Debt crisis is a myth.....?

[jimmygu3]

Re: Debt crisis is a myth.....?

He is just celebrating the fact that the treasury got another bunch of Balance Transfer Checks in the mail. They can float the credit card balance for another 9-12 months at only 1% interest!!! Let's listen in to the happy couple ...

Hi Honey! How's work going? I just went to the mailbox and we got a real good deal on a balance transfer. We can clear out that nasty credit card bill and only pay 1%! Remember the big screen TV we were looking at? Well, you were there too... Anyway we could get that and STILL have a BUNCH of credit limit left over! Just the thing for you to watch the figure skating on. Oh, the skating is already over? Well, then next year... Anyway, whadaya think? Ya know since I lost my job it's awful dull around here with just that 25 incher in the rec room. Oh, sure. Yeah, I'll start vacuuming every day if I get to rest those tired feet afterwards. Why should we worry. 1% interest is so cheap it's almost sinful. They're GIVING THE MONEY AWAY!! We better hurry.

Nuff said?

Reminds me of a former friend who was very successful and frugal, saving 15% of his income, having put away $100k by his 30th birthday (think USA 1945-1980). Then he fell off the deep end with drugs and alcohol, spent his life savings, and essentially hasn't worked in 10 years (think FIRE economy and its collapse). During the early part of that period he maintained his lifestyle and would tell me about his credit juggling. "I get offers to take a $50k advance at 1.9% APR- I'd be a fool not to take them up on it!" Needless to say, that game ended in bankruptcy and the loss of everything he had, including his sanity.

Of course, with some discipline, that excellent FICO score and plentiful credit could have been used to help get himself back on his feet. He could have dreastically reduced his expenses, gotten a realistic job he would be happy at, and used the credit line as an emergency fund, or to invest in very specific training that would provide future income to service and reduce the debt. But that's no fun! Much easier to ride the debt Hindenburg into the ground.

USA Inc. is in the critical stage, still in denial, having chosen to maintain standard of living through massive borrowing, with no clear engine of future income in sight. Without a radical and unlikely change of course, the US is headed for the same fate as my friend.

-Jimmy