What happened to prudent living?

Being prudent with your life and your lifestyle is the single most thing I learned from my parents. There are times I felt if I am like a dinosaur among the easy credit user folks around me. As they say, for every question, time provides an answer. Sooner than I expected, I found the answer in the current financial crisis. As most of us know, the credit based lifestyle is what caused this mess and the virtues of prudence are being sung along with the Christmas Carols.

I have always been afraid of debt. I have not used my first credit for almost year and half as I was afraid of the word credit. I could not fathom the fact that I had to pay somebody 12.99% interest for what I used for convenience. I did know that if I paid the monthly statement in full, I did not have to pay the interest. I still was afraid of the late fee in case I forgot to pay it off and I was also worried that I have to spend the 33cents on the stamp. To me that was an extra expense when I was only earning $400 a month. My monthly rent then was $220 and international calling card bill from AT&T was almost $50 leaving me with only $130 for the other expenses.

The vices of current society have devised their tangles in a way to lure everyone into its arms. I my case, the draw to credit card use was credit history building. I have been bombarded by well wishers and media stating that I need to have a good credit history. The lure is the fact that a good credit history is imperative to get loan for a home or a car in the future. The real estate boom was only beginning then, and I did not want to miss out on that boom by not having a good credit history. All I have to do was swipe my card and it builds history. It is that easy I was told.

I had my share of missed payments where I was penalized. I would pick up a phone, I would apologize to the CR rep and get the fee waived off. I have also three laptops in the last three years. In hindsight one of them was probably not warranted.I also bought a car that died on me in 3 months and had a laptop stolen all in the gap of a month. Barring those two, I think I have been prudent and been careful of my possessions. I never paid interest on any statement, excepting the month where I missed my payments when I got my late fee waived. I have always bought the big items with cash or have used the 0% APR convenience checks that the credit card companies mail ever so often. If I don't, I delayed the purchases until it was absolutely necessary. Clothing and kitchen items are an exception. I have to blame the Gabriel brothers from Morgantown, WV where I could get clothing for T-shirts for a buck or two. Kitchen items are not my blame.

Reading news is like one horror story after other. People were offered mortgage loans with nothing to show as seed and income. Financial firms were allowed to borrow 30-40 bucks on a single dollar of assets. Since they had no skin in the game they risked all of it, packaged and repackaged them to numerous clients.

Long before these news stories broke, I have seen some amazing characters who had absolutely no concept of prudence. Our next door neighbor in Vizag was one. The family was a bunch of misfits lead by the mother. She would manage a rotating loans from multiple people. Spend it off and when it is time to repay, take a loan from someone else. If no body is willing to loan, there were the chit funds. After she exhausted the friendly neighborhood chit funds, she turned to finance firms. That was where the buck stopped. Finance firms unlike ordinary people do not use the conventional methods of repetitive pleading. They use the method of what can be called an Italian job.

She had to sell her inheritance and moved out of the city to rented home in the suburbs. She had fun while it lasted and fun continued for the neighbors watching the drama unfold. I know someone in my family who bought a flat panel TV in India for Rs. 200,000 or $4,000. Crazy isn't it. I hope someday sense returns to people as to how they spend their money and lead their lives.