Please visit our new site, ModernAlternativeMama.com.
Comments on this post have been locked and updates are no longer being made to this page. Please click here to view this article on the new site.
In light of the fact that many people probably used a lot of credit to get themselves through Christmas, I thought I'd review the movie Maxed Out to start the new year. This movie is all about how much debt we have in this country (personally and the national debt). If you haven't seen it, I do recommend it, although I have some general reservations about it.
This movie, like many of its style, is filled with personal stories. I find this particular technique to be "effective," although not helpful. When I'm watching a documentary, I would like the straight facts, not muddied up by worst-case scenarios. This movie seems to blame the government and large corporations, especially credit card companies, for peoples' debt problems. Towards the end of the movie, they describe how some families can live the "American Dream" by staying out of debt, but say that most families won't manage that. I think that all families CAN manage that, if they are well informed about money and are willing to make lifestyle changes as necessary.
However, the movie did present some scary statistics:
*Credit card companies send 4 billion offers per year.
*Average household has over $8400
*1980s -- $15 for late or over limit. Now (2005), $43 for late or overlimit, plus interest rates 21 – 28% .
*FICO has nothing to do with your income, and an inaccuracy rate of 90%.
*National debt clock was built in 1988. Individual family’s share is $90,000 (in 2005. Now, it is over $500,000).
That's pretty scary!
Here is a quote from a woman in the movie that sums up a lot of the people featured, and the attitude I believe a lot of people have:
"They kept offering me more, and I kept thinking, if they think I can pay it back, maybe I can pay it back."
The credit card companies are not your friends. The movie actually shows collection employees mildly harassing customers, and interviews them about their perspective on the matter. Credit is offered to EVERYONE, but especially to people who have a history of using a lot of it -- i.e. people who probably DON'T have the means to pay. Credit is frequently offered to people who have declared bankruptcy because the companies know they will use it (poorly). Credit is offered to low-income families and to college students, because these populations are more likely to splurge or to "need" credit. So an offer of credit is, by no means, a friendly way of saying "I have confidence in your ability to pay this back." It's saying "I know you will likely carry a balance and have to make finance charges and pay fees, and I know I can make money of you because of this."
The movie also goes through several issues with the national debt, including noting when various presidents have increased it (usually by borrowing from social security).
The general picture of the movie is that this country is highly leveraged and financially unstable. But other than featuring Dave Ramsey (it doesn't discuss his actual plan, though, just shows some basic information and a few radio show quotes), it doesn't actually offer a solution. The final message is unenthusiastic and the movie believes that people CAN'T escape being in debt, that it just a fact of life in America.
I disagree with this, and I would have liked to see a real solution to the problem. Luckily, I'm going to do some research and provide you with one very soon. :)
Have you seen Maxed Out? Do you use credit cards? Do you want to improve your financial situation?
Posts
My husband and I saw Maxed Out, but it wasn't surprising to us (the statistics) because we heard much of it from Dave Ramsey. In my opinion, I wasn't surprised by the movie because it seemed to put most of the blame on the credit industry, not on the consumer. Of course, the credit industry does have some responsibility, but we, the consumer, are all responsible for knowing how much income we take in and how much we can spend. Personal responsibility is not held in high regard these days.
ReplyDeleteWe do not use credit cards, only cash. And, it was only when we became good stewards of our money that our financial situation improved greatly. We'll never look back. :)