Monday, June 20, 2011

A Review of “Maxed Out”

Using “Maxed Out” to Scrutinize Consumer Debt in America
"Maxed Out" exploring modern day debt prison 

This documentary review and summary of “Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders” will be my first commentary post. Technically all of my blog posts are merely the commentary and examinations of a college student, however I usually back up my thoughts, unless it’s a literary analysis, with references. These commentary posts will lack references because they are primarily here to start a conversation about the various issues we are faced with. Our collective personal experiences will be adequate enough reference. Any future commentary blogs posts will also be labeled so that you will not be confused by the informal language. 

I watched “Maxed Out” a couple of months ago and every since then I’ve thought about what debt means as an index for America as a society. This blog post will review psychological and social roots of debt since I believe that extreme debt is just a symptom of issues that are not being properly addressed. I will not be able to discuss all the causes, but I wanted to highlight plausible causes that I found interesting. If you want to add input on additional causes and roots, feel free to comment. Overall this was a very compelling and well executed documentary. I loved the 1950’s clips also. It added historical richness and naiveté to the film. According to Top Documentary Films, “Maxed Out” is James D. Scurlock’s “virulently angry muckraking documentary.” Therefore the message is pretty strong and biased against credit but I expect that tone from a documentary with the goal of spreading awareness, being memorable and inciting people to action. 

Damaging Materialism. Unhealthy Obsession. Irresistible Fascination. Distorted Cultural Values.
Rich reality stars have taken over the media!
The documentary started off with a critical commentary (ironically by Robin Leach of Las Vegas, which has experienced the harrowing affects of foreclosures and generally profits from people’s dreams and escapism) about the materialistic culture in America and obsession that people in general have with the rich. I can agree somewhat because of the emergence of popular reality shows based on the rich and famous with desirable lifestyles. In many instances you need no other qualifications to be the focus of others fascination other than beauty, money and sometimes charisma. However how much of this can be attributed to marketing and primal traits than blind admiration of the rich? I do agree with the thought that many want to dream, escape and “look upwards and not look behind them….escape in a fantasy that says, yes I will be queen for day, yes I will be king for a day”. We all say, what is wrong with this desire? I don’t believe that there is anything wrong with the desire to improve; however issues arise when materialism becomes destructive…especially when the corrupt begin to the design cunning methods to exploit deep seeded longings. 

Venus Debt Trap: Debt as Sweet Poison—Lure In the Unsuspecting Victims. Then Trap Them!
The startling statistics following this commentary stated that credit card companies were mailing billions of offers each year and making trillions of dollars available annually. As if they are saying…"we’re here to help you reach those goals, we’re your friend, you can trust us, live like a king or queen through us.” The ulterior motive was for people to spend on smaller, meaningless, depreciating purchases that added up to a tremendous amount of debt. They want to get customers addicted to the debt, normalize the idea of debt and then raise the fees. Bid Hubbs, a consumer advocate gave a small history on the rise of late fees. Basically as credit became more popular, late fees also increased. He ended with the eye opening statement that creditors want people to be late.
Elizabeth Warren of Harvard Law Professor and Author.
Historically the strong or cunning have preyed on the weak through the usual means. But despite the warnings, people were not prepared for this type of trap. Humans learn through experience, and if the experience is lacking, then misconceptions arise and it is easier to fall prey to unfamiliar circumstances. What I found disturbing was the creditor’s use of knowledge about the law and psychological understanding to carry out their dishonest functions such offering credit to the vulnerable. This type of complex behavior is novel to the human experience since brute force or simple psychology has been used for thousands of years. The imbalance between uninformed and trusting consumers with faith in large institutions (they must be good if everyone is crediting with them right?) and highly educated yet predatory creditors exacerbates the issue. Elizabeth Warren of Harvard Law School states that creditors love to offer credit those who have gone through bankruptcies because they cannot go bankrupt again, they have a taste for credit and are willing to make minimum payments for the rest of their lives. Who would have guessed that creditors are psychoanalyzing you and using that information to purposefully ensnare you? Another is the lack of privacy consumers have (social security numbers are just floating around these days).
Debt collector using personal information to shame debtor.
Once again they pry into your personal life and use that information to harm you while having not transparency in their own operations so that you can be protected.

