This is a post I did on my other blogs, The Frugal Law Student. I thought people in the bloggernacle would be interested considering the focus by our leaders to get out and stay out of debt.
20/20 did a special tonight on America’s debt crisis. The broke it down into three parts: Spenders and savers, debt collecting, and cyberbegging. Here’s some of the highlights of the show.
Spenders and Savers
This segment focused on two families living on opposite ends of the financial spectrum. The Peterson Family are big spenders. They’ve racked up over $60,000 in credit card, hundreds of thousands of dollars in time shares, and a few mortgages on their house. Despite their money problems, this year the family has gone on more vacations than any time in their marriage. They’re on the brink of bankruptcy.
In order to help them, 20/20 brought financial planner Robert Pagliarini, author of the book The Six Day Financial Makeover. He set up a plan for the Peterson family that included selling their house and time shares. I wonder if the family will follow through with it.
Watching this family, I couldn’t believe that people could just rack up debt like that. They never regretted a single lavish purchase they made because they figure they’ll probably be dead tomorrow. I don’t get it.
Lesson from the Peterson’s: DON”T USE CREDIT CARDS! Cut the darn things up (don’t cancel them; it hurts your credit score) and start paying with cash. Take it easy on the big purchase items. If you can’t afford it, don’t buy it. Duh.
The Economides are the cheapest family in America. At least that’s what they titled their book. They earn less than $35,000 a year, have seven kids, a few cars, but no debt. They’ve accomplished this by buying everything used and planning grocery store trips so they’re as economical as possible. They carry around walkie talkies in the store to report on the good deals to each other. They also buy expired lunch meat. They’re hardcore.
Lesson from the Economides: PLAN, PLAN, PLAN. Take advantage of coupons; every cent counts. Buy whatever you can used.
This segment was a perfect torts hypo for Intentional or reckless infliction causing severe emotional distress by extreme or outrageous conduct (See? I learned something in law school). They interviewed a former debt collector about the techniques he and others like him used to get money from people. Tactics included persistence calls with death threats, threats to reveal their debt to neighbors, and just plain emotional abuse. It was heartbreaking to see the crap that some of the debt collectors could drag people through.
Of course John Stossel had to bust out his libertarian stick to show that we should be thankful for debt collectors. He points out that the bad debt collectors are a minority. The tactics they use are illegal. He then goes on to argue that if it weren’t for debt collectors, prices would go up because companies would lose money on default payments. He also made a point that most of the clients of debt clients are small businesses. I always figured debt collectors were for big companies. Overall, I think Stossel made some good points. At least he got me thinking about things.
Lesson learned from debt collectors: keep only two credit cards, negotiate lower rates, and if for some unfortunate reason you become the victim of thug debt collectors, contact the FTC, your lawyer, and tape the culprit berating you.
Cyberbegging is a hot topic, especially in the blogsphere. Paypal donation buttons are popping up on blogs everyday. One law student started a blog to raise money to pay for his student loans. (However, one should note that he’s converted the site into way of raising scholarships for other students and raising awareness about student debt.) Cyber Beg is a popular site where one can list their financial need like they would list an item on craigslist. The crazy thing is that people give money.
The segment discussed how an admitted shopaholic, Karyn Bosnak, got herself out of $20,000 worth of designer handbag and belt debt by asking complete strangers on the net. It worked. She wrote a book about it and made even more money. A movie deal is forthcoming.
They also discussed how Dustin Diamond (aka Screech from Saved by the Bell) used cyberbegging to save his house. His sex tape, “Screeched”, has been picked up by a major porn distributor and he’s raking in the dough. (That makes two former Saved By the Bell alum who’ve gone on to make porn. Don’t do it Lisa Turtle! Resist!)
My first reaction is disgust. These people have no shame. Both Bosnak and Screech say what they did is creative, not shameful. Right… when was the last time you heard someone praise the creativeness of panhandlers and bums? That’s right, never. Screech and Bosnack… you’re bums. Jason Ryan Dorsey, author of My Reality Check Bounced: The Twentysomething’s Guide to Cashing In On Your Real-World Dreams, discussed how Screech’s and Bosnak’s attitudes are common among twenty somethings. They’re not responsible with how they spend money, so they don’t want to be responsible for paying for their debts.
I guess one could make an argument that ad’s or pay per post are a form of cyberbegging. That’s what Bosnak tried to argue. Her site is full of content. She figures the donations were in exchange for the content But the difference between begging and posting ads are different. With posting ads, you’re providing a service (putting a company’s ad on your site) in exchange for money. With cyberbegging, it’s just people telling us about their life and then asking for money so they can pay off debt or buy a handbag. It’s like justifying panhandling by saying if the panhandler tells us about his cute dog or what he thinks about Lindsay Lohan and then asks for money, it’s OK.
Lesson learned from cyberbeggers: Get a real job!
Overall, it was a good show. I thought they could have spent more time disusing the frugal family. Check out the 20/20 site for more details.