The Conical Glass: Maxed Out

Tuesday, February 27, 2007

Maxed Out

What kind of financial education did you receive? Mine came from my parents, a banker dad and a -- I was going to say tightwad, but let's say thrifty mom. My dad was a loan officer for many years and I remember his cautionary tales of the bankers and lawyers he encountered who were in debt up to their eyeballs, despite their six-figure salaries. The lesson: no matter how much or how little money you earn, don't live beyond your means. I got my first checking account when I was in high school and learned to balance it to the penny (something I still do, but it's much easier now since I use Quicken). As a result, I live debt-free, with the reasonable exception of our mortgage.

When I was a college senior, I applied for a credit card and was turned down -- apparently, my major (Writing Seminars) was not considered lucrative enough, something that was borne out when I got my first job out of college earning $5/hour. How things have changed since then! Today, any college kid can get a credit card, regardless if he's majoring in philosophy or pre-law. Indeed, credit card companies throng campuses, offering free T-shirts or frisbees to anyone willing to fill out an application. Most kids take advantage of the offers, and a lot of them wind up owing thousands of dollars by the time they graduate -- and that's in addition to their student loans. Did anyone ever warn them that if you pay the minimum payment, it could take you 30 years to pay off your debt, and that's only if you never charge another cent? What about the fact that credit card companies can legally change your interest rate at any time and for any reason?

The new documentary "Maxed Out" explores America's credit card culture, and perhaps the saddest story told is that of two women whose college-age children killed themselves after they ran up huge credit card debts; one of them had accumulated a dozen cards. The moms have since been crusading to get credit card companies off campuses. Were their kids irresponsible for going on buying binges after receiving their plastic? Undoubtedly -- but let's face it, we all did a lot of stupid stuff when we were teenagers. Misusing credit cards is something that can screw up your entire adult life, and for whatever reason, that message isn't getting through to teens. We don't let 18-year-olds go out and buy a six-pack of beer anymore because too many of them weren't using alcohol responsibly. Should those same teens really be allowed to go buy a new wardrobe at Abercrombie & Fitch with their newly acquired Visa card unless they can prove they know the ramifications of what they're doing?

"Maxed Out" features a lot of other stories -- a farmer in Minnesota whose credit rating went haywire when her daughter died and she was mistakenly considered deceased as well; a mentally retarded man who was persuaded by Citibank to refinance his home and is now facing foreclosure; a National Guardsman who had to file for bankruptcy after a long tour of duty in Iraq because his military pay couldn't support his wife and child. The overwhelming message of the film is that the deck is stacked against consumers. (Lest you think filmmaker James Scurlock is a liberal agitator, he is a former campaign worker for George Bush Sr. and was voted "most conservative" by his business school classmates.) The credit providers prey on the weak and the poor because that's where the money is. If they can only pay the minimum, that means they're racking up huge fees and interest payments. Folks who pay the bill in full every month are considered less desirable.

"Maxed Out" isn't a particularly slick or entertaining doc in the crowd-pleasing vein of "Super Size Me," but it is certainly informative, and would be an invaluable film to show to high school or even middle school kids -- before they get to college and encounter the hordes of credit card marketers.

posted by 125records @ 5:29 PM

2 Comments:

At 7:30 PM, yellojkt said…

I am bad with money and very over-extended. That said, I stay current and try to get ahead, but the credit card companies rape you every chance they get. Arbitrary rate increases. Mysterious term changes. I just despise those companies. They are the most genuinely evil people in the country.
At 1:05 PM, Paula said…

I think it's interesting that M. Spurlock and J. Scurlock both make docu's.

I have lived w/o a credit card for over 10 years now. A debit card is all I want or need. That's not to say that I don't have debt--oh, brother, do I!--but I am off the credit card grid, and happy about it.