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Living Car Free Do you live car free or car light? Do you prefer to use alternative transportation (bicycles, walking, other human-powered or public transportation) for everyday activities whenever possible? Discuss your lifestyle here.

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Old 09-26-08, 01:40 PM   #1
gwd
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Downside to living within your means.

I was listening to someone defending the president's 700 billion purchase of worthless mortgages say that it effects "everyone" so we all have to pay up. The problem is that the guy's definition of "everyone" was everyone in debt. He was saying that people who live beyond their means will no longer be able to do so if credit becomes hard to get. So what I take away from that is those of us who live within our means must pay up for the benefit of those who don't. A recurring theme on this list is that living car free allows some people to live nicely within their means and avoid or get out of debt. It makes me wonder what would happen if everyone lived within their means and avoided debt.
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Old 09-26-08, 02:30 PM   #2
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Many believe that the situation can be fixed using free market solutions.

From Congressman Connie Mack of Florida on the Paulson Bailout Plan:
'Instead of pursuing this ill-conceived, heavy-handed action that will trample the free market system, Congress should consider market-based solutions that will strengthen our economy and preserve our free markets. These should include a number of market-based reforms such as instituting a reduction in or a temporary moratorium of the capital gains tax; strengthening the U.S. dollar; ending mark-to-market accounting; accelerating depreciation; and repealing the Securities and Exchange Commission’s ban on short-selling certain stocks and reinstituting the so-called “uptick rule.” '
Maybe we aren't getting the full story from the government and the media who seem intent on ramming the Paulson Bailout Plan down our throats.
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Old 09-26-08, 02:53 PM   #3
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I It makes me wonder what would happen if everyone lived within their means and avoided debt.
There wouldn't be any bad mortgages because the mortgage market wouldn't exist if everyone avoided debt. Your employer couldn't borrow against receivables or to expand. Your kids wouldn't be able to go to college... that sort of thing.
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Old 09-26-08, 02:53 PM   #4
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Investment banks and mortgage holders alike made risky decisions, and now the consequences are here to bite them. Except the government wants to remove all the consequences. Gee, I wonder if that might result in even more risky behavior?
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Old 09-26-08, 02:54 PM   #5
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Many believe that the situation can be fixed using free market solutions.
I thought the current situation was caused by a free market solution... perhaps if the markets were less free we might not be in the current situation.
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Old 09-26-08, 03:03 PM   #6
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Your employer couldn't borrow against receivables or to expand. Your kids wouldn't be able to go to college... that sort of thing.
I didn't mean no business loans for inventory or expansion or for farmers to plant their crops. I meant people like me who work for a paycheck.

My kid is working her way through college and got some scholarship money. Its slow but she'll graduate debt free. I did the same- no debt at graduation time.
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Old 09-26-08, 03:03 PM   #7
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I thought the current situation was caused by a free market solution... perhaps if the markets were less free we might not be in the current situation.
"We" aren't in any "situation"


I'm doing just fine, because I avoid debt, and save most of my money. Now the federal government wants me to be personally responsible for thousands of dollars of other peoples' irresponsibility.
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Old 09-26-08, 03:10 PM   #8
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I love it! I hope this 10 trillio...Sorry 700 billion (yeah right) solution doesnt get passed. There are a lot of politicians who hold stock on these companies and banks and it would serve them right.

If it passed It would be like US paying for THEIR losses. If divided equally, it woud be about $2,000 for every man, woman , child in this country, Including illegals, for the first run. Because they can come back and take more later. And whats more, none of their actions are reviewable, and cannot be persecuted. THERE WILL BE NO CONSEQUENCES if they simply decided to take more of your money.

I say let's do it!


NOT!
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Old 09-26-08, 03:12 PM   #9
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"We" aren't in any "situation"
As long as you're a citizen and resident of the United States, this is your problem too.

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Many believe that the situation can be fixed using free market solutions.
And these delusions are why the gap between the wealthy and the poor in this country will continue to increase.
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Old 09-26-08, 03:12 PM   #10
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I'm doing just fine, because I avoid debt, and save most of my money. Now the federal government wants me to be personally responsible for thousands of dollars of other peoples' irresponsibility.
Yeah, it doesn't seem fair that people who avoid debt have to cough up thousands of dollars for people who don't. But we might be in a minority like people who live car free who still breath the bad air and put up with a wasted environment for the car drivers pleasure. Are debt free people a minority in the US? I know the savings rate is pretty low but a few people heavily in debt can skew a statistic to make it seem like the average person is in debt. I guess half my friends have more debt than savings but I'm not sure.
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Old 09-26-08, 03:21 PM   #11
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As long as you're a citizen and resident of the United States, this is your problem too.
No it isn't. My problems end with me and my family.
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Old 09-26-08, 03:22 PM   #12
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I was listening to someone defending the president's 700 billion purchase of worthless mortgages say that it effects "everyone" so we all have to pay up.
By 'everyone' I think we are talking about 'everyone' who pays taxes, which is virtually everyone.