Survival of the Shrewdest?
As I stated in the last section, age information is key. Creditors know this...therefore college students are great targets. Many don’t have life experience to fully understand how and why corporations would take advantage of them. We believe that we are going to make a bunch of money in the future, we’re desperate due to the high cost of college, more impulsive (the brain which monitors self control is still developing), high on freedom and we trust them. For example, when I was 18 I didn’t understand the significance of credit card interest rates rising faster than the income, how recessions can come in and sweep away your income, unexpected expenses and the real meaning behind the small print. To be clear, I knew those things but until you live it you don’t really know. Now I know that you should only use debt to make money like if you are purchasing a suit for an interview, not for purchases that don’t earn money …consumer debt is risky. Those who aren’t shrewd will not survive. For example the pawn shop owner didn’t realize that the business he banked, Wells Fargo, was his main competition since they fund Cash America, a check cashing company. Even in your personal relationships you must be shrewd and avoid blind trust. Both of the mothers noticed issues but their trust didn’t allow them to imagine that their son and daughter in college were hiding overwhelming debt. Hubbs, the consumer advocate, stated “that these are the organizations that will take advantage of you. You cannot be trusting.” Scrutiny and skepticism saves lives.

Desperation to Profit + Desperation to Overcome Financially + Financial Gangs = Trouble
Founders of as they make jokes about selling debt.
Do you want to know a bad combination? People that are so desperate they are willing to sign anything to get money and people so determined to earn a profit they are willing to get people to sign anything, even if it’s harmful. Unscrupulous creditors will do anything such as shred and hold checks to earn a profit. The debt collectors have no problem hurting people emotionally to earn a pay check by harassing debtors and their family, probing into their personal life, making threats against survival and trying to embarrass you. Yes it is a conspiracy and they are working against you. Ok, so maybe I went overboard...There are companies that are inflating debt, companies buying debt and demanding a much higher price than what they paid. There is pressure from all sides. The credit score companies are even working against the consumers. Over time these people feel as if their actions are acceptable and even moral. It’s a game to them and we are the bad people that need to be punished because we can’t pay back astronomical fees after losing our jobs. This would be less alarming if there weren’t so many emotionally wounded people in desperate situations that depend on these institutions.

Victims of predatory lending.
People in desperate situations are also another demographic being grossly exploited. As Elizabeth Warren noted in “Maxed Out”, the people that can’t pay back the debt are the money makers. Many of the people introduced further into the film were face with emergencies and didn’t take the time to research these fraudulent and predatory bankers or creditors. Therefore the will to overcome and make a speedy financial recovery was easily taken advantage of by creditors. People have a strong aversion to stress and our mind works for survival. If you feel as if you are about to be homeless or go without food, rationality is out the window. However it’s important to know what you are getting yourself into. This is easier said than done because so it’s difficult to get out of desperate situations these days. "The real point is that the basics are driving families right to the edges," observes Liz Warren.Unemployment is skyrocketing, the gap between the rich and poor is broadening, the cost of living is surpassing incomes and the government is running out of money. One financial hiccup can put you in the financial graveyard. Where else can people turn to other than the loan sharks?
Lynn Stewart's desperate attempt to avoid foreclosure.
We all know the issues that we are battling, either individually, as a family, society or nation. Many people just continue with the rat race in hopes that life works itself out. However remaining in denial about your situation will lead to more harm.But the most important step to solving these issues are identifying them, joining together and actively working to solve them. Also stay informed at any cost, which is why I love documentaries such as “Maxed Out.”

Comment if you enjoyed this review!
Mandy said...

Interesting! I am trying to get better about being frugal.

Dianne Heath said...

@ Mandy,same here. I got a bit trapped in college but boy oh boy did I learn my lesson!!
I learned to be more frugal ( I wasn't completely reckless just a bit impulsive) in the good times so that in the hard times I won't be as desperate. Thank you for commenting!

