"That's so 2005"

I came across this post on MSN after checking my email and I couldn’t agree more with the majority of the following list of extravagant fads and things we’ll probably compare to Member’s Only jackets from the eighties in terms of  “what were we thinking?”

20 Fads I’m so Glad are History

20. Las Vegas: I actually have no hope whatsoever that this monument to excess will ever go away. Built on delusions of easy wealth, soaking up resources of every kind (electricity, water, paychecks, home equity), this city has reinvented itself so many times — including, horrifically, as a family destination in the 1990s — to ever count it out, despite its current troubles.

But a city based on the squandering of wealth really should be allowed to melt back into the desert from which it came. (See “Is ‘Sin City’ poised for a comeback?“)

19. Deregulation: Conflicts of interest and allegations of fraud led to the creation of a wall between commercial banks and investment banks during the Great Depression. In 1999, Congress demolished the wall by repealing the Glass-Steagall Act that had created it.

The idea was that we had long since learned our lesson, that we wouldn’t let bad things happen again and that modern finance required banks to have more flexibility to manage risk. Oops. (See “An ugly, unrecognizable recession.”)

18. Massive plasma TVs: Screens that dwarf the rooms they inhabit started as a status symbol of the very wealthy. But the desire for huge screens quickly worked its way down to folks who would pay for all that acreage many, many times over, thanks to stupidly high credit card interest rates.

17. $4, four-adjective coffee: However much you love your soy no-whip mocha frappawhatsit, you’ve got to admit how nuts it is to pay good money for ingredients that probably cost Starbucks 50 cents.

And that’s before you even consider the calorie count. (See “Death of the ‘latte factor’?“)

16. “Underwater” cars: I’m not talking about the vehicles that drowned during Hurricane Katrina. I’m talking about the many, many cars that drowned their owners in debt. Before the auto industry rolled over and died, it puffed up profits by encouraging people to overspend on cars — which they did, with a vengeance.

Many thought replacing cars every three to five years was “normal,” rather than a huge waste of money, but incomes weren’t growing to keep up with rising car prices. So more than 80% of car loans stretched beyond four years, and one in four car buyers still owed money on their trade-ins. Now that people are hanging on to cars longer, perhaps they’ll discover the joys of life without car payments. We can hope. (See “The real reason you’re broke.”) -Sadly I know people who are still doing this with ridiculously expensive, outlandish or impractical. items.

15. Mega-SUVs: Their very names — Sequoia, Yukon, Escalade, Expedition, Hummer — are now synonymous with excess, but years from now we’ll wonder how anyone justified these massive, gas-guzzling “screw yous” to the environment and to anyone who tried to park (or drive) next to them. -Because you know every 110lb. suburban stay-at-home mom needs a vehicle larger than a standard garage to drive across town to pick up a day’s worth of groceries.

14. Reality TV: Speaking of McMansions and plastic surgery, our national obsession with how the rich and vapid live is going to be tough to explain to future generations.

Whether it’s dysfunctional rock stars or the real housewives of anywhere, it will be hard for our descendants to understand why we wasted hours watching the conspicuous consume. -Why I don’t miss cable.

13. Finance plans for plastic surgery: I actually laughed out loud the first time a company tried to pitch me its low-cost financing plan for cosmetic surgery procedures. Surely people wouldn’t be so dumb as to risk their financial lives, as well as their physical lives, for unnecessary and elective procedures? Shows you what I know.

Now lenders as mainstream as Capital One have “health care finance” units, although the demand has drained away along with the economy.

12. “The Secret”: This mega-best-seller insisted you could think your way to wealth and a smaller waistline.

I’m not going to knock the value of visualization, because clearly imagining your goal is a crucial first step. But the idea that you could get what you want without any effort or discipline was a clear sign the bubble was about to burst. -About as effective as those exercise-less diet programs, or the work-from-home-part-time programs promising to make you millions. Why can’t you have it all without having to actually work?

11. Birkin bags: There are many, many poster children for consumer excess. Manolo Blahnik shoes. Gucci sunglasses. Hermès scarves. But a handbag that costs more than some cars will suffice nicely. (“Retail price: $18,000. Our price: $12,000.”)

If you have this much money to blow, you should be donating it to your local food bank. -I’ve never owned a purse that didn’t come from Target or a mall store and cost more than $30. Purses shouldn’t cost more than my college education, or even my car payment…

10. Credit card debt: The explosion of easy credit, starting in the early 1990s, culminated with widespread offers of 0% balance transfers and low, supposedly “fixed” rates.

