Maxed out credit

[Jim Richards]

Originally Posted by Tobra

I still don't understand how you get in the hole like that on credit cards. If I can't afford it, I don't buy it, which I suppose is sort of an "Unamerican" attitude to have.

I guess I'm unAmerican, too. My wife and I have maintained zero CC debt for the past three decades. Our house payment can be managed with just one of our incomes. We don't live large, and we have been saving like mad for retirement. As long as our money is still worth something, we have a good chance of being OK. Knock on wood.

[onewhippedpuppy]

Originally Posted by peppy

It is not just credit card debt that is eating people, it is the whole have it now pay for it later attitude.

My nephew is starting college in the fall, and was considering borrowing 80% of the money to go. He would have been lucky to graduate in four years, and would have owed 144K in student loans. When he got out of school and got a job making say 40K a year he would have been living at home with his mother trying to pay the loans down. He has since decided to goto a state supported school and will not have any or very little student loans.

If I'm paying $144k, I damn well better be making better than $40k/year! That's almost medical school.

[Porsche-O-Phile]

I was "lucky" to get out owing just over $80k, but I also refused to accept any help from family for my graduate school. In retrospect I probably could have done a bit better with that (pushed a bit harder for in-state tuition earlier).

[peppy]

Matt, a private college in Virginia. I think it would be a total waste of money.

[djmcmath]

Our educational system has failed. I'm honestly not sure which bits we've left out , but I think some valuable skipped topics might include:
1 - Personal responsibility
2 - Cause and effect
3 - The value of money and the effects of compounded interest
4 - ... ?


Of course, most of us seem to understand these things, and we didn't learn them in school -- we got them from our parents. Did we raise a generation that just didn't get it? What went wrong? When I was growing up, my parents explained things like "avoid debt like the plague," and "watch out for credit cards -- they're handy, but they'll get you in trouble if you're not careful."

HardDrive, I'm with you, but I don't know that it's better anywhere else. I think Europe has pushed hard for the 30 hour work week, and the Muslims are over-running what productivity is left. Where is it better than here?

Dan

[Hugh R]

I recently paid off about $10K in cc debt. How do you do it? It creeps up on you. Kid in college, borrowing to pay for that, no Pell Grants, no scholarships, nothing. Make to much money. So my tax dollars get to pay for some other guy's kid to go to college (like in state tuition for illegals). You're living hand to mouth, suddenly the 10 year old Mazda eats it's trannie, a couple of grand, a few months later the master brain on the 10 year old oven fries, another $500, etc, etc. I didn't put money on cc's unless I had too cause I knew it was hard to pay off, mostly used a debit card. I don't think the average american is just running up debt to pay for the new big screen, at least I hope not, I think it's the getting by month-to-month.

[island_dude]

It is pretty scary how people manage to dig themselves in. A good friend of mine got his first credit card while I was in college. He was headed to the Navy. The card had a limit of 5K or so which at the time was pretty generous for someone who was currently working in fast food. He bought this sound system for 2.5K or so and then said something to me about still having at least 2K left to spend! The thing was, he was serious. This is at a time when finance rates were well in the 20s. I tried to sit him down and explain the magic of compound interest. I don't think that I got the message fully across though.

Finances like sex ed should be mandatory. What people don't know about money is really pretty scary. I have always limited my use of credit to what I really need. This has really paid off since I don't carry any balances. I did try to leverage some equity in a house for investment purposes. This hasn't worked out so well, and I will probably have to pull the plug. At very least, I set it up so that it was very unlikely for me to really lose my shirt. The loan was really deceptive in how it was sold and documented. They give you an interest only payment that accumulates principle. It makes the rate look really low, but it is hiding a much less attractive rate. Very bad news. I at least went in with eyes open, but anyone not having their wits would get taken. Bad news really.

[911Rob]

......they have a taste for it.

You have the lower class and the upper class. Period.

Introduce debt (credit) and you create the middle class. Period.

End of story.
What'ya gonna do if you're in the lower class?

Once the spending is all done, and there's no credit left, only payments, then the spending must stop or you gunna have some trubbles.

[MFAFF]

Originally Posted by djmcmath

....snip...
HardDrive, I'm with you, but I don't know that it's better anywhere else. I think Europe has pushed hard for the 30 hour work week, and the Muslims are over-running what productivity is left. Where is it better than here?

Dan

Sometimes people say things that they should perhaps have reflected about a tad more before hitting the post button...

Its 2.22am here.. I've been at work since 0600 and will leave in about an hour's time.. I have an 0700 wake up call.

My team (only 4 people today) have done similar hours...one English, one Greek and Iranian and a Swiss....

That will be followed by another 0200 end of play on Tuesday.. with anther public presentation at 2000 on Wednesday and an further presentation on another project on Thursday..

In all it will be about 70 hours before I go home on Friday evening.. and that is apretty standard working week.. maintained by I'd say 5% of our office...with another 50% doing around 50 hours per week...

Now if we were paid overtime...

Sorry guys.. the 30 hour working week is not something the private sector does over here any more than it does in the US...and if you are here and you work in the sector religion has F-all to do with it...

However I do agree that the credit issue here is a bad as in the US, with individual fiscal responsibiltiy and financial management being noticeable by their absence in many households...it will change the way we save and the value of savings...

