Ever Wonder Why Your Banker's Laughing So Hard? Look At Your Interest Rate

If you want to get a real handle on what keeps the financial industry afloat in greenback gravy, while millions of people remain mired in economic misery, the following example should serve as an illustration, and also, a warning.

In this case, the source material comes from a financial management course that the U.S. Bankruptcy Court requires of its petitioners, passed on by someone who's undergone the process.  The reader is asked to ponder two hypothetical case studies, affected by different credit histories:

Kelly

Credit Score: 750

Interest Rate: 4.5%

Loan Amount: $175,000

Insurance: $500 annually

Property Taxes: $4,000 annually

Monthly Payment : $1,262

Total amount to be repaid: $319,211 

Lisa:

Credit Score :620

Interest Rate: 7.75%

Loan Amount: $175,000

Insurance: $500 annually

Property Taxes: $4,000 annually

Monthly Payment: $1,629

Total amount to be repaid: $451,341

Although Kelly's credit score will give her a hypothetically less bumpy ride in life, the reader should notice the repayment amounts, which are highlighted in bold, for your convenience. In Kelly's case, she's still going to pay back almost twice the loan, while poor Lisa will cough up slightly more than three times the original amount. Ever wonder why your banker's laughing so hard?

The impact of interest also plays a role in the debate about the impending student loan debt bubble, which -- amid all the ink being expended on the current Fiscal Cliff Debate -- has received precious little attention, but certainly should. Ever wonder why your banker's laughing so hard?

Last year, the Consumer Financial Protection Bureau (CFPB) put out a call for student loan horror stories on its website. This example, courtesy of Yahoo News, is an example of rapacious laissez-faire capitalism at its most harrowing:

Socialworkmary: Paid $350+ per month on her loans for 14 years to no avail

"I admit I did not understand capitalized interest until recently. I consolidated my loans in 1997 when the interest rate was 8 percent. My student loan office at Tulane University led me to believe that I 'had' to consolidate and Sallie Mae was the only option offered to me.

I have repaid them over $61,000 (over 14 years). I think I should be done now, but according to Sallie Mae I still owe $25,000. A Sallie Mae employee directed me to write the legal department and ask to have my loan written off and to appeal if they denied. They denied, stating that federal government regulation prevents them from writing off the balance of the loan.

When I talked to the Sallie Mae employee and said I was confused about why on most months more of my payment goes to interest than principal... she chuckled and said 'We certainly don't go out of our way to put that in big bright red letters across the front page'." 

You can read the original CFPB press release on the subject here:

http://www.consumerfinance.gov/pressreleases/consumer-financial-protection-bureau-aims-to-shed-light-on-the-private-student-loan-industry/

And, if you want to take a truly depressive bath during this most difficult of holidays for folks living on the margins, this "Business Insider" story should do the trick:
http://www.businessinsider.com/depressing-student-loan-stories-2012-9?op=1

Just cut, paste and then...shake your head.

Ever wonder why your banker's laughing so hard?  It's safe to say that 99 percent of us know all toll well, but sometimes, we need a healthy reminder (or two) of why the picture doesn't look so pretty for those of us caught in the grip of such schemes...and, also, why those who continue to champion the status quo need to be held accountable for promoting them.  --The Reckoner

Too Poor To Prep!

The Reckoner isn't into prepping as much as the Squawker. I am what could be called a WANT TO BE PREPPER. I believe there are major chances of total economic and other collapse looming over society. Even our scary weather, whether from would be rogues and their chemtrails if you believe that way or from "climate change" seems to be now bringing a monthly disaster to America. Some surely are old enough to remember when a thunderstorm was just a thunderstorm and didn't mean millions had the electrical grid collapse for weeks such as the East Coast is having happening now.

To be frank, I almost froze to death while on a long distance trip in a blizzard. Yes, it did get that bad, and my food amounted to some crackers I had with me for days. Thankfully a Andy Griffith like friendly sheriff rescued I and a friend from a stuck car but while we were given shelter in an falling down hotel, there was no heat. The days of being wrapped in blankets on the bed, as a trail of freezing tears will be ones to never be forgotten. I also know the me of today in poorer health never could survive another go-around.

