It’s crazy.
Shops and manufactures keeps shoving these “must have” items at us and we’re fool enough to think that we really must have those. And since most of us want it “now”, it’s alright to borrow. After all, most of us think that were entitled to it.
And most of us – our idea of savings? Investing our hard earned money on stock market and bonds. Now the sad part of it is, most of our hard earned money is lost and washed out because of bad practices all around.