Tuesday, May 26, 2009

Financial Armageddon when both spouses are unemployed

Recent articles in the news have stated that there are many homes in default or foreclosure because not one but BOTH of the primary wage-earners are currently unemployed.
when you couple that with the current economy, where jobs are extremely scarce and pay scales have declined, we have a recipe for more financial Armageddon in our midst.

I am concerned about this because unemployment, and the financial collapse of a families finances affect all of us, and cause our own worth to diminish as the crisis escalates.
Among professionals, a drop in credit score (caused by a home in default or late payments on credit cards and loans) can make you a "risky" hire, and you would never know why, they would just pass on hiring the person with a low credit score (sucks if that's you). If they told the applicant the truth, they would be open to a discrimination lawsuit.

You also need to be aware that all the "workout, Debt-Settlement, and modification packages" are "attempts to collect a debt", and the lenders want to get paid, and are sympathetic to your plight but not so much that they will actually reduce payments, lower interest rates, or otherwise assist the debtor. In fact, their reporting of late or missed payments and subsequent "penalty interest rates" put additional hardships on the unemployed, and can further jeopardize the employable status of someone who is unemployed and in debt. Many of these people take jobs where they are under-employed, or making barely more than minimum wage. After the phenomenal years we have had, many of us have stacked on debts that are more than pocket change; They need thousands of dollars a month to break even, and must start to pay down the debt or risk further financial destruction. This is made more difficult when there is additional costs to save money - returning the leased or mortgaged car; cancelling certain contracts (cell phone, satellite TV, etc.), and selling the second home (if it is not underwater financially). There is alos a tremendous emotional cost, as these people suffer from isolation, depression, and other maladies where treatment may take months - and they may not have adequate health insurance!

This is important to us for many reasons. If this segment of the population fails financially, it will continue to drive employment, home prices, salaries, and business opportunities to levels that will drastically affect every neighborhood in America. THE AMERICAN DREAM IS AT RISK, and major change has to occur in the way debts are managed so that these people can re-group and find their way to earning again.

Wednesday, May 13, 2009

Piracy on the High Seas - a Solution

As a student of history, and a recreational boater, I find the situation in Somalia of great concern. Somali pirates are seizing vessels by force, and charging multi-million dollar ransoms for the return of the ships.
President Obama's response to the situation was welcome, as Piracy is an unacceptable profession in today's world, except in Disney Movies.
My solution is this:
Conscript the pirates into the Somali Navy! Paint their boats in Somali colors, and give them uniforms. They are already decent mariners, and this gives them a form of recognition and a "regular" job. Second, have the merchant vessels pay for a formal escort by Somali Navy vessels through the (formerly) pirate-ridden seas. This will cost far less than ransoms, and give the Somali pirates an opportunity to join the world of commerce as defenders of the seas instead of scorned plunderers! And they will have regular pay to squander on Rum and Wenches when they return to port.

Sunday, May 10, 2009

Credit card regulations don't go far enough!

I am rather upset by the weak credit card laws proposed this past week. It is like the paid lobbyists from the credit card companies are writing the legislation!

First, lets get real - the credit card companies ENSLAVE people with credit card debt, interest rate hikes, calendar shenanigans that ensure people miss the due dates (so the banks can charge hefty fees), and other LEGAL and shady practices that guarantee the banks make the maximum profit from each charging customer. This is more like a war than a business, with the debtor who does not pay off his charge cards each month paying more interest and fees than the original purchase is worth.

These companies need to be reined in; not just notifications "90 days prior to an interest rate hike" and forcing anyone under 21 to have a parent cosign (remember, many responsible parents learned their lessons the hard way).

This is better for the CC companies than the debtor! A parent consignor makes the parent responsible if the child defaults. The parent is almost forced into paying off the debt, because their FICO score is affected! (Bank wins). 90 day notification just gives the banks more time to shut down somebodies credit - They have integrated reporting systems, notification tools, and other mechanisms to ensure the person who is being changed will not have a chance to move any of this debt to a lower interest card. (Bank wins).

President Obama - ARE YOU LISTENING? - This law does not go far enough. Let's send this one back for more revision, and let some responsible citizens have real input into this!