apartment therapy changing the world, one room at a time

I find all this rather validating. I didn't buy a house during the crazy (unsustainable) run up in prices. I've been working at paying off my credit cars. (Will be there next summer.) I never understood how others could afford so many expensive 'things'. Now I do...they never really could afford it in the first place!!

We payed off both cars within 2 years, bought a fixer ranch for little over what we sold our other house for, and just ditched the gym memberships. We pay any credit balances off every month. With two little kids, we go to the park or to friends' houses so our entertainment expenses are minimal. We cooj at home almost every night. That said, I am still saving for a Saarinen tulip table. Saving, not charging. It is good to be practical when you don't have loads of extra cash.

Credit card debt is the scariest type of debt there is. I sometimes get worried about my visa bill (thanks to school and living off of student loans), but I can't help but think that it's not so bad compared to a lot of americans with tens of thousands of dollars in credit card debt.
Student loans, personal line of credit, etc... are the better kind of debt simply because they don't come with a 28% interest!

Living green, and within ones means is the best way to understand your fianances completely. This age of gluttony really has to come to an end.

i hope we learn a lesson. i really really do. but so much of our economy is lubricated with easy credit that i'm not sure this is too much more than a temporary pinch. i liken it to the severe drought we had in the south- it rains for 2 days and all the sudden everyone thinks its their god given right to water their lawns every day again.
that said, i do notice a nice confluence of events (demographics, oil prices, stagnant wages) that is making people think about moving to compact urban environments. that is a great start.
my personal experience at least is that if you've got a tiny house with tiny closets its hard to buy too much crap that you dont need.

I'd like to think all this green sustainable living is, uh, sustainable. But until unless the market-drive economic model changes, I suspect that we'll go back to the old ways eventually. Maybe not so "eventually;" seems the pendulum swings ever lower and narrower...

Being able to sleep untroubled at night is a better luxury than anything I could buy with credit.

Not to take away from an important topic, and I agree with all the above sentiments, but I actually quite like the look of the black Amex card.

Banks are using a "proven evaluation method" to go out and devalue people's homes so that they can cut off their home equity line of credit.

I have heard of people using their homes as ATM machines but I am finally starting to understand it.

I have seen the bling, the Escalades, the moda, the bottle service, toys. I always wondered how people paid for that stuff.

I guess when you grow up with a good work ethic and learn what kind of effort it takes to make money you do either one of two things:

1. work hard to pay for the things that you can afford.

2. do not buy the the things that you cannot afford.

I never considered alternative methods of payment such as credit cards as rational unless I could pay off that credit card when the statement arrived. I guess that's why I'm considered a "deadbeat" to the credit card companies.

The only way things will change is if people are cut off because they aren't going to change their lifestyles any time soon.

So many Americans are like trillion dollar deficits personified.

It's pretty scary because eventually, even those who have made the right decisions and have been responsible may very well suffer.

So many people are so eager to moralize on this subject.

My understanding is that the main driver of american credit problems is not usually overspending on luxuries, but rather putting fundamentals on credit. And by fundamentals, I mean healthcare, childcare, utilities, groceries. And people generally do so because they don't have any better options, and taking on credit card debt today IS a better financial option than doing without basics (healthcare, food, heat, etc.) today. Maybe they use to be able to afford groceries on their salary, until dad got laid off and couldn't find a job for two years, or until grandma got sick and needed pricey meds, or until gas prices went through the roof.

Paradoxically, people with spendy habits are usually more financially stable than average americans, because there is so much fat in their budget that they can trim when things get tight.

And yet, everyone is so quick to assume that irrational Manolo purchases are the cause of the radical increase in bankruptcy filings. It takes attention away from the real problem, which is the tragic insecurity of the american middle class.

I think yolio makes lots of good points BUT I do see people who absolutely can't afford it with all sorts of luxury items, e.g., Coach handbags.

And then there are neighbors who do things like buy an apartment for $1 million and then spend thousands to redo a new, luxury kitchen because some detail isn't perfect. And these are the people who are losing their jobs, in droves, so it isn't an issue of "trimming fat" but rather of switching to a whole new lifestyle because no one is going to pay them the $500K they need each year to live on.

Expanding on yolio's point, there are only two things that made our economy grow over the past seven years: the housing bubble and easy credit. And, since the housing bubble was fueled by easy credit, I guess you can say it's all due to that.

Wages have been stagnating for quite a while and the only way most Americans have been able to maintain their quality of life has been by racking up debt.

That said, it has been amazing to me to see people who don't earn much more money than I do buying so much stuff and seemingly living the high life.

is it me, or can others make out the fuzzed up numbers on that card?

I don't currently live in America, but I am American and grew up with a mother who has had seriously spending issues her entire life which has always destabilized the family. I left home about 20 years ago, and have fortunately not absorbed her ways. I have no debts (haven't had any for 15 years) and save every month. In the last 7 or years, I've dramatically cut spending by choice.

Decluttering is the thing which set me off on spending less. After going through my apartment and throwing out a lot of things I spent a good deal of money on, I started to seriously scrutinize every purchase both from a material waste viewpoint and a monetary one. Now, I don't buy anything no matter how cheap it is without thinking over how long I'm going to enjoy it or how well it'll fit into my limited space.

I didn't start to declutter because of some zen notion (and I still think faux minimalism as exemplified by barren spaces in decor isn't for me). I didn't it because I expected to leave Japan and knew that it was going to be really hard to deal with too many possessions when the time came to go. I didn't end up leaving, but years of thinking about doing so put me in a mindset which has been beneficial financially and in terms of physical space use.

I continue to prune away at the edges of what we have about once every month or so, but I'm not getting rid of new stuff. I'm mainly questioning the old things that I've had for years and working on weeding out the regular influx of paperwork (bank statements, receipts for electronics that have failed, etc.). I consider any purchase which is current and needs to be thrown out while in good condition a failure to consume responsibly on my part.

@art - as someone who spent 10 years putting myself through college (stopping to work, working two jobs -at $5/hr, mind you-, etc) and getting myself from parents who made $5000 a year growing up to much more than that as an adult - I could not have done it without investing in myself via credit cards. No other loans were available to me, and I don't regret it for a second. Not everyone has the luxury of not needing a hand up, and unfortunately there aren't a lot of other resources.

I never buy new, the only big ticket things I buy are items that go toward my work and gaining more work - a laptop, a camera. The idea that people who are in debt now did not grow up with a "good work ethic" is classist and absurd.

and what's so bad about being classist and absurd?

@verhext, I may be absurd but far from classist. This is how I rationalize my own spending habits and nobody else has to agree with me.

Spending less than you earn is just one (very important) part of having a healthy financial life. Your investments, the length of your 'saving life,' and the economy also have a significant impact. So many of these 'bad mortgages' came about because 1. people didn't know what a bad deal they were getting and 2. in America, we have less of a safety net (pension, nationalized health insurance, etc) than the previous generation and 3. variable interest rates went up.

I'm taking fewer trips abroad. I even switched jobs (my previous company had a wage freeze for the 2009 fiscal year). And reading the Wall Street Journal and the Economist like its my job.