Credit Card Debt

[TAlderson]

I am a high school student. So maybe this is something I won't understand until I'm older. But answer me this.

A credit card is something you knowingly have. You knowingly make purchases with it, knowing that you will have to pay the bill when it comes in. If you are of any intelligence, you know how much money you have, or at least you have a ballpark estimate.

So, tell me, how is it that we treat people with credit card debt like VICTIMS?

If you don't have the fucking money, you can't buy the fucking HD TV. Period.

If you can't pay your food and utility bills, there are ways to pay other than putting it on a 20% interest rate credit card.

Sorry if I'm being too blunt, but it seems like we should stop treating people as victims and try educating people to be responsible in the first place.

-Tyler

[Charlie_M]

There is a thing called denial which you may come to learn about at a certain point in your studies.

Also there is a distinction to be drawn between knowledge (knowing what is the best/moral/right/responsible thing to do) and discipline (doing it) or self control which is a somewhat different shade of discipline.

In judging those whose material desires have overwhelmed their discipline, please try to bear in mind youngblood that your own discipline is, as yet, untested.

Who described them as victims?

[TAlderson]

Well, whenever I listen to the radio, go online, or watch TV, there's always ads about how to get your life back together and pay off your debt for less. Seems like we should be holding these people accountable.

Plus, every once and a while there's an editorial in the paper or a letter or a piece of legislation that says that we should protect people from the big, bad, credit card companies. Seems to me we should protect people from themselves...

-Tyler

[Charlie_M]

I see. OK ya.... a couple things to keep in mind:

1. Those ads are just the market working. Most of the time the way those guys get paid is to help people face up to their past mistakes and put together a plan for recovery. Often there is a refnancing of short term debt into longer term debt. Whenever there is a refi, there is a payday for somebody. That's what those ads are about. The sales pitch in the ad usually claims to be able to reduce your debt load and often makes an inference (but seldom do they actually state) that they can make your debt magically disappear through negotiation. It might be possible in some cases when you have a guy way in over his head and a you can demonstrate that clearly. In that case you might be able to say to the CC company "OK look this guy is going to have to file bankruptcy unless we help him put together a reasonable plan. Here's our proposed plan: ..." and then you offer to pay 50%, or whatever and then the negotiation starts and maybe you end up at 60% or whatever. Now, you might look at that and say "hey that guy got off the hook easy he only paid half, I WANT THAT DEAL!!" But really you don't want that deal. It sucks for everyone involved. Credit rating gets trashed, and you pay for that in so many ways over the following years. If it makes you feel better about it, you can now see that a person who opts to go this route is in fact paying a hefty price for his foolishness wiht financial decisions.

2. Allowing people to pay a reduced amount is again something that the market has determined to be better than having people file bankruptcy (which is always an option in a free society that places liberty above punishment for dumb but honest mistakes).

There is a way for people to keep claiming bankruptcy over and over again, but to do that you need to basically pick up new identities along the way and that's criminal. That's no longer an honest but dumb mistake. For that they put you in jail.

[brandondrury]

This one is right up my alley. As a guy trying to make a million bucks online (which running a studio) I've had to learn to live on a smaller income than I'm going to have. The same can be said for any starving actor who is serious about making it. (There is a story of Dustin Hoffman and Gene Hackman living together and living on a shoestring budget. They had a jar for the food bill. They had a jar for the electricity bill. It was very common for both to be empty).

Of course, in America, you are EXPECTED to have money. You are EXPECTED to have $100 shows, a $500+ cell phone, a new car, etc. This is how many people judge their success.

My friend's dad is a contractor. He had a 15 year old minivan but was building these houses for rich dudes that sometimes cost over $1,000,000. He went out and bought a big Ford pickup truck. I said "is that going to help you build houses?". He said, "Actually yes. If I drive up in a shitty minivan, they think I don't know what I'm doing. If I drive a brand new truck, I look successful and I MUST know what I'm doing".

Of course, the Plasma TV on the wall has nothing to do with making more money.

Here's an interesting fact:
The nations credit card debt increased the same amount as the enconomy increased during the booming 90s. In other words, the economy wasn't any better, people were just putting everything on credit cards.

The average credit card debt was $9,000 per household 2 years ago. OUCH!!

If you can't pay your food and utility bills, there are ways to pay other than putting it on a 20% interest rate credit card.

Sorry if I'm being too blunt, but it seems like we should stop treating people as victims and try educating people to be responsible in the first place.

Well, it's easy to say "Touch it out, dont' waste your money, and don't live above your means". It's another thing to do it. It takes a real drive and a real feeling that their situation is temporary. If they don't feel their situation is temporary, there is no motivation to fight.

I don't see any point to feel sorry for people who can't manage their money, but I do understand that our society "ranks" you by the size of your house and things of that sort. My "rank" means nothing to me.

