hairylunch (hairylunch) wrote,

Maxed Out

Just got done watching Maxed Out, a movie that Netflix's summary describes as
Investigating both the personal and the national debt owed by Americans, this thought-provoking documentary explores the staggering financial burden we live with every day and exposes how the contemporary financial industry is set up in ways that can harm unwitting customers. With both sobering facts and black humor, Maxed Out unveils the consequences of our debt addiction, including its contribution to the vanishing of the American middle class.
While the movie has a strong liberal bias (for example, when the bankruptcy laws were rewritten several years ago to make it harder for individuals to file for bankruptcy, they highlighted how it was all Democrats objecting to the bill). Still, some surprising tidbits of information - such as the Federal government pays more in interest than it does for funding Iraq, and how over a trillion dollars has been "borrowed" from the Social Security trust to pay interest and avoid defaulting on loans. Kind of crazy.

The movie also highlights three families who lost family members to suicide over debt - 2 college students, and one older woman. It's frightening to imagine people committing suicide over debt, particularly college students. One of them had $12,000 in credit card debt - a large amount, but not insurmountable. From the NY Times review, "The facts speak for themselves. Consumer debt in the United States amounts to more than $2.4 trillion; the debt carried by the median American household is $9,000. When people go into bankruptcy, about two-thirds of what they owe is in interest and penalties, not principal."

I tend to agree with the author the review in the SF Gate, that "while the documentary does a credible job of pointing out the magnitude of the problem, it skirts the issue of what can be done about it and by whom."

The whole issue parallels a recent conversation I had with a friend about Super Size Me. Her whole point was that no one eats McDonald's thinking that it's healthy, and if people showed a little self-restraint, we wouldn't have the issues that Spurlock raises in Super Size Me. I'd guess she'd say the same thing about credit card debt, that people dig their own graves, and they should deal with it. While I can see where she's coming from, I also think that for both obesity and credit card debt, society has made it too easy to dig your own grave. The two mothers who lost their children to suicide went to DC to try and propose a bill to ban credit cards from doing on campus promotions. Sounds reasonable to me. In other words, I don't think credit card companies should be put out of business (hell, I love my Discover card), I do think we could make it harder for people to get in trouble. Whether this be done by controls (similar to speed limits making roads safer), or by making the alternatives easier (micro-loans by banks rather than pay-day lending), is open to debate.

The other thing that struck me while watching this movie was my view of debt. My brother and I had the conversation several years ago that both of us have a weird reluctance to go into debt. In fact, as far as I know, neither of us has been in any real debt. Neither of us had student loans (yea for scholarships), and have never carried a balance on our credit cards. Of course, it helps that we both received cars for our college graduations, so haven't had to deal with auto loans (yet), but neither of us has racked up any debt lasting more than a credit card billing cycle. I wonder why we have this attitude, yet so many others seem to get into trouble with their credit cards?

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