[YTNUKLR]

Credit can be used wisely. For example I have used credit cards at age 20 to build up a business with cash I didn't have. Now it's more or less ball-rolling and the credit cards are paid *off*(as in zilch, $0) monthly.

I also make 1% cash back from all the crap I buy. So, I actually make money off having a credit card AND building my credit history.

You just have to not be a retard. Tall order nowadays

[sammyg2]

Think about how stupid the average person is, then realize half the people are dumber than that.

The dumbest person in the world in he who allows his wife to try and keep up with the jones'. Dump her and get it over with, you should have never married her in the first place.

If there are lots of stupid people who make stupid choices, it makes my smart choices even better. Until I have to start paying the stupid people for their stupid choices, then it just pisses me off.
Thank allot you stupid people! Stop being so incredibly stupid! Just be stupid enough to make me look smart, but not stupid enough for me to have to bail your stupid butt out!

[M.D. Holloway]

Don't place the blame on the educational system - I don't think it is the place for this sort of education. It rests squarely on the shoulders of the parents. They should be the ones teaching these life lessons. At some point people as well as parents have to take on the responcibility!

[campbellcj]

We were crushed under CC and student loan debt (plus a mega mortgage) for years -- basically a combination of stupidity coupled with my life in a semi-unstable small business and med school for the wife. We finally have cleared the credit cards (and cancelled several) and can now breathe easier, start to invest and chip away at the student loans much more effectively.

Seems like Americans also have a thing for buying expensive cars they can't afford, making payments for 5-7 years and then they trade it in and start over again. I haven't had a car payment in more than 5 years and that is one bad habit I don't miss at all!

[Wickd89]

At least Chris noted that part of it was caused by stupidity. Thanks Chris.

Like most people, I have known a few people that I know that have had CC trouble, and it was all their own fault - buying everything they want, missing payments, top of the line SUVs, etc...

Except for someone who has health issues, I have no sympathy for CC issues.
I think they should not be allowed any credit, period, for 5 years minimum; unfortunately our "fake economy" lives off the fact that people cannot control themselves...

[YTNUKLR]

I sure know what it's like though, to experience what debt can do to f**k things up..my parents basically got divorced over it.

I am of the opinion that CC's are dumb, unless of course you can actually increase your productive capacity in utilizing credit. If you are just splurging on some new shoes or some sweet 1/43rd BRM model, maybe that requires re-thinking things. My Dad was a great person but he did not have much know-how when it came to finance.

I had a class in my senior year of high school called "Investments". The class was basically all finance, all year, and it was my senior year so it was more fun and low pressure...we even got to invest part of the school fund in stocks (or whatever we agreed the class should buy/sell/own). The teacher? Retired at 40 from MorganStanley because he just felt like teaching. Hands down, the most useful class I've ever taken.

I can't believe people are taught all the stuff they are taught, then sprung into society without ANY knowledge (other than what rubs off from parents) about what to do with CC's......

BTW, DON'T cancel your credit cards, even if they are paid off. When your credit scores are calculated, they look at your credit utilization ratio. If you have earned a load of credit, say, $40k, but you only use $2k, then you have a much better credit utilization ratio than if you had closed the cards, so now you might only have $10k with $2k used. Your credit rating just went down because you are now at 20% rather than 5%. It's such a simple thing, don't work against yourself by cancelling old credit cards!

[KFC911]

Originally Posted by Wayne at Pelican Parts

I am very fortunate, my parents were....

Me too... I owe my parent's more than I can ever repay for teaching me values and paying for my college education (relatively inexpensive by todays standards), but I keep trying .

[id10t]

We've got tons of CC debt, but we've considered it the cost of having the wife stay home to raise our 2 kids. Fortunately, they are both in school now, so the wife is starting to find work to start paying it down. The house we own we put 50% down (dad's retirement fund when he died) and haven't been pulling equity, etc. other than one refinance to drop interest rates and we including the closing costs, etc. in the new mortgage.

Still a butt load of debt, hurtin my score, but it is worth it to us to have good kids...

[KFC911]

I don't know your situation, but have you considered a HELOC in order to consolidate the CC debt? Normally, I would NEVER even suggest this, but in your case, if you've made a logical, rational decision (and aren't credited out to the max overall), it "might" be beneficial to have to the tax advantages of a HELOC in order to pay down your CC debt. On second thought, I don't even like my own idea here, but have you considered it?

ps: Some debt is inevitable for most, but I just consider CC debt to be almost "EVIL"

[id10t]

KC911 - just talked to the bank yesterday... they won't do a HELOC or anything without refinancing the whole ball of wax at *way* too much interest... so we're doing it by ourselves. Big tax return will wipe out a big card with high interest, then the next highest interest card on the list and so on. All of our fun money (guns, disney trips, etc) comes only from side jobs and working for a local shop for store credit in lieu of pay...

If I could set up a few more paperless fax systems, we'd be really set... I do 'em for about 10% of what a commercial/proprietary system is... I just don't have the time to drum up business...

[onewhippedpuppy]

I agree that it's on the parents to teach their kids financial responsibility, but I think it's ridiculous that it's not also taught in school. All the stupid BS classes you are required to take, but nothing regarding finances. I don't even know if it was offered when I went to HS. Really, in our world what is more important?