Forum Post: Consumer Debt is the Real Enemy. Consumer debt is causing all types of Stagnation.
Posted 12 years ago on Aug. 18, 2012, 8:28 p.m. EST by DebtNEUTRALITYpetition
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Consumer Debt is causing stagnation in how we deal with environmental issues. Consumer Debt is causing stagnation in how we deal with conserving resources while increasing efficiency.
The more consumer debt there is, the more populist stagnation there is. Remove Consumer Debt, not by waving a magic wand, but by waving off future interest rate charges, penalties and fees, and people will have more of their own money to spend locally, which is where most innovative ideas roost.
Please consider signing the Debt Neutrality Petition which should help get us headed in the right direction, less consumer debt frees people up to improve their planet with less fear they will be marginalized out of existence because they can't keep up with their credit card and student loan bills that never decrease.
There is a certain level of self control and discipline that could also be called for. Halting rate changes is a nice move, but if people can't rein in their spending it won't help for long.
Sure, what if interest rates are frozen, people begin to pay down their debts, then start new ones of equal or higher amounts.
The goal of Debt Neutrality is to take the 2 to 3 trillion dollars of credit card and consumer debt and and lower it to between 500 billion to one trillion max.
Part of the problem is that credit cards and student loans don't have any kind of real warning, like the ones that appear on cigarettes.
I think people believe that if they have a real hardship, one that maybe was not of their own doing, like being a crime victim, identity theft victim, having a sudden medical issue, or caretaking for a family member, that the credit card company won't take them to court, that is just not true.
If the debt is supposed to be more important than personal and family health issues, or being a crime victim, that needs to be stated up front.
Sorry to intrude - but msstacy has difficulties.
A freeze on interest ( not rates - rates practices need to be removed from the realm of usury ) - a freeze on penalties - along with a freeze on additional lending until the debt is paid off - this would reduce the amount of unsustainable debt. This would have to be set-up on a repayment schedule that could be met while allowing for the making of the day to day cost of living expenses out of pocket.
I don't mind you intruding, DKAtoday. People would have to be able to "respend" some of the money they are paying down.
Example, 5,000 dollar credit card debt, 100 dollar minimum payment all goes towards the principal, however, the customer should be allowed to respend around 30 to 40 dollars every month.
Why not just make the payment smaller and no respend? Probably not a good idea. Better to keep the payment higher and allow a modest respend percentage.
How about freeze the debt at the point of failure to pay - then payments go towards the debt and not to any penalties or accumulating interest. If the individual can not get credit for awhile - well no biggie really - living cash and carry is a good way to live - all this depends on being paid a living wage - if you do not have that - then credit should never have been extended in the 1st place.
Almost anything is better than what is presently going on.
Death to usury, death to predatory - Lending.
But in the meantime, lets reduce consumer debt from 2 to 3 trillion for credit cards and student loans to 500 million dollars by waiving interest rate charges, penalties and fees on future bills.
You can have lenders make all the statements you want there are still going to be people that overspend. The individual stays in debt because he spends too much. I'd be fine with freezing interest rates for anyone that agreed to stop using credit until they paid off their balance. The banks are only part of the problem much of it is caused by over consumption.
A lot of it is caused by unexpected surprises, medical issues, aging family members who have to be taken care, being a victim of crime, identity theft. These people don't get a break of any kind.
The real issue in my opinion is the monthly minimum payment is so low (2% of what is owed), it's no different than putting a frog into normal temperature water and then heating the water to a boil. The frog never knew what cooked them until it's too late.
Banks lobbied for an ultra low monthly minimum payment. I guarantee you if monthly minimum payments had been at the very least 5% of the total due, or even higher, say 10% of the total due, people would instantly understand how much debt they could actually take on.
Bank misdirection and deception of the monthly minimum payment is 75% of the cause of too much debt in this country.
People need to begin looking out for themselves and take responsibility for their own actions. No doubt some debt is due to unforeseen circumstances, but I find it impossible to believe that accounts for a majority of personal debt.
You may set the minimum payment at any figure you desire, or institute a freeze on interest rates. When you give the consumer that gift, you should also end their ability to charge more until the debt is totally paid.