No matter what happens with this weekend's discussions and in the future weeks, this mess will probably plague our economy for many years, or possibly even decades. To add insult to injury, we have exported our mess to many countries around the globe.
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Old 09-26-08, 03:30 PM   #13
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No it isn't. My problems end with me and my family.
If that were true, you wouldn't pay taxes or use public facilities. Get back to me when you're off the grid and in the woods.
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Old 09-26-08, 03:51 PM   #14
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I was hoping to see someone would address the issue of teaching Americans how to be more fiscally responsible. I think some people have gotten their priorities all wrong in this country and need to remember that just because you can find someone to let you have a $40,000 car (just an example), doesn't mean that you should.

There are many government programs I do not agree with, and there are many that upset me because I'm told I don't qualify. I use student loans to pay my education at a private college. I cannot afford the tuition out of pocket, but I feel that the education I receive there is far better than that of the college I could pay out of my pocket for.

There is nothing wrong with using credit, you just have to use it responsible.

-Nate
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Old 09-26-08, 04:00 PM   #15
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If it passed It would be like US paying for THEIR losses. If divided equally, it woud be about $2,000 for every man, woman , child in this country, Including illegals, for the first run.
I agree with you on all parts except for this. $2,000 is assuming we actually pay for it upfront. I think it will be put on a loan that should be paid off by the time teleportation will solve high gas prices.

Speaking of not paying off a loan (what got us into this problem to start), here's some info on the national debt. http://www.federalbudget.com/

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Old 09-26-08, 05:35 PM   #16
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My kid is working her way through college and got some scholarship money. Its slow but she'll graduate debt free. I did the same- no debt at graduation time.

I am doing the same thing ... yes, it's difficult to work and go to school at the same time, but I'll graduate with a minimal debt which I should be able to pay off in a year or so. And then I'll be completely debt free.
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Old 09-26-08, 06:19 PM   #17
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I was listening to someone defending the president's 700 billion purchase of worthless mortgages say that it effects "everyone" so we all have to pay up. The problem is that the guy's definition of "everyone" was everyone in debt. He was saying that people who live beyond their means will no longer be able to do so if credit becomes hard to get. So what I take away from that is those of us who live within our means must pay up for the benefit of those who don't. .
This financial mess is going to screw with EVERYBODY - and it is going to hurt most those who HAVE been responsible and lived within their means. If you live within your means, it suggests you might have savings -perhaps in mutual funds and perhaps money in the bank. I also assume that you work and pay taxes - taxes that are being squandered with the bail-out and taxes that will go up and you will pay with greater toil than before.

The values of the stocks in your mutual funds are at risk for massive devaluation.

The money you have in banks is at risk of complete evaporation in the worst case or massive devaluation in the best case.

That is what really sucks about this situation AND the proposed bailout. The hard-working people who live, work, and save responsibly will be hurt the most. The working man will pay the taxes that go to propping up failed businesses of executives who vacuumed off the money and ran with it.

The solution is not to bail out these financial systems and let them fail just like every other poorly managed company. Yes it will hurt, but putting it off and pumping the empty balloons with tax money will cause and even worse problem.

The really sad thing is that the federal, state, and local taxes for many mid-Americans is nearing 50% now. With the added burden of these bail-outs and the Bush wars, the tax burden is almost sure to exceed the 50% mark in the near future. We will reach Socialist Government taxation without public health care or any of the other benefits of Socialism- burden only.

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Old 09-26-08, 09:33 PM   #18
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I am doing the same thing ... yes, it's difficult to work and go to school at the same time, but I'll graduate with a minimal debt which I should be able to pay off in a year or so. And then I'll be completely debt free.
Same here. Have a friend who graduated in about half the time it's going to take me for the same degree, but he has $160K in debt that he has to answer to and isn't going away anytime soon. I am working full time and taking as many classes as I can afford for each semester. It's slower going, but no complaints here.
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Old 09-26-08, 10:04 PM   #19
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"We" aren't in any "situation"

I'm doing just fine, because I avoid debt, and save most of my money. Now the federal government wants me to be personally responsible for thousands of dollars of other peoples' irresponsibility.
Are you retired? Do you realize that Bernanke wrote his dissertation on the causes of the great depression? Do you realize that during the great depression unemployment reached 24.9%?

We (people that work for a living) are in this situation, whether we caused it or not.

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The values of the stocks in your mutual funds are at risk for massive devaluation.

The money you have in banks is at risk of complete evaporation in the worst case or massive devaluation in the best case.
1. I welcome the opportunity to purchase cheap stocks to lower by average basis.

2. No one's money is going to disappear from their FDIC insured bank account. In fact, one of the worst case scenarios for the economy right now is DEFLATION. That is, people's money would go up in value. Unfortunately this is a very bad thing for the economy.

