A debt crisis looms as renters turn to credit cards to stay afloat
Experts worry people may be destroying their credit to make ends meet during the pandemic.
https://crosscut.com/focus/2020/09/debt-crisis-looms-renters-turn-credit-cards-stay-afloat
Gotta do what ya have to do.....
@SouthJamaica wrote:A debt crisis looms as renters turn to credit cards to stay afloat
Experts worry people may be destroying their credit to make ends meet during the pandemic.
https://crosscut.com/focus/2020/09/debt-crisis-looms-renters-turn-credit-cards-stay-afloat
I wondered what would happen, when people run out of unemployment and stimulus monies.
Don't know how many people had a years worth of emergency funds? .. I'm guessing not many
Not knocking renters here, but no equity to tap into.
Main Street (MS) calling Washington (W):
MS: "Help! We're on fire! Our economy is on the verge of collapse!"
W: "I'm on the phone with Wall Street. I'll get back to you when I can!"
This is a multifaceted issue. I want to preference my opinions with the understanding that thus far I have been extremely lucky and my opinions are not meant to pass judgement.
The consumer debt in the United States was already rising at the start of the year, the reality is many Americans aren't really equipped to handle long-term unemployment. Dave Ramsey and others preach the 3-6 months of emergency funds, but there are certainly people that have been out of work since the pandemic started and we are now 7 months into this. The blow was lessened by the extra unemployment and stimulus checks. I have no doubt that some people might have made poor choices with that money and some of those people maybe the ones adding to their debt or not being able to pay rent. This does minimize the fact that this pandemic has hurt a lot of people in a variety of different ways, financially being one.
I think in general we as a society are going to need to re-evaluate our relationships with debt and living beyond our means. I know I have been guilty of this time and time again, and I am not passing judgement. Something has to change and it has to change at all levels. I don't know what all the answers are and I will avoid further commentary to avoid getting into politics and will end by saying that everyone should prepare (which I am doing by trying to buy a house during a time of economic uncertainty like a good little American).
@M_Smart007 wrote:
@SouthJamaica wrote:A debt crisis looms as renters turn to credit cards to stay afloat
Experts worry people may be destroying their credit to make ends meet during the pandemic.
https://crosscut.com/focus/2020/09/debt-crisis-looms-renters-turn-credit-cards-stay-afloat
I wondered what would happen, when people run out of unemployment and stimulus monies.
Don't know how many people had a years worth of emergency funds? .. I'm guessing not many
Not knocking renters here, but no equity to tap into.
The sad part is the experience likely won't leave a meaningful imprint on those who didn't save before now. There's too many grasshoppers and not enough ants out there, and the ones that do manage to stay afloat are likely to go right back to being grasshoppers once the economy recovers.
This crisis is very peculiar and transcends the typical recession dynamics.
While it is true that Americans tend -- on average -- to abuse credit and live beyond their means, this isn't like a normal recession that tends to hit people proportionally -- where the ones who overspent the most being punished the most.
In this crisis, people are hit by profession rather than by level of debt: even very responsible people are being hit hard: entrepreneurs who were taking a commensurate amount of risk in the hospitality and entertainment sectors, and employees in those industries who were living within reason. At the same time, some of those folks who were overspending before have not (on average) been penalized as harshly if they worked in sectors that were not as affected by shelter-in-place orders and social distancing measures.
Manufacturing jobs took another huge hit, by the way: the sudden step-function increase in automation and robotization caused by the pandemic (a long-term trend that was now accelerated) is pulverizing hundreds of thousands of jobs that won't ever come back. I don't think we can blame all those folks for not being ready for a robot to take over.
@iced wrote:
@sammydavidjr wrote:This crisis is very peculiar and transcends the typical recession dynamics.
While it is true that Americans tend -- on average -- to abuse credit and live beyond their means, this isn't like a normal recession that tends to hit people proportionally -- where the ones who overspent the most being punished the most.