You are also overlooking that american consumers have lost 7 to 10 trillion dollars of wealth since 2006. So consumers thought they had a certain amount of wealth and their debt was in proportion to that wealth, then wall street's fraudulent actions reversed that apparently fake wealth, but nothing has been done to help consumers get their debt back in line with much lower overall wealth.
What you're trying to do is offer some mitigation for over consuming done with credit cards and personal loans. You can come up with all sorts of reasons to forgive the debt of people. When it's all said and done it's still the individual taking out loans or over using credit cards that must bear a majority of the responsibility for personal debt.
Debt neutrality is a good way to dig yourself out as long as you stop using credit while getting yourself out from under. You seem to think people are unable to get out of debt on their own, that it's not their own fault, then the law should keep them safe and bar them from borrowing while debt neutrality freezes interest rates.
It's not forgiving the debt if the person is still paying the debt off, even if it is without interest payments, penalties or fees.
And don't you find it profound that the amount of total consumer debt IS LESS than the amount that main street loss because of wall streets shenanigans?
I'm not interested in possible conspiracies or what role Wall Street plays in debt. Personal debt gets it's start with the individual. You seem to blame the institutions for a problem that is self inflicted.
People in general may be too simple minded to understand and may have been encouraged by institutions to over borrow. If that's the case then they may be too simple minded to get out of debt on their own. Pass a version of debt neutrality that takes away their ability to borrow anything more while they get out of debt.
Get them some help through legislation, that's fine, but if the individual is so poorly educated that they don't understand you have to pay back what you borrow, then take away the credit cards for anyone that takes advantage of frozen rates or removed penalties.
The minimum payment of 2% was a purposefully deceitful pay back plan designed to over time get people into too much debt. Just like a drug dealer who gives out free drug samples.
People had responsible debt to equity ratios BEFORE wall street crashed their home equity values through their securitization fraud.
On top of that, there are people out there sitting on valuable real estate, perhaps even almost paid off, who lose their jobs and now can't qualify for any type of cash out from their home.
Example, A couple has a million dollar home, 800.000 of it has already been paid off, but they lose their employment. Simply taking out a 100,000 of home equity would tie them over for a couple of years.
No job, therefore no equity take out, they are forced to move. But, they now have to buy a 500,000 dollar home, subtract a 100,000 in all kinds of real estate and moving fees.
The result is a 500,000 dollar home, loss of a 100,000 dollars in moving expenses, 200,000 dollars in savings, BUT, they may end up paying a LOT MORE in property taxes in the newer home every six months.
The bottom line is, some people out there spent their whole lives paying off their homes, when they needed their home to help them most, (when they were out of a job), the government makes it impossible for the homeowner to help themselves from equity they spent a lifetime building up.
Now you come along and accuse main street of being irresponsible when it was the government that first bailed out the bankers with new money while denying the homeowner access to their own built up equity.
It's not relevant what the banker's intensions were when they offered a 2% minimum payment. No one was ever required to make only minimum payments. If the typical borrower isn't smart enough to look at their statements and see the trend over a few months of payments, then they are not smart enough to be allowed access to a credit card under any debt neutrality.
I'm talking the typical borrower, you insist on finding the worst individual case anecdote to build support around. Sorry I see nothing wrong with preventing someone that has gotten himself in over their head from continuing to borrow. If they are going to accept help then there should be conditions to keep these financial incompetents from doing further harm to themselves.
Of course it's TOTALLY RELEVANT what the bankers intent was, BECAUSE IT WAS NOT THEIR MONEY.
The government basically gave money to wall street banks and in turn Wall Street used that money to lure consumers into too much debt, and then with those new found profits, the banks reinvested in home securitization schemes that caused a LOSS of 7 Trillion dollars of equity for main street and of which the bankers HAVE TAKEN NO RESPONSIBILITY.
What is the main point you're trying to make? If it is relief for consumers with debt, then seek neutrality and stop these easily misled consumers from borrowing any more while they dig themselves out from under. If it's punish bankers find a better way then your debt neutrality petition.
