4/5 Don't Leave Home Without It
  by !Edwin C. Pauzer (New York City)
The woman looks out at the camera while showing the audience her new home in the making. She tells us how the bank guaranteed her mortgage based on the projected increased value of the house from its original price, after completion. We are told this is the exact same accounting procedure that Enron used.

There are some facts that this DVD makes clear. America, once a country where people were forced to live within their means has become a nation of debtors. Our indebtedness has been encouraged and even exploited by politicians, and credit card companies who tell us they are everywhere we want to be. With the complicity of congress, credit card companies are sapping the financial vitality of the American family.

Almost all politicians have told us that we should continue to consume. If it isn't Governor Arnold Schwarzenegger telling us from the front of an auto dealership that we need a new car, it's George W. Bush who told us after 9/11, to hell with sacrifices--just buy (and get into more debt).

In the 1980's President Ronald Reagan encouraged deregulation. Banks, once unable to operate in other states or float credit cards could now do so. Knowing that we could have something now instead of later was tempting for too many people. As the DVD reveals, the banks found a master marketer who suggested that they have zero percent interest "come-ons."

Then, there was targeting the right population. College kids were especially targeted with free Frisbees, school tee shirts, or any other gimmick that was given just for filling out an application. Calculated in this decision was to lure kids with future income potential and limited current income to make them debtors for life. The full-time working, non-student, eighteen year olds were usually rejected because they were more likely to make the monthly payments.

Enter MBNA. They write the new bankruptcy law that the 109th republican dominated Congress will adopt. This Congress has its hands in the pockets of the banks and credit card companies, and they make it quite clear that their obligation is to represent their largest contributors rather than their constituents. In the words of Senator Orrin Hatch of Utah, the purpose of the bill is "to make Americans more responsible."

It's unfortunate that the good senator didn't feel the same way about the credit card companies, which were then allowed to charge rates once thought of as criminal e.g. 35% on delinquent credit card payments. (Just think. At that rate, one in three borrowers could default and the credit card companies and banks would still make money)! Additional "fees" are added for processing, lateness, etc. Providian, which tried to lure people with low interest rates, withheld deposit or simply shredded payments so they could charge late fees and raise interest rates.

Another genius decision was to maintain low monthly payment minimums. This will guarantee that a $10,000 balance would require payments of more than $18,000 to pay off. It would also lull the consumer into feeling that the burden was not too much to bear, and that the card could still be used.

But the banks were still not short on ingenuity in coming up with more ways to make money via credit cards. They could sell their debt to collectors who were ready to dun borrowers and take them to court for judgments and liens.

There is a heavy-handed part to this story that I was uncomfortable with. It was the tragedy of two mothers whose children committed suicide because they had acquired too many credit cards and could not pay them back the enormous amount of debt they accumulated. Obviously, this decision was driven by their own thoughts rather than by collection coersion. They tell their story to Congress asking them to change these laws as they face an array of bankers and lawyers. They knew nothing would happen, and nothing did. (But at least Congress did investigate the important stuff, like if Roger Clemens was using performance-enhancing drugs)!

The intentional irony here was a number of these bankers and company executives telling Congress: "We are sensitive to the needs of our customers."

And some day pigs will fly.

I recommend you see this or buy it. But, please--pay cash for it.




Easter Monday
301 More Days and a Wake-Up

Thanks for the recommendation, Marc.


November 5, 2009: The credit card companies that are so sensitive to the needs of their customers are raising interest rates up the maximum currently allowed by law. That means 29% and 30% for customers with outstanding credit.

As I said, some day pigs will fly.

5/5 mandatory viewing for better money management
  by Matthew G. Sherwin (last seen screaming at Amazon customer service)
The best things in life are free
But you can keep 'em for the birds and bees
Now give me money (that's what I want)
That's what I want (that's what I want)
That's what I want (that's what I want), yeah
That's what I want

Your lovin' gives me a thrill
But your lovin' don't pay my bills
Now give me money (that's what I want)
That's what I want (that's what I want)
That's what I want (that's what I want), yeah
That's what I want

Money don't get everything it's true,
What it don't get I can't use;
Now give me money (that's what I want)
That's what I want (that's what I want)
That's what I want (that's what I want), yeah
That's what I want

People want money. The credit card moguls prey on consumers who don't read the fine print before they sign their lives away; elected government officials including presidents "borrow" money from Social Security; and the average person wants an endless income. As my grandfather used to say, "Rich or poor, it's good to have money."

Maxed Out is an excellent documentary that, although somewhat disjointed, does do a very good job of exploring and explaining to people--in plain English--the risks of too much debt and the responsibilities they must face when it comes time to pay back that debt. We get fascinating interviews with unsuspecting, everyday people who unknowingly were fooled by creditors to become saddled with more debt than they could handle. We also see examples of families shattered when a member of the family actually kills themselves rather than face the shame of debt or bankruptcy. In addition, look for some excellent insights from Elizabeth Warren from Harvard University and former Federal Reserve Chairman Alan Greenspan.

Maxed Out can be difficult to watch. After all, the stories we learn of are rather sad and unpleasant. We learn of credit card companies so driven to sign anyone up they give out credit cards like candy to college freshmen working a mere 12 hours a week. It's scary. We learn how four consecutive presidents "borrowed" money from social security just to pay interest on government loans and to keep the government open. (Actually, even this failed when the government closed for three days a few years ago.) Ay!

