The End of Credit Card Consumerism

Ethical Dimension of Sustainable Development

"Solidarity, Sustainability, and Nonviolence"

-- monthly newsletter, free access

A series of articles on "dimensions of sustainable development" is being published. Please post and/or forward this notice to friends/associates who might be interested in sustainable development and related issues.

The September 2008 issue has been posted:

Ethical Dimension of Sustainable Development

http://pelicanweb.org/solisustv04n09.html

See the archive for previously posted newsletters:

May 2005 to August 2008 Archive

http://pelicanweb.org/solisust.html

Any feedback is deeply appreciated.

Sincerely,

Luis

_______________________

Luis T. Gutierrez, Ph.D.

Sustainability & Sustainable Development

Solidarity, Sustainability, and Nonviolence Newsletter

Luis Gutierrez of MD @ Sep 29, 2008 16:08:29 PM

Opportunities in the Present Credit Crisis

We have seen over the last few years a financial crisis unlike anything seen since the Great Depression. The American people are in nearly $1 trillion of credit card debt, $3.3 trillion in consumer debt (all debt excluding mortgages) and if we throw mortgage debt in we are at $12 trillion. To put things in perspective, when Bill Clinton was running for office in 1992 the call to arms was formed around our national debt, the debt our nation owed other nations, which was published at that time to be $3 trillion. Now our consumer debt is there and one third of that is credit card debt. As a nation we have become like a ravenous animal with a tape worm and the only thing that satisfies is our consumption of more goods. We have become insatiable with materialism and have become a freight train of spending with no engineer, going 100 miles an hour off the track. In 2005 18% of sub-prime borrowers defaulted on the very first mortgage payment (The Debt Advocacy Center). There were 1million foreclosure filings last year and 400,000 in the first quarter of this year (National Realtor Association). On top of all that Bankruptcy filing were up 38% in 2007. This all sounds very gloomy and it is, however it is not hopeless. We also have an opportunity to make changes in our lives, get out of debt, help others do the same and as a nation we can become stronger through this. However, the individual must act with sound judgment, discipline, conviction and perseverance. We must get ourselves out of debt and the faster the better.

There is basically two types of debt, unsecured and secured. Unsecured debt is anything that has no tangible item that can be taken as collateral. Credit cards, medical bills that are in collections etc. Secured debt is home mortgages, car loans, boat loans etc. In terms of eliminating debt you always want to eliminate credit card debt first. Why? It uses compounding interest to determine your payout as compared to simple interest. Mortgages are calculated by simple interest. If you had a $100,000 mortgage over 30 years you would pay back at the end approx. $165,000. The same amount on a credit card would calculate to nearly 40 years and approx $250,000. Why? Because of the difference between simple interest and compounding interest. Bottom line, we need to get rid of credit card debt. The banking industry has enslaved the American public through credit cards. We need to take the proverb "the borrower is a slave to the lender" to heart and be debt free.

Part of the problem is there are so many sharks out there how can anyone know what is a wise choice for help. If you are behind in unsecured debt and need settlement, there are plenty of companies out there to help, the only problem is they want to charge 10% to 15% of your debt before they do anything for you. If you owe $15,000 you have to come up with $2,250. Heck, if I had that kind of money I wouldn't have the problem and wouldn't need their help. Bankruptcy is an alternative, n

Phill of FL @ Aug 28, 2008 23:06:05 PM

2008...THE YEAR THAT WAS!!

As a small business owner, it truly has been a year of change, mainly for the worst. And if you are not on a scale of 7 to 10, which I mean a business that is dealing with the wealthy class,it has definitely been a severe uphill battle. The old saying "money comes to money" is truer these days then it ever was. And if you are a business owner these days that caters and deals with the lower to medium income class of people, then you truly must really be feeling the affects of the downturn in spending, and even customers patronizing your business. Sad that the small business owner is becoming a thing of the past, as I believe that many, if not, most, will not survive the economic onslaught. We have been active in our small family run business for over 25 years, and have even moved our business place to what we thought was a "better location." NOT a good move! BAD timing! The hole has become deep enough for us to become very concerned. Yet, many competing businesses who have wealthier clientele are "thriving." It makes me wonder about the "rift" between the middle class and the rich, as it seems to have widened tremendously. My conversations with other small business owners are similiar to ours where they are in the midst of a struggle for survival. In all our years in our business, I never imagined that maintaining "break even" would look so good!

Harold M Smith, Jr. of PA @ Aug 24, 2008 09:32:37 AM

ttes of NV

We have freedom of choice but it is limited by freedom of wallet. You can drive any gas guzzler you want, but it's not up to the rest of us to insure you have cheap gas. For that you are limited by your own wallet.