Dianne Heath said...

@ Angie
I do believe that a balance has to be maintained. Too much information my paralyze some people. However with credit too fear much may be a good thing, lol, as long as you don't fear the creditors or allow fear to interfere with other areas in your life....The problem with many people ( I used to be like this also )that the fear can be so great that you just avoid the situation. Now I'm promoting facing your fears and garnering information. Because these institutions sure do have information on us. Thank you for commenting :D

Sheltie Times said...

I think people have lost some of the skills and balance that helped families deal with the challenges of balancing tight budgets. I came from a large family with limited income and I learned how to manage money from my Mom. I have worked with the members of the next generation who are willing to learn because many of their parents have failed to teach them.

They didn't want their kids to "suffer" from the deprivations of their childhood and now their kids need lessons in basics like money management, budgeting, cooking, chores, etc. They thought they were being kind, now their children are helpless.

Dianne Heath said...

@ Bailey
I agree so much. Plus you have the issue of parents being ashamed of their actions therefore the topic of financial responsibility is never probed too deeply. I recently found that my mother is in deep financial trouble. One time she got offended because I checked out a book about being frugal. Knowledge could have prevent a lot of financial ills in this movie.

However on the flip side I was deprived a lot as a child. We simply did not have the money. Therefore people are using debt to fill in hole or they have nothing. The question remains...what can we do about those holes as a society so that people don't flood themselves into debt.

Andrea said...

I was so pleased to see your comment on my site! I hope you found it informational and enjoyable and will check back again :)

Dianne Heath said...

@ Andrea
It's very informational, I can't wait to see your future posts!

Arlee Bird said...

Good post. I too saw this documentary and it was very interesting. I have a couple of similar ones on my Netflix queue that I want to watch.

I'm not a fan of those credit companies, but we cannot absolve the borrowers for their lack of responsibility. So many of us are greedy consumers of product and experiences and we somehow feel entitled to have what we want, when we want it, without thought to where the money is going to come from.

Abusers of credit have unrealistic expectations about their lives and the world. Marketers encourage instant gratification instilling us with the idea that we deserve what we want immediately without having to sacrifice or save.

Consumers see everyone else doing it so they jump on the bandwagon. Heck, even our government is doing it and is the worst offender.

Debt has become an accepted and expected way of life.

We are going to be in big trouble in the future if it's not put in check.

Tossing It Out

Dianne Heath said...

@ Arlee Birth
Great assessment!
I honestly feel so split on this issue. (except for my disdain of creditors, lol) On one hand I feel so bad for the people that are suffering with extreme debt however others times I wondering, What were they thinking?!? I think that's why the people that were in situations that were out of their control tugged at my heart strings the most. For example, what if already used up your savings and you are hanging on by a.
I especially agree with your statement about the marketers. They are so pervasive and make fantasies seem too real. It's sad to see people take it so seriously.
I think that the moral of the story is that creditors and consumers should act responsibly.

I really appreciate such a thoughtful comment. I love responding to long comments, lol

Sheltie Times said...

Part of the problem is so many people have never saved and when they do hit a hole they have nothing and end up using credit as their means of "covering them."

It is an issue people need to address. I know plenty of people who have ended up in debt who had good solid incomes and no real crisis such as health, disaster, etc. They just woke up one day and realized that their income was not meeting expenses and they had nothing in reserve to show for it.

Being frugal is not always fun or popular. The emergency savings thing is the MOST critical thing to getting and staying out of debt and it is really hard to get people to focus on the definition of emergency. Without that savings it is all too easy to end up on the road to losing it all because even simple problems like car repairs, home repairs, etc. have no budget line items to cover them and no emergency cash to use for that cost.

Sylvia Ney said...

Wonderful post - very interesting! I need to look into that documentary.

Dianne Heath said...

@Sylvia Ney!
Thank you so much. This documentary was amazing. I do recommend checking it out.

Lizeth Taylor said...

Brilliant. I didn't realize that creditors can offer credit to those who have filed for bankruptcy and they can earn more from them.

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