Saturday, March 31, 2012

The Effort of Managing Personal Debt

I recently finally paid off my Student Loan debt.  When interest rates plummeted the first time a few years ago, Sallie Mae could not compete so I took a chance and started passing it around to whatever credit card companies were offering the best deals.

Cruising through my Google Docs for a different reason I came across a payoff plan that I had created.  The amount of effort that I put into managing the debt was impressive and I feel slightly guilty about deleting a spreadsheet that I had put so much time and thought into though now it is happily irrelevant.

I hated (still hate) being billed excessively and I became a fine print expert.  I think this is one reason I started enjoying carefully reading the bad home mortgage refi deals that came in the mail pre-2008 housing crash.  But it is so nice not having that burden of potentially expensive debt anymore, and really brings home how crushing excessive debt is for those who have entirely too much of it.

Now onto paying off the car and figuring out how to own the house sooner.  Both are much more enjoyable.

Friday, March 30, 2012

The Euro: Where being too Polite is a Huge Risk

Only This American Life and Planet Money can make economics fascinating.  In particular, they are geniuses at bringing the involved personalities to life.  It's like the disaster movie where everything comes down to the choices of just a few characters.

They explained the American Housing Crisis and I can now explain what a Credit Default Swap is in some detail.  But in this show about the European Debt Crisis and how the Euro is in real danger:

What I find fascinating is that one reason it came about was that the other countries chose not to question the Greek deficit numbers which were later found to be false by a factor of TWO.  The reasons were that (a) everyone, especially Germany, really wanted the Euro to happen and (b) it was just impolite to say "We just don't believe your numbers."

WHAT?!  Multiibillion [insert monetary unit of your choice] decision and you're worried about offending someone?

I don't think that would have happened in the US.  The US Housing crisis was all about greed, law breaking, hiding the truth even to your customers, and betting against the very economic system you depend on.

The Greeks lied.  It sounds like they may not have meant to (some Greek-German cultural differences in play here), but they certainly slanted the truth and it took a new Greek government to come clean about it 10 years into this mess.  And the shoot-the-messenger old-guard Greek statisticians are actually trying to prosecute those involved with estimating the real amount of the Greek deficit.

The US is slowly recovering from its economic tailspin, but if Greece sinks the Euro then we all could be in a world of trouble.  They were saying that a strong nation in a group can bring all of them up, but a weak one can bring them all down.

Staying tuned...