You also don't have freedom to kill people, kick cops in the shins or do any number of other things. Freedom comes with responsibility.

JiM in Mesa of AZ @ Aug 19, 2008 15:11:30 PM

Read and study Walden

Henry David Thoreau adovocated simpifying our lives in the 1840's. People in this country should read and study Thoreau's Walden. He was not advocating living a primitive life. He belived that by simplifying his life he could spend less time and effort supporting himself, spend more time doing what he enjoyed and be much happier. Could your magazine have a featyre article on Thoreau and Walden.

Also, we learned nothing in this country from the lives of Howard Hughes and Elvis Presley. They because quite wealthy, yet were far from happy men when they died.

Bob of NJ @ Aug 15, 2008 22:54:13 PM

Spot on

RE: Consumers were "so glutted on everything that they had acquired and all the time that was robbed from them...that they almost saw this [downturn] as a great opportunity to stop," says Faith Popcorn, chief executive of her eponymous consultancy.

So true Kimberly! A well-written piece providing a great overview of the American consumer outlook today.

Ms. Meacham: Money Maven of OR @ Aug 15, 2008 16:15:12 PM

I LOVE my Credit Card!

I encountered this post while researching America’s views on credit cards. I work for CardOffers.com, a free online credit card directory. Actually, it is my job to promote credit cards.

If used wisely, credit cards can be a smart way to spend and use money; but I have to emphasize “used wisely”.

More Secure

I live in an area where identity theft is rampant. My husband was victimized twice just by using an ATM and paying with his debit card. We had to wait one month on two separate occasions for $7000 to be replaced in our checking account. We used our savings to cover costs until the money was recovered. I would rather have credit stolen, than cash.

Rewards

I use my airline card for everything. I have enough miles for two round-trip tickets to South America just by spending what I would normally spend. In addition to airline miles, many cards offer cash back, hotel miles, etc.

Benefits

A lot of cards offer many benefits for being a card member: insurance on rental cars, satisfaction guarantee on purchases, complimentary upgrades, discounts, concierge services, and more.

0% Introductory Rates

Free loan, period. As long as you pay off the balance during the limited time period, you have an interest free loan.

Cash Incentives

Because of the credit crunch, many issuers are offering cash incentives for approvals. We advertise a few on our site—you can earn up to $50 per approval (limited to two approvals once a year per person—this is to combat fraud).

I have to emphasize again, if “used wisely” credit cards are great. Everyone should do the same type of comparison shopping for credit cards as they do with home mortgages. Some people do more research on their high definition TV then they do for credit cards.

Amal of FL @ Aug 13, 2008 15:10:51 PM

Cultural amnesia

I was only a baby the last time a cultural shift in thinking occurred like the one unfolding now. People sold their huge gas-guzzling American "boats" in favor of smaller, cheaper Japanese fuel misers. Those early Japanese cars were fantastic little gas sippers capable of getting 30 to 35 miles per gallon. Funny, here we are 30 years later and we are being bombarded with advertisements for cars that get 35 miles per gallon (45 if it is a hybrid). Pretty unimpressive numbers when you consider that personal computers at that time were nothing but glorified calculators. Shouldn't we be getting 35 miles per gallon in our SUV's based on the number of technical advancements we have made, 60 in our small cars, and 100 in our hybrids? If "green" is the new status symbol, then we need to wake up to the fact that the "green" vehicles we are spending so much extra money for now are really only marginally better than the first commuter cars our parents bought.

Nehemia of DC is right, a little financial education could go a long way. A little history lesson might help as well. It is humorous to listen to all the "talking heads" on TV and radio wax poetic about our unique current societal situation. It is all cyclical. Ten years from now things will be better and people will start forgetting about the hard times again. Just don't call this borderline recession a hard time when my grandmother is in the room, otherwise you might get a first-hand account of how truly desperate things can be. What are we at, 6% unemployment? During the hardest years of the great depression fully a quarter of the American workforce was unemployed -- without the government protections and programs that are taken for granted in today's age of entitlement. It's true, we need to take our problems seriously, but let's keep things in perspective here.

I'll make it simple. Don't spend more than you have. Save a little bit out of each paycheck, even if you can only afford a few bucks (that mocha you buy every morning is $3, and that pack of cigarettes is over $5 now, I think). And in case you didn't know, even the poorest members of our society have widescreen TV's in their living rooms with surround sound, nice cars with nice rims, and a cell phone for every member of the household. Just like the poorest people in the thirties, right?

Aaron of CA @ Aug 12, 2008 23:39:17 PM