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I was listening to someone defending the president's 700 billion purchase of worthless mortgages say that it effects "everyone" so we all have to pay up. The problem is that the guy's definition of "everyone" was everyone in debt. He was saying that people who live beyond their means will no longer be able to do so if credit becomes hard to get. So what I take away from that is those of us who live within our means must pay up for the benefit of those who don't. A recurring theme on this list is that living car free allows some people to live nicely within their means and avoid or get out of debt. It makes me wonder what would happen if everyone lived within their means and avoided debt.
You missed the point. A lot of businesses use credit to fund projects that are ultimately profitable. It is not as nice as using cash, but sometimes it is their only choice. This is especially true for the electronics industry. It takes A LOT of money to set up a fab, but it is also ultimately profitable.

NO CREDIT == NO JOBS (for a lot of businesses)

That said, I don't think we should bail out anyone.

Last edited by Tabor; 09-26-08 at 10:18 PM.
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Old 09-27-08, 01:18 AM   #20
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I was hoping to see someone would address the issue of teaching Americans how to be more fiscally responsible. I think some people have gotten their priorities all wrong in this country and need to remember that just because you can find someone to let you have a $40,000 car (just an example), doesn't mean that you should.
This ties in to the concept of entitlement. Too many people believe they deserve what they think is the good life. Too many young couples believe they should be able to start out at the same standard of living as their parents built up over 20 to 25 years.

It's possible to live comfortably and happily on a modest income if the expectations are kept in line. It's also possible to feel impoverished on a high income if the lifestyle is too extravagant. Contentment, not an accumulation of things, is key.
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Old 09-27-08, 01:26 AM   #21
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No it isn't. My problems end with me and my family.
You're kidding, right? it's even affecting us here in Australia, whether we like it or not. Your problem (USA) is now our problem (the whole world)

I think the subprime lenders knew perfectly well they were writing loans to people that couldn't repay them, so I don't see why they (the lenders) should be bailed out of their own mess. Call me cynical but I'll bet many of those in power have interests in these institutions and stand to make/lose significant personal wealth. That might be why they're so keen to throw taxpayer money at it.
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Old 09-27-08, 03:37 AM   #22
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Lending money for home mortgages when there is no chance of repayment is OK if the housing market continues to climb. Heck, banks here in Australia have been lending like crazy to almost anyone -- the old rules of lending only up to a percentage went out the window, and some institutions were financing to 100% of the property value. When the repayment default inevitably comes, the bank repossesses and the property goes to auction on the expectation of recovering the capital plus some.

There also were a lot of people who picked up on using their home equity as collateral to finance other trinkets such as cars, boats, holidays, motorcycles... and the resulting debt became part of the mortgage.

A slight increase in interest rates meant enormous pressure was immediately applied to those families. Now, instead of having, say, a 50% equity in their home, they were faced with OWING the bank money on default, and having a heap of toys that have already devalued by around 50%. Even worse, the market becomes saturated with these trinkets, so the prices go down further.

Affluence -- you could say greed -- does incredibly bad things to the financial, emotional and physical health of a nation.

Anyway, Newspaperguy gets my vote for his insightful and incisive comments on expectations. Mine have dropped considerably since I was in my 20s and 30s -- especially when they didn't eventuate.

I am very contented with my lot right now. It took some hardships to understand it all, though.
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Old 09-27-08, 05:55 AM   #23
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It makes me wonder what would happen if everyone lived within their means and avoided debt.
We would be French.

http://news.bbc.co.uk/2/hi/europe/7635327.stm
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Old 09-27-08, 06:57 AM   #24
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I thought the current situation was caused by a free market solution... perhaps if the markets were less free we might not be in the current situation.
The current situation was caused, to a large extent, by government intervention into the marketplace. The combination of two government actions palyed a large part in the credit meltdown. The Community Reinvestment Act required lenders to make loans to low income borrowers who clearly could not afford to pay back the loans. Then, artificially low interest rates propagated by the Federal Reserve set the price of borrowing money very low. These two actions distorted the market and set off a frenzy of borrowing, cheap consumer credit and real estate "investing". To lower risk, smart (but greedy) lenders sold these risky loans to investors as packages. This is probably where you think there should be more regulation by the government. But if the original distortions were not there (cheap money and government requirements) and the lenders were able to refuse the risky loans up-front, then more regulation and government intrusion would not be needed because the risky loans (at least not to the extent we have today) would not have been made. For the few who do get cheated in a free market, there are the courts of law.
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Old 09-27-08, 06:59 AM   #25
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It was variable interest rate home loans that really got us in this mess mostly. Most people were able to afford their house when they first purchased it. However, they were either to ignorant to realize that variable interest rates aren't a good thing, or they actually really thought that it would never rise. So when it started to climb, all of these people didn't know what to do. Some refinanced for fixed rate home loans, others couldn't come up with the closing costs for the new loan, and still others just sat there like a bump on a log expecting some miracle to happen and rates would go back down. This problem only points out just how stupid some of the people are in this country and how we should maybe focus less on proms in high school and more on how important being financially responsible is.

BTW; my bank just went under and was bought up by Chase...no more Washington Mutual, hello I charge a fee for everything Chase.

-Nate
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