For many the answer is going to be...run up the bills...use up the credit...and walk away.
Economists should think about that and how to solve it. Help for home owners is a start, not just for big banks. Easier terms on credit cards would help...less of that if you are 2 minutes past the payment deadline we go to 30% interest. Whoever is raising prices on food (we know one store charging $5.85 for a half gallon milk...that's $11.70 a gallon! plus tax) needs to stop.
Think about this: some people meet in a room. They decide to raise: medical costs, school tuition, food prices, gas prices. It's not magic...it doesn't happen on its own. Someone does it. They blame supply and demand, the stock market here, the stock market in Hong Kong, oil prices (someone is setting those, too), bad weather...you name it, they'll use it for an excuse to do exactly what they want to do. I was examining a hospital bill once and saw that the patient was being charged $11 for one aspirin. I once read advice to a contractor (“Take what it costs you, multiply 11 times and add 10% extra”). That's how houses-beautiful houses that once cost $100,000 suddenly cost half a million or more. That was probably the worst rip-off of all because buyers believed they really were worth all that.
So where does that leave the person caught in this mess...the one with the job, the disappearing house, the family that needs feeding, the vehicle guzzling gas, the money that is melting? The reason people are charging more is because they are running out of options, and, of course, running out of options in the credit world means people hold you in contempt. You get charged massive additional fees. One card fills up and you pay it with another. You are going as far as you can while you can. After a while the nasty letters and phone calls begin and you no longer care. The bear is at the door and the wood is beginning to splinter.
The best solution...act before things get too bad. Trade off the gas hog cars for decent, modest used ones. Sell the extras you don't need. Make sure the kids understand; if they want extras, earn the money...walk dogs, baby sit, cut grass...there's nothing wrong in working.
Most of all, get hold of your congressman and senator and raise hell. Someday, someone will start listening.