Another time if not for a friend with an outdoor wood heater, that would have been the end, three days, seeing my breath before me, with an entire small town, with the power out including the hospital in the dead of winter after an ice storm. Freezing to death is not a pleasant outcome. These experiences told me that civilization has a thin veneer and stayed with me.

For years, I have read Backwoods Home magazine, like others have read Vogue and fashion magazines to dream of an unattainable self-reliant life. With poor health and low money, the walking cane and prescription drug set living in a small apartment without land aren't exactly able to follow what these magazines detail. The problem? Most everything COSTS MONEY, the tools, the canning jars, the special pots, and you need LAND to pull it off. What if you have none of it? The Reckoner and I lack all of the above, included needed skills.

I feel a sense of guilt in not having been able to prepare. I pray that God will look out for me and leave it that. However all these years, I have discussed with the Reckoner, switching to another way of life, but we were forced even out of our more remote small town from economic forces. With every month a marathon even to obtain food and the basics of living, what extra is there to prepare for societal collapse outside of some solar flashlights, extra meds and a few silver coins? Perhaps that was a bad decision, but when you can't pay rent or buy food, who wants to live in someone's basement? I've had enough homeless and other friends to know that is a situation not always easily rectified.

When I watch the Hutterites on TV, I feel ENVIOUS.  They have community, food they grow and make themselves, and skills to survive. They have others around to help them. The Amish share these things too though they are not allowed electricity and modern tools like the Hutterites who live more communally--every family in a private home but with shared meals and resources. I wonder if shows like this and ones on the Amish are growing so popular now, because people see a way of life that was lost. Not only are we enslaved to debt, working as worker bees, going nowhere, we have lost everything that has made life matter, community, religious connections, close access to our family, ties to the land and more. The only time I get to visit with my family is on a social website, some of whom I have not seen in 7-8 years. Somehow photos and written lines isn't doing it anymore, but very few seem to understand the loss I speak of. One asks what is it all for just to work and enjoy nothing else?  For those who are disabled, isolation seems to be a normative price in this society.  If healthy I would consider what of these lifestyles and one can tell even modern preppers in their own way aspire to it. I have realized that I am not happy in "modern life", but with poor health feel somehow 'stuck" in being able to change it. If anyone has any ideas about that write me here.

Suburban upper middle class life in my case, prepared me for nothing. I even had to learn to live as a poor person in the beginning because I simply did not know how. When your parents never lacked for groceries, finding alternative sources of food, does require knowledge, such as how to approach a food pantry. Today that is the worse part of being poor, the feeling of being on the abyss, knowing it wouldn't take much to knock the whole jerry-built contraption over. Of course here, prayer helps, but you wonder about the stress, of what modern life has done to us. Out of touch with everything but at the same time bombarded with fear, endless disasters and more. The preppers even if some think they are crazy, and many do, are the people preparing ahead of time, sniffing the wind of a culture that even now speaks of it's own collapse. What is that Zombie Apocalypse meme about? What do you all think of a country now where everyone is so worried honestly seeing the rising signs of decline with their eyes open, that so many people desire to have entire bunkers full of food and survival supplies? This is not a sign of a healthy cohesive society but one that is coming apart at the seams with people knowing it is!! Whatever your beliefs, even if you think these prepping people are 'crazy', and I don't, there is a reason so many Americans feel the need to do this now. 

That said, prepping does cost money.

Look at this guy, he is probably an average prepper, how many thousands of dollars did this prepping cost? How many folks would have this guy's extreme mechanical skills? He has the land, the resources and much more to pull off the prepping self- reliant life style



He admits at the beginning of the video, that he spent $6-7,000 dollars for the food stores. What of the families who do not have this type of extra expendable income? I do believe if someone feels so led, they should prepare as much as they are able. We are in the days now, where having a few extra days of food around is not a bad idea, but then with so many stuck in the week to week lifestyle, barely able to even keep the needed daily groceries in the house, it is a serious problem.

I don't have the answers for this one, it is just something I've been mulling over. There are different websites out there that do give advice.

120 Powerful Pieces Of Advice For Preppers

How to Start Preparing for Hard Times on a Very Modest Budget:Part One

I guess at the end of the day, a person can just do what they can, if you are poor enough everyday is a "survival run".--The Squawker