Now millions are learning that whatever credit card issuers gave, they’re apt to take away, and that includes low rates and generous lines of credit. -Credit cards are not money, and far too many people were seeing it that way.

9. Condos as investments: In 2005, I warned you that the run-up in condo prices was “the tech-stock bubble all over again.” Yet way too many people got sucked into the condo boom, paying top dollar for properties that were, ultimately, ugly stepsisters of what the real-estate people actually want: single-family homes.

As in past real-estate recessions, condo prices have fallen faster and will take longer to recover. That’s something to remember if you’re considering swooping in on any “bargains.” -I know people who have condos and l0ve them, but I do agree with this bent on them. See them for what they are and don’t go overboard.

8. Option ARM mortgages: BusinessWeek rightly called these loans “nightmare mortgages” in September 2006, just as the real-estate bubble was about to burst. But that didn’t prevent homebuyers in high-priced markets from snapping up these mortgages that allowed their balances to grow over time.

Many will reset to much higher payments at the five-year mark, which could worsen the foreclosure crisis. -I don’t even need to comment on this, if you disagree…God save you.

7. Zero-down financing: Saving cash for a down payment indicates a borrower has at least rudimentary money management skills. Lenders forgot how important that was, but they’ve since remembered. -If you don’t have the money now, you won’t later, I promise you.

6. Costco closets: Speaking of weird housing trends, there was a hot one for a while in building extra pantry space to accommodate bulk purchases from warehouse stores. So you’d save $12 on your paper towels, then store the monster package in a $12,000 specially designed closet.

Now that we’ve discovered real thrift — buying less, rather than more — maybe these closets can be converted to a room for the boarder that the McMansion owners need to make their payments. (If you truly need items in bulk, you’re probably wondering which warehouse club is cheaper.) -I get there is a need for bulk stores. Businesses use them, churches…well churches are businesses, and there is a need for bulk items, becuase buying in bulk is cheaper. But who really needs a 3-foot cannister of cheese balls, or a years supply of cheesecake? Don’t answer that…

5. Cash-out refinancing: I wrote numerous columns warning you about tapping your home equity to pay off credit card debt, buy cars or finance vacations — columns that usually ran alongside lender advertisements encouraging you to do exactly that.

If you’d listened to me, you might have enough equity left now to refinance at some amazingly low rates. Sorry, just had to rub that in. -A home you don’t own is not a line of credit to purchase more stuff you can’t afford to pay for in cash.
4. House porn: Whole evenings on some cable channels were devoted to shows about fixing up and flipping homes for big bucks. Today, you can tell which shows were taped post-bust: At the end, after the big “reveal,” the would-be sellers are always “waiting for the perfect offer” to come in. -I’ve never enjoyed those shows because it put all the value of aesthetic in value-less items as decorative must. Instead of DIY, how to organize things you already own or refinishing or upholstering furniture, it was buy NEW, buy BIG, and your home isn’t home unless it looks like THIS!

3. Remodeling as an investment: Only in a world designed by Bernie Madoff, whose investors currently pray for a return of any fraction of their principal, could remodeling be considered an investment.

At the housing market’s peak, the most popular remodeling projects returned about 80 cents on the dollar and only if you sold soon after completion. Yet millions of Americans drained their home equity to pay for upgrades, redos and tear-downs that ultimately reduced, rather than built, their net worth. (See which projects do make sense.)

2. Granite countertops: They crack. They stain. They’re expensive. And yet they became the must-have kitchen accessory, as ubiquitous and predictable as stainless-steel appliances (another major pain to clean, by the way).

Was it really worth spending Junior’s college fund on something that looks better than it works? (See the alternatives to granite.)

1. McMansions: Sales of oversized houses on undersized lots soared during the real-estate boom, but the glory days of these architectural abominations may be over thanks to changing demographics and rising energy bills. Retiring baby boomers and first-time homebuyers will be the growth market, and they’ll want smaller homes, not huge, expensive-to-heat starter castles. (Read about the McMansion backlash.) -I never understood it. Thousands of identical houses built fall-apart cheap with horrible materials and insustainable infrustructure on tiny lots with no landscape or unique features. Not to mention they were insanely oversized, causing people to fill them with tons of things they didn’t need, but saw as essential. Neil and I live in a 2 bedroom home with a one-car garage and basement. If we can’t fit it, we don’t need it. The only thing we would add is another garage spot.

{via Liz Pulliam Weston, MSN}