Debt

 My broke sister-in-law wanted me to meet her at her bank today to meet with a representative.  Yup.  It's just what I wanted to do the day before Thanksgiving at 3:30 PM.  

I'm delving through her finances and piecing together her situation.  Here's the problem.  She tap dances and does not give me the whole story.  I have to prod and pull information out of her.  I need the whole story in order to help her.  

Figuring out her income was a story all unto itself. 

Figuring out her expenses were yet another story all unto itself.

My sister-in-law does not get a bank statement.  What?  She said she calls to get the balance.  She needs to get a bank statement monthly and scrutinize it.  My gut tells me she does get a bank statement, but she does not want to show me.  

Same with the credit cards.  She says she does not get statements.  I asked her how she verifies purchases on her cards to know if they are legitimate.  She doesn't.  She does not have online access, either, as she is not really technically savvy.  She pays the minimum amount due on her credit cards.  The minimum payment does not keep up with the accruing interest on her cards.  

Since yesterday I have identified $50 she has been throwing away monthly without even really trying.  Fifty bucks is a big deal to her.  She was paying bank fees on her checking account, and she also had a subscription to a clothing catalog she was not even aware she had.  What other recurring charges are there?  She said the statements for all her accounts are forthcoming in the mail as she finally agreed she need to see them.  I'm tapping my toes waiting.  

In the meantime, at the bank this afternoon, we managed to negotiate her 19% credit card interest rate down to 4.25% and lower her monthly payment by $50.  The catch is that she can't charge on that credit card anymore.  Good.

The guy at the bank was very nice.  He was saying he's seeing a lot of people in trouble lately.  People used their credit cards to make ends meet.  Now that their credit cards are maxed out people are desperate for $.  They are taking out home equity lines of credit and second mortgages to pay off their credit cards.  

That is not a good sign.

It's unwise to use secured debt to pay for unsecured debt.  I see another housing bubble bursting in the not-to-distant future.  

The immediate impacts of inflation over the last couple of years or so have been mitigated by people using credit.  Now people can't pay.  People can't "borrow" themselves out of their financial hole any longer.