Podcast: Why Americans Are Buried in Debt

Several comments.

Not everyone can be so fortunate as to be able to sell off a lot they just happen to own and to have that lot be worth enough to pay off the mortgage on their house.

But your advice is good, so long as other debt is paid off first. As another Alpha Consumer show advises, it is wise to pay off higher rate credit card debt first and then mortgage, which has a lower rate and also is a tax write-off. Wisest is never to get in debt beyond one's means in teh first place.

But that will take incredible good luck. Even living as a church mouse, I was in dire financial straits when my first marriage cracked up.

What is thought to be necessary now, even secondhand, is amazing to me. This applies to houses, apartmemnts, cars, eating out, and forms of at-home and outside entertainment.

I am a 56-year-old grandson of immigrants (illiterate) from Lithuania and Poland (arriving in Cleveland between 1887 and 1913). My father was a postal worker, my mother worked as a grocery clerk and then in a school cafeteria. My father's first new car, a stripped down Ford Galaxy, was bought in 1963 when he was 47 years old. It did not come loaded with the equivalent, at the time, of sound systems, satellite cable,or other frills. Our meals were often leftovers from school lunches, including Turkey hearts and chicken livers.

By such frugality, my father was able to buy and build a small three-bedroom home in a nice Cleveland suburb. A doctor of chemistry and his wife, a school psychologist, without children lived next door

My first trip to the barber shop was a rite of passage. I was a sophomore in college. My father cut my hair until then. I went to college with a cheap portable 'stereo' from Sears. I had no television, three pairs of pants and about 6 shirts and three pairs of shoes, casual, dress and tennis, and underwear and one suit. My suitcase was my brother's old Air Force duffel. I did not feel I needed much else. I was there to study and to take in what the University (in my case Boston College) had to offer.

I have students at my public university who work 20-30 hours per week, and pile up credit card debt, not to afford their educations, but to make payments on a pickup truck, afford a flat screen television and cable service and super stereo sound systems, go off on vacations and so on.

You were wise to have your children work. My summer jobs on road repair crews, garbage trucks, in a brake shoe factory and as a school janitor, taught me to be sympathetic with and considerate of people in all walks of life and also that there were jobs much harder and dirtier and poorer-paying than any I would ever have to work at after getting my degrees.

I am not totally sympathetic with Brian of IL. As the recent documentary 20 minutes by Bill Moyers on subprime devastation in Cleveland shows, there are people who can genuinely be taken advantage of. That is why old regulations were in place: to protect the uneducated, the unintelligent, those who have suffered bad luck.

To give mortgages to people who were traditionally classified as bad credit risks or who did not have resource, and do so under terms which were eventually less favorable to their making payments was a formula for disaster.

As the mayor of Cleveland declares: those involved (bankers, realtors, appraisers, lawyers, title insurers, lobbyists and state legislators) knew this. They knew it.

When Cleveland moved to enforce its own regulations, the state of Ohio legislators passed a law preventing communities from doing this.

Tom Palaima of TX 3:49PM July 24, 2008