Worse yet, we are introduced to people at collection agencies who rather heartlessly leave messages with relatives and neighbors of the people in debt so that the debtors can be publicly embarrassed about getting a call from a collection agency. The shame is so great that according to Elizabeth Warren a bankruptcy is often referred to as "the event" because people can't bear to hear the word bankruptcy.

Of course, there is the other side of the coin. We see Dave Ramsey, a radio DJ who coaches individual responsibility when it comes to money management. I also had the sense, although the movie did not spell this out, that many parents simply assume that their eighteen year olds would never be given a credit card--and so too many parents never teach their kids about the risks of racking up debt. Parents and schools need to teach lessons about money management very, very carefully.

Overall, Maxed Out is an excellent film that deals with all of the above and more. The DVD also comes with interesting bonuses including another interview with Elizabeth Warren; a 1950's educational film about credit and money management that should still be shown to young students today; and we also get another close look at Dave Ramsey who counsels people on the radio about debt and getting out of it.

I highly recommend Maxed Out for anyone who wants to better understand just how predatory credit card companies can be--and just how much we still need to know about overall money management to avoid much more debt than we could ever repay. This movie also benefits from an excellent soundtrack. Although this subject matter could be dry, the movie keeps it all interesting by also showing interviews with everyday people about their financial problems and other film clips.


4/5 No easy answers here for difficult financial burdens
  by Kyle Tolle (Phoenix, Arizona USA)
`Maxed Out' is an informative although disjointed look at personal and national debt in America. There is a decent amount of interviews given by not only regular victims of credit card debt but also from individuals who are educated in this subject such as consumer advocates and financial experts. A bit more organization in the presentation of material would have been better.

Looking past the shortcomings listed above and concentrating solely on the subject of debt, this program reveals some alarming trends by credit card companies, the government, and corporations that want to part you from your money using whatever means they feel are good for them but not good for you.

Whether it is credit lenders trying to exploit college students or companies trying to induce recent bankruptcy filers to again mire themselves in financial trouble, this is just another day at the office for them, business as usual. When it comes to ethics and professional behavior, it really isn't a big consideration in day to day affairs for some credit card companies and banks. As far as collecting on what you owe them, it is commonplace to experience rude and intimidating behavior from some debt collectors. When it comes to gathering information about a person's credit history and buying practices, there is evidence of data manipulation and disregarding people's rights to privacy in financial affairs.

When looking at numbers too, these don't paint a very pretty picture. Over 4 billion credit card offers a year are sent to the public. Credit card fees have risen 160 percent over the last 5 years. Between 1994 and 2004, over 10 million Americans filed for bankruptcy. The average household nowadays averages over 9000 dollars in debt and they spend more than 1300 dollars a year in interest payments. In 2004, thirty different states sued banks regarding predatory and discriminatory practices.

Don't count on the government to help out or be a consumer watchdog regarding these affairs either. They're complicit in events that worsen the situation. President Bush introduced new bankruptcy legislation that makes it harder for middle class citizens to file for bankruptcy and get a second chance. Several presidents have borrowed very heavily from Social Security and pension funds to make interest payments owed on the national debt. So much for the public's best interests at heart. When it comes to examining and investigating the unscrupulous behavior of these credit card companies and lending institutions, very little action, if any, is taken and in most cases they aren't being held responsible for their harmful activities.

Although some of the subject matter in this program may be a little disheartening at times, it is still a good look at what really goes on in this country regarding debt, fiscal irresponsibility, and the diminishing middle class society in America, among other things.


5/5 Up your learning curve in financial literacy!
  by K. Corn (Indianapolis,, IN United States)
This is based on a book by the same people who made the movie (well, some of them). If you prefer to gain your information via some other form than books, this is a good alternative. I happen to own both movie and book and think they complement each other, belong together as a set.
After watching this, I doubt you'll feel the same about credit and debt again. It will help you avoid predatory offers and, more importantly, be wary. NEVER forget that credit card companies are in business to make money, preferably by helping you wrack up debt at the highest interest rates possible. Miss a payment? They'll be counting the extra dollars as they up your interest rate. DON"T miss a payment and you may find your interest rate "arbitrarily" raised anyway.
If you believe in increasing your financial literacy, this is a must-see. Credit cards can be tamed and, when used wisely and with back-up funds to keep you from being at the mercy of credit card companies, they can be a valuable tool in your financial picture. But be wary...and wise about the pros and cons.

Please add your comments and any info you have about how people can avoid getting Maxed out - or whatever else you feel like adding. Share your input, please, because it matters to me.

By the way this movie is based on this book, well worth owning and reading: Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders

5/5 Predatory Lending....What they don't teach you in school
  by Amy Kennedy-Mehegan (Portland, Oregon)
As a 30-something accountant who was marketed to heavily by credit card companies once I turned 18, I could completely relate to this film. By age 21 I had my car repossessed, defaulted on 2 loans, 8 credit cards, and was unable to open even a savings account in my name. All the credit was given to me, like many of the people featured in the film, while I was earning minimum wage at a part-time job.

Today I try and counsel my clients away from debt of all kinds, including the ever-present tax refund loans, check cashing, and home equity lines.

The sad truth is that many people need these services to simply stay afloat from month to month, and the movie didn't offer any more solutions than I generally can. Still, I highly recommend this film to everyone, and especially enjoyed the little jab made at Suze Orman. (She's always seemed less than genuine to me, and now I know why)