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.  

Piranha: One Bite At A Time

 The media is trying to tell us inflation has tampered down.  I'm not so sure about that.  Perhaps inflation for 2023 was 3.7%, but that's on top of the 10% of 2022.  In reality, we are facing inflation of 15% on everything from a couple years ago.  How many of you got a 15% raise just to keep up?

I don't see many raised hands.

I feel like the piranhas are biting at us one little chunk at a time with the price increases here and there ranging from: groceries, utilities, gas, health insurance, homeowners insurance, auto insurance,  etc.  It's a feeding frenzy and we are the bait for these nasty fishes.  Inflation will gnaw at us middle class bit by bit until there is nothing left but a pool of red water.  

I think there is a silent depression going on economically.  I personally know of many who have been laid off.  I think there are more layoffs than what people realize. 

When inflation first hit people used credit cards to stretch their budgets.  The problem is that interest rates have skyrocketed and unless you pay off your credit cards monthly people are digging themselves into a financial grave.  

Then....all the government COVID subsidies/credits timed out along with the reprieve for student loan repayments.  The elimination of COVID subsidies/credits along with people now needing to resume payments on their debt has put even more people wondering how they are going to survive financially.

It's all come home to roost.