Maxed Out by James D Scurlock

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Maxed Out by James D Scurlock

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Category: Home and Family
Rating: 2/5
Reviewer: Sue Magee
Reviewed by Sue Magee
Summary: An annoying combination of facts which should be known, such as the depths to which the debt industry will sink in order to ensnare you, and factual inaccuracies. Bookbag is unable to recommend this book for UK readers as some implied advice could be detrimental to their financial health.
Buy? No Borrow? No
Pages: 256 Date: January 2007
Publisher: Harper
ISBN: 978-0007242887

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Not too many years ago people used to joke that the only way that you could get credit was to prove that you didn't need it. Implicit in the granting of a loan was an assurance that you were well able to afford to make the repayments. Whilst those seeking credit still seem to believe that it would not be given if the lender didn't think the loan could be repaid the stark fact is that lenders now prefer that their customers should have difficulties - and a need to seek further credit.

Scurlock is a film maker and he's made a film about the debt industry. This book has the feel of being 'the book of the film' in that there's quite a bit about the making of the film which I wouldn't expect in a book which laid bare some of the nasty little tricks of the credit card providers. As a result the book is less rigorous than I might have liked, but that's personal taste and there are points in this book which should be required reading for everyone who might wonder about whether or not to pay off the full balance on their card.

I was shocked at the extent that credit card providers will go to in order to ensnare people. Some have partnerships with universities (to the financial benefit of the university) enabling them to push their credit card to the students. Debt is encouraged, marketed as being good. At the other end of the chain you might be shocked at the extent to which the debt collectors will go to force a payment of the debt. Any unused balance on one card can always be used to satisfy a debt on another card. Bankruptcy, even death will not save you or your family.

The attitudes to debt are exposed. Some debts are touted as 'good' debt - such as the mortgage to buy the house. In this way credit card debt - 'bad' debt - can be turned into 'good' debt by releasing some of the equity in the house to pay off the credit card debts. Even governments are not immune to this skewed thinking with statements that the national debt is only figures, or that debt is a good thing because it forces people - or governments - to live within their means.

So, why am I not raving about this book? Why have I been less than generous with our Bookbag stars? Well, I think the book has some real problems. Reading it I couldn't escape the feeling that it had originally been written for the US but some more was tacked on (rather loosely in places) to make the book marketable in the UK. Much of the UK information comes in the form of footnotes and I was annoyed when I read a footnote only to find exactly the same wording in the following text. It's sloppy.

The real problem is that Scurlock simply doesn't understand the UK and if you appear to speak knowledgeably about financial matters then you should make certain that you are well informed. Steam came out of my ears when I read the following in a footnote on page 199:

Things are a bit better in Britain it seems. The highest earning marginal tax rate is 40 percent and begins to operate after around £32,000. Any additional income (rents, dividends and interest) is added to wages and is therefore taxed at the highest marginal tax rate. The capital gains tax is also 40 percent once you make above £32,000, but all this assumes that the household is not sophisticated enough to open an offshore account in Jersey to protect its income from the taxman.

Now there is a rather arcane piece of legislation which allows some people to place money in an offshore account and avoid UK tax on the interest, but very, very few people could legitimately take advantage of this and 99% of the population wouldn't even know someone who could. Anyone thinking that they could take advantage of Mr Scurlock's implied advice could well find themselves the subject of an investigation by Her Majesty's Revenue and Customs and in the position of having to pay the tax lost plus interest and penalties on top. On balance I don't think that the author is advocating dishonesty: I think he simply fails to understand the UK tax system and it's therefore incumbent upon him not to make such statements, particularly when there are other, perfectly legal ways in which interest can be sheltered from taxation.

There's a fundamental misunderstanding too about the National Health Service and the purpose of National Insurance contributions. Here's what he has to say:

In the UK, of course, to many the idea of being refused medical care because you can't afford it is absurd due to the fact that people pay national insurance contributions during their working lives to cover them for sickness when they are older.

The National Health Service is free at the point of delivery at any age and regardless of contributions. National Insurance contributions are, in reality, an additional form of taxation and payments made by individuals don't determine whether or not they receive health care at any age. They do, however, affect the level of National Insurance Retirement Pension which the individual receives. When I see such glaring and obvious errors I wonder what else I've read and accepted as fact which may not be correct.

He has the film-maker or journalist's knack of being able to make the most of an emotive issue, even if the facts occasionally get in the way. An American woman was refused treatment for her cancer. Janis seemed to fall through all the cracks in the systems and she eventually got her treatment through publicity for her plight. A UK case was needed and Spurlock turns to Anne Marie Rogers as a comparison. ... she has cancer, and the public health system refuses to treat her because the cost of the prescription drugs she needs is, as they put it "excessive". The National Health Service didn't refuse to treat Ms. Rogers - they refused to give her a particular treatment, which is a rather different matter.

Mr Scurlock seems to have an agenda about the Iraq war and whilst I might share his feelings I doubt that this was the place to air them. Yes, some reservists who were called up have been badly treated and I accept that some families have extended their credit in order to buy body armour for their children serving in Iraq. Apparently the government feels that you go to war with what you have rather than what you wish you had. These are emotive points though and I think that they have their place in a book or film about Iraq but not in a book about debt. For me the book would have far more impact if it was freed of such red herrings.

I think Scurlock has missed a valuable opportunity here. There are facts there which people should know, lenders' practices which they should understand as being to their own detriment, but there's far too much about this book which leaves it open to criticism.

My thanks to the publishers for sending this book.

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