When it comes to responsibility why do you expect the bankers to be any different from anyone else? No one seems willing to accept any responsibility for anything. You don't hold consumers responsible for borrowing, yet no one forced them to do it.
in reply to your comment below, what you propose IS the very definition of closing a credit card, the card holder continues to pay down the debt, but they can no longer respend any amount.
This actually doesn't work well if a debtor has a few credit cards they need to pay down as it literally saps all of their available cash and then some.
Banks place a hold on cards all the time without closing the account. Sometimes it happens when you reach a limit, I've had mine frozen in error when i travel. All it should take is a computer code to freeze an account without actually closing it for the time i t takes the person to get out of debt.
You have a strange way of viewing finances. The idea of living within the boundaries set by your income should be the eventual goal. That could actually mean not using credit cards unless you already have the money to pay off the balance. This should be especially true for the individual with poor self control. The available cash will have to be what the person earns, not more credit.
he goal of debt neutrality is to lower overall consumer debt in regards to credit card and student loans. That won't happen until people can pay down their debts interest free and with no more interest rate charges, penalties or fees.
The flaw with what you are saying is as soon as credit card accounts are closed, the drag on that person's overall ability to pay all of their bills every month is damaged if they cannot respend some of what they are paying down.
Some people would actually be better off as they are now by treading water on their debts versus your desire that they cannot respend any of what they pay down.
I think I gave the example earlier on. A person pays 2% of what they owe, but they can respend 1% (aka one half of the paydown) of that every month. The end result is the debt goes down every month but the consumer has some respend money as well.
This plan would still take anywhere from 4 to 8 years for most people to pay down their debts to a reasonable level, however, it instantly frees up respend money on a monthly basis to stimulate their local economies.
I didn't say close, just place a hold on it so that the person in need of help is unable to charge more on it. Minimum payments are already calculated in such a way that the card holder will pay off some of the principal each month. The problem is that they continue to charge. Making it easy for a person with no financial sense to continue to charge seems foolish.
Or, we could say the following, americans lost more in wealth from 2006 than they ever owed in consumer debt. Yes, Obama should have done something, OBAMA DID NOTHING.
Obama! Obama! Obama! 810255
Obama! Obama! Obama! 810249
Obama! Obama! Obama! 810249
Yet some people pay their bills, live their lives responsibly and don't seem to constantly be in turmoil.
Maybe it's time for the free ride mentality to stop. Say NO to the debtneutrality petition and insist EVERYONE take responsibility for themselves.
you might be confusing debt neutrality with debt forgiveness.
Or I may not.
You have use of the money. Pay back the principle AND interest.
No, you are confusing the two. There is a large movement / demand for debt forgiveness. Debt Neutrality is about as middle of the road / compromise as one can get.
If you choose to see them as the same thing, then you are a part of the problem.
No, you are part of the problem.
The borrowers signed up for the money. They need to stick to the agreement, principle and interest like they agreed to.
Personal responsibility. LEARN IT.
you are who the OWS needs to crush. Your belief that the banksters have done nothing to create the problems facing mainstreet makes you a lunatic.
No one put a gun to your head to SIGN for the loan. You wanted it. You signed on the line.
START TAKING PERSONAL RESPONSIBILITY.
You don't need to personalize this, you don't know my situation. I do know that adhesion contracts are the slippery slope to financial abuse of main street by wall street.
You seem to be in denial that americans were responsibly in debt until wall street falsely inflated everyone's worth, then deflated it so dramatically because of their own fraud as to cause all kinds of financial problems not of main street's doing.
Main Street's collateral to debt ratios were shot to shit by wall street and their fraudulent home securitization gambling games, now tell us what financial institution you work for.
None of this would have occured if people were financially prudent. Dont use credit cards and dont borrow money and the banksters cant touch you.
From the 1970's through 2000 one of the most common meme's consumers heard was it was important to have a good credit rating. To get a good credit rating, one was supposed to borrow and then pay it back. However, paying off a debt and then not starting a new one was actually considered bad.
I don't see the point in trying to lay blame at the feet of the people who have been the most honest and sincere in life. It's those who nothing better to do in life than keep cramming their excess money down other's people throat that have the character and greed issues.