Has The United States Become A Nation With No Economic Spine?

What are hard working Americans who have scrimped and saved and have done everything “right” financially for decades supposed to think about all of these “bailouts” and of the massive financial mess in Washington?  How are people who have handled their own finances admirably supposed to feel now that the foolishness of others is leading us all towards a horrific economic collapse?  Well, a reader named “Mae” recently left a comment that I think does a good job of communicating what a lot of hard working Americans are feeling right now: My situation is this – we have lived our lives playing by the rules: never carried debt on a credit card that we couldn’t pay off by the due date. If we couldn’t afford the item, we didn’t buy it. We always had a Christmas Club which enabled us to pay cash for the holiday. We payed ourselves first after every paycheck whether it was $10 or $100, whatever we could afford. We made double payments on our mortgage when we could which helped us to pay off our modest home 10 years early. We knew that we couldn’t afford to “have it all” so we made our choices early on and stuck with it. We sacrificed the fancy vacations in order to do large home repairs (like a new roof) ourselves. We didn’t buy expensive cars and now own one outright and carry a small loan on another. That’s our only debt besides monthly bills. We chose jobs that provided health care benefits. We did everything right…we saved and saved and saved to have a decent retirement but of course last year took half the value of our 401k.

Now, I’m expected to sit back and watch Bush, Congress and Obama bail everyone out because they didn’t have the fiscal discipline to manage their money?? I’m supposed to feel bad for people who bought homes they couldn’t afford? or cars they couldn’t pay for? or $1000 cell phone bills? or $20,000 in credit card debt? HELL NO! I’m livid! If I ran my checkbook the way Washington is running the national checkbook, I’d be thrown in jail!

All we can do now is educate as many people as possible about what is happening and hopefully vote all these s.o.b.’s out of office and replace them with fiscally conservative candidates who will vote for term limits. The days of a career politician are over. I don’t know if we can turn any of this around – it will take a lot of hard work to make the tough decisions, but they have to be made if we’re to survive. How many people have the guts to work through this? Not many…we’ve become a spoiled, selfish, arrogant and hypocritical nation with no spine.

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The Credit Card Trap: How U.S. Credit Card Companies Are Sucking The Financial Life Out Of The American Consumer

There have been very few things more damaging to American consumers over the past couple of decades than credit card debt.  Easy credit has enabled many of us to live absolutely fabulous lifestyles, but outrageously high interest rates, ridiculous penalties and predatory fees have sucked the financial life out of millions of American families.  It is very easy to blame the rapidly exploding debt of the U.S. government for the economic collapse that we are now experiencing, but the truth is that tens of millions of Americans have created their own personal economic disasters by overusing credit cards.  The temptation of easy credit has been too much for millions of Americans to resist, but now all of that easy credit is proving to be incredibly difficult to pay back, and massive debt problems are literally tearing many American families apart.

It is hard to underestimate how devastating credit card debt can be to a family.

According to the credit card repayment calculator, if you owe $6000 on a credit card with a 20 percent interest rate and only pay the minimum payment each time, it will take you 54 years to pay off that credit card.

During that time you will pay $26,168 in interest rate charges in addition to the $6000 in principal that you are required to pay back.

That does not even account for any penalties or fees you may have to pay.

Are you starting to get the picture?

The reality is that credit cards are one of the greatest inventions for sucking the wealth out of middle class American families ever invented.

Just consider the following facts….

*According to the United States Census Bureau, there are approximately 1.5 billion credit cards in use in the United States.

*At the end of 2008, the total credit card debt piled up by American consumers was over 972 billion dollars.  This is an amount that is greater than the GDP of the world’s 122 poorest nations combined.

*78 percent of American households had at least one credit card at the end of 2008.

*The top 10 credit card issuers control approximately 88 percent of the credit card market.

*The average U.S. college graduate leaves school with more than $2,000 in credit card debt.

So is Congress doing anything to protect American consumers?

Well, some of the key provisions of The Credit Card Accountability, Responsibility and Disclosure Act, commonly known as the CARD Act, go into full effect for all credit card providers on February 22nd.  In particular, starting on the 22nd limits will be imposed on when credit card issuers can raise rates on existing card balances.

But the truth is that this new law doesn’t really do much to protect us.  U.S. credit card companies will continue to be able to engage in highly predatory practices.  The following are just three examples….

#1) According to Pamela Banks of Consumers Union, the nonprofit publisher of Consumer Reports, there are no current federal laws that cap credit card interest rates.  In fact, CNN is reporting that interest rates on some major bank credit cards are now as high as 36 percent.

#2) New laws only address the existing fees charged by credit card companies.  So credit card companies are working hard to invent all kinds of new fees and penalties that will get around the new laws so that they can keep sticking it to American consumers.  For example, Citibank is now charging some consumers with a fee if they put less than $2,400 on their card annually.

#3) In anticipation of the CARD Act going into effect, many credit card companies have been aggressively bumping up the minimum payments for many of their customers.  Chase, one of the biggest credit card providers, recently increased the mandatory minimum payment for many consumers by 150 percent.  MBNA, Citibank and Bank of America have announced that they are doubling minimum monthly payments on credit card balances for many of their customers.  These increases have been absolutely devastating for many families who are on a tight budget.

The bottom line is that we all need to get out of debt and we all need to stop using credit cards.  It is financial insanity to end up paying two, three, four or five times as much for an item as it cost in the store.  We have been making the big banks rich by spending money that we do not have.

So if we are going to accuse the U.S. federal government of horribly wasting our money, we have got to be certain that we are geting our own financial houses in order.

But for many American families it is already too late.  It is hard to pay off debt if you don’t have a job and you are about to lose your home.  In fact, many American families find themselves literally being torn apart by financial stress.

Unfortunately, economic times are not going to get any easier.  If you are able, get out of debt while you still can.  Now is the time to tighten our belts and to prepare ourselves and our families for what is ahead.

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