In this crisis, people are hit by profession rather than by level of debt: even very responsible people are being hit hard: entrepreneurs who were taking a commensurate amount of risk in the hospitality and entertainment sectors, and employees in those industries who were living within reason. At the same time, some of those folks who were overspending before have not (on average) been penalized as harshly if they worked in sectors that were not as affected by shelter-in-place orders and social distancing measures.Manufacturing jobs took another huge hit, by the way, after being on a non-stop decline since 2015: the sudden step-function increase in automation and robotization caused by the pandemic (a long-term trend that was now accelerated) is pulverizing hundreds of thousands of jobs that won't ever come back. I don't think we can blame all those folks for not being ready for a robot to take over.
I agree there are some who did everything mostly-right and still got clocked. The hope I have in this is that, when they do get back on their feet again, it leaves them with a bitter taste and they seek ways to insulate themselves from a repeat. There are levels of planning and preparation even this level can do to mitigate a future repeat, such as becoming adaptable to working in multiple fields or creating a side-gig/passive income stream to soften future blows. The idea is that, no matter how well one did or didn't do in this shutdown, there's always, always, always room for improvement and everyone should have felt at least a little personally responsible for their lot. I've arguably come out way ahead from the shutdown and I'm still assessing my mistakes and faults through it and looking for ways to come out even further ahead next time. That's the mentality more need to have, rather than feeling like victims. There are no problems, only opportunities.
The automation brings up an interesting topic, though it might be a sensitive one. Automation has been obliterating manufacturing (and even some service) jobs for decades now, and one of the real root problems along the way has been the reluctance or outright denial those in automation's path of destruction take toward it.
As you state, these jobs are not ever coming back, and yet there remains a demographic that, faced with the choice of either adapting to the new world of service-based and tech-related work/skillsets or digging in and making a stand in the obviously futile effort (at least obvious to everyone outside of the aforementioned group) to revive a career path that was doomed years ago. The shutdown has accelerated the extinction of these jobs. They may be old dogs, but we've told them for years it's time to learn some new tricks, and old dogs CAN learn new tricks if they want to.
That said, we can blame these folks for not being ready for a robot or program to take their job. Again, the eradication of those jobs has been years in the making; the writing was on the wall, pointed to, spoken about, and then pointed to again. Ignoring that writing was willful ignorance on their part. These people were punched in the face in slow motion, with plenty of time to dodge the blow either by learning new skillsets and jumping off the sinking ship or preparing themselves for the blow (forced retirement), but instead took it right in the kisser and are now reacting as if blindsided.
I tend to be forgiving of those who lose their jobs to automation or the general obsolescence of their industry (i.e.: mining). Here's why:
- Because they have not consistently been told that their jobs would eventually go. As a matter of fact, they are still very much being told -- from behind a podium marked with a very authoritative office seal -- that their jobs are coming back and will continue to come back... again.
- Because learning new skills is a lot easier said than done. Some folks certainly had/have that opportunity and still seek comfort in the memory of the good old days, but the hurdles for those who genuinely want to try are often significant.
- Because a lot of people who learn new skills can't really deploy them effectively. I've been in the tech sector since 2004: internationally, in the Silicon Valley, in NYC. The industry has grown like weed and we've hired a ton of people from all over the world. You know who you never see among those hired? People coming from mine country, or midwestern former factory workers, etc. Even when they have the skills, they don't have the pedigree that will get them hired. There are very few tech companies nationwide that are known to have recruiting strategies that value the resilient mindset of people who are starting over.
- Because we are all -- one way or another -- guilty of wishful thinking, hoping that just this one time things will work out. People who rebuild their homes after every hurricane in the same exact flood hazard area; gamblers who just know that one more roulette spin will make them rich; myFICO members who open $200k worth of credit lines with Synchrony; fans who keep rooting for the New York Mets hoping DeGrom's talent won't go to waste... again! We're also guilty of thinking we survived a recession in good shape solely because of how prepared we were, without accounting for good fortune.
Go Mets!