"Before losing my job we were somewhat overextended with several credit cards due to inattention and the American need for instant gratification"
UGH. Just because everyone else buys things they can't afford, I should too! More on this later, though.
"We also really did not plan for the high cost of daycare when we purchased our home"
Before you have kids, you need to figure out who is going to take care of them, and if you are going to put them in daycare, you better know how much freaking money it will cost! People spend all sorts of time finding out invoice costs when they buy a car, but then they have a kid and don't even know how they will afford taking care of a human being. Unreal.
"We had revolving debt that was manageable and we qualified for a mortgage on a fixed rate. Our credit scores were okay, but they were not good enough to qualify for an adjustable-rate mortgage."
You've just got to cut it off right there. ARM mortgages are complex financial instruments that are powerful, but only for those who CLEARLY KNOW WHAT THEY ARE DOING, which is only about 1% of the people that actually buy with ARMs. It's fundamentally messed up that someone would be upset about not qualifying for an ARM.
Part of the "New Badger" is that I actually don't think these things are entirely these people's faults. I think that fundamentally, most people don't understand the concept that if they buy things they can't afford and pay the minimum credit card payment, for all practical purposes, they will never pay it off.
It's time for the education system to start helping these matters. I know I've done a lot of complaining about the sub-prime crisis, but this is just a glimpse at a bigger problem. If we don't start working to temper this type of behavior, we will only face worse crises in the future.