The mentality that every person was "entitled" to have a car and frigerator didn't come to be until after WW2. My grandpa didn't get an air conditioner until 1994. I don't consider this a need, either. TVs were invented in the 50s (I think). This is not a need.

After WW2, electricity was very expensive. I read about one family who could run their electricity for 3 hours per day during the winter. They didn't die. Electricity isn't a need.

-----

There is one other thing. Many people are flat out braindead when it comes to money. They don't understand it....even though it's first grade math (addition and subtraction).

Brandon

[DT Chris]

There is even more of a reason to not get into debt nowadays, I don't have the link at hand, but I either read or viewed on MSN, CNN or others that credit companies were given the go-ahead to charge up to 30% interest now on loans of all types.

Uhh.. that's crazy. When my bank pays me 0.00000123 interest on my saved money, but wants to charge me up to 30% on loans, who do you think will win in the long run?

[md.taylor67]

Originally Posted by s.jenkins

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I have 2 monthly bills that involves credit a car payment and we just put a new house on property we've owned for the last 5 years.
I have perfect credit but choose to live with as little dept as possible!

[jdaug]

Tyler-it sounds like you have a much better understanding than the average high schooler, and even the average working adult, of how personal finance works. My wife just had to schedule a meeting for her parents to meet with a financial advisor on how to manage their budget, because they apparently dont understand that your income must be greater than your expenses in order to sustain yourself. I guess they are deep in debt even though my father in law makes $40K/month on a good month.

I dont have any sympathy for anyone that gets into unmanagable credit card debt. If you dont like the interest rate on the credit card, then dont get one. They arent necessary. Maybe think about scaling down your lifestyle before borrowing money you cant pay back. The interest rate is not a secret. The terms of the credit card are on the credit agreement. If you are too stupid to read a credit card statement, you shouldnt have one.

Its the entitlement mentality that pervades our culture, and the idiots in government who are more than willing to bail out idiots who made irresponsible decisions with our tax money in exchange for cheap votes. Why are we buying homes for the idiots in New Orleans who CHOSE not to buy flood insurance because they would rather have a cell phone or whatever, knowing full well they lived in a flood zone? The public is coming to expect the government to wipe their ass for them everytime they shit themselves, and this trend cannot continue without bankrupting the country. I am already counting on not seeing a dime of the thousands of dollars I have paid into Social Security, because the government is just as bad as the average idiot when it comes to managing money. The government is on an unsustainable path. Just like with personal finances, the government should not spend more than it takes in.

[brandondrury]

apparently dont understand that your income must be greater than your expenses in order to sustain yourself.

It's interesting how the formula for managing finances and managing your weight are exactly the same but so few people understand them.

I think debt is a self esteem issue. There has to be a logical reason why a person with no money thinks they need a $4,000 LCD TV or a $600 cell phone. They only one I can think of is they need these items so they appear to have money.

I'm at the tough stage of my life financially (the turning point is coming! IT BETTER!) and I've learned to live without many of the typical luxuries that Americans are "supposed" to have. (That's called entitlement and entitlement is bullshit!) While there are some definitely negative aspects to roughing it, there are a lot of positive effects. Reading a $2.50 used book can change a life and entertain for 2-4week. Walking instead of driving avoids a slew of debt, but more importantly, has some kind of therapeutic qualities.

I think if our nation walked a little more and read a little more, we'd all be better off.

Brandon

[bilco]

I learned this lesson the hard way in the 80s when we were first married. A couple of really uncomfortable years of trying to make car payments, rent and ever increasing MC and Visa bills......

Learning from that experience, we went on a cash only basis for buying things that I really recommend. Our cars are always about 5 years old, paid for with cash. I have bought all ~ $6,000 worth of recording gear that I have with cash, one piece at a time, over 5 years; I refuse to get the GC card, although it is really tempting.

In the last few years we have been charging most things that get charged on an Am Ex card and paying it off completely each month. That works okay, although some months are tougher than others.

I won't say that we aren't getting in debt at all, my daughter had a NY wedding and my wife and I went to Europe for a week for our 25th anniversary, a couple of exorbitant car repair expenses........ but we are paying it off slowly, tracking our progress in a spreadsheet.

I have had to learn the concept of delayed gratification and in a world where every marketing device is used to convince you that you should "have it now!" it was hard to learn. I had to save gig income for months to get the RNP, but it didn't kill me to wait awhile to get it. I would love to have an all tube bass amp for my gigs, but as long as the 15 year old Yorkville combo hangs in there, I'll make do with what I have.

There was a saying our grandparents had in the depression:

"Use it up, wear it out, make it do or do without" Corny, but it's a good credo for staying out of debt.

Credit is a trap for sure. If I have a credit card in my hand, it is just a mindless thing to volunteer to be the one to pick up a tab for friends at a restaurant. But when I actually have to peel off those $20 bills in cash, it definitely helps keep it real.

bilco