Posted on 01/01/2005 1:13:18 PM PST by showpromid
Christmas has come and gone and the biggest buying spree of the year is over. Now comes the tough part: cutting up those credit cards to keep from charging anymore in the new year.
American consumers could keep Edward Scissorhands (search) busy for months just slicing up our maxed-out credit cards. Remember him? In the 1990 Tim Burton movie about the young man with scissors for hands, Johnny Depp mainly used his talented appendages to trim hair and create whimsical creatures out of shrubbery.
But what's in order now is much more straightforward snipping. Sure, everyone spends a little more than they mean to at this time of year; the problem is that we've all been spending a little more than we mean to throughout the last few years. Let's take a look at our credit habits as a nation to get an idea of why we may be in over our heads.
(Excerpt) Read more at foxnews.com ...
No savings accounts either? I think a truer picture of the economy would be to look at the percent of people with savings accounts. Some people have a debt but at the same time could pay it off the same day from savings. People with no savings accounts are still better off than those with net debt.
Plus it depends on what your debts are for --- if they're for things that are losing value such as cars then it's a very bad kind of debt to have. If your debt if for a home it's not as bad because the home still has some value even if it is foreclosed on.
Kids? Kids? Since when is a college student a kid?
I'm in debt up to my eyeballs! ;)
Spend ... you suckers!
I'd hope that the majority of Freepers pay off their balances monthly. We are supposed to be a bit smarter than the general public. Letting oneself creep into debt at 18% isn't exactly smart.
My mindset has always been: If I don't have the money now, what makes me think I'll have it later? Emergencies happen. Save money and be prepared for them.
I do have a debit card that I use practically on daily basis. Much simpler and safer than carrying around large amounts of cash.
IMHO, too many people chase the "I want" instead of the "I need." Too many people live beyond their means and then wonder why they can never seem to get ahead. </end rant>
"Prior to 1990, how many people do you think used cc's to charge their groceries? Today, it's the norm. It's just a convenience.
"
That's true, but a lot of what you see is debit card use. My Wells Fargo Visa is not marked as a debit card and always is used just like a credit card, but all funds come out of my checking account. I haven't written a check in weeks.
"Yet home ownership is at a historical high at 70% of the American population. "
But that's not really home ownership. It's home debtorship. If you own more than 50% of the value of your home, there's no way that you can claim to own it.
Divorce can take all funds from people, and force them to borrow against credit cards to even eat. I have friends who are $50k in debt now because of divorce. They will be crawling out of the hole for years.
About 35% of people pay off their credit card debt every month. We are known as "convenience users" and the banks hate us because they don't make any money of us except for the Merchant Fees that the stores pay to the banks whenever a customer uses the bank's card, typically about 2% of the purchase price. Chargeoffs, people being delinquent or not paying at all, varies, but typically goes between 3-4%. In really bad years, it may go up to 6.5%. Keep paying off those bankcard debts. Don't pay interest charges.
"I'd hope that the majority of Freepers pay off their balances monthly. We are supposed to be a bit smarter than the general public. Letting oneself creep into debt at 18% isn't exactly smart.
"
No way. I'll bet that among Freepers, the percentage of those who pay their entire credit card balance each month is less than 10%.
Woohoooo! It's the traditional last story of the year. Every year, inbetween Christmas and New Years we get the story about how consumer credit debt "may" crash the economy. You can write a calendar by these traditional stories, especially in the winter months. I think the first time this story was printed Lincoln was in the White House.
Come on. You are not going to let an 18 yr old go into a bar, but you are going to give them a credit line of $5000?
No, she is failing all subjects. LOL! AAAAAA's AP and Honors courses including advanced calculus, english, history, economics. At least in economics she is learning much more than the teacher knows.
Divorce probably does that to a lot of people. However, I had a co-worker get divorced (he is an engineer), and the wife got the house, nice car, kids,....the whole ball of wax.
He declared bankruptcy, drove an el-cheapo car, supplemented his income by delivering pizzas at night, scrimped, saved, eventually played the stock market, bought some investment real estate, and now, 8 years later, is back on his feet again in a big way.
Credit card debt is not the answer when you don't have money. Cutting back on spending and earning more money IS the answer.
At least you double your anally extracted percentage estimate of freepers who pay each month vs. the general population.
I'll have to do some google searches to see if I can find figures for the general population....
>>8 years later>>
That is my point.
>>Cutting back on spending and earning more money IS the answer.>>
No. When work is skimpy, you're renting a room and eating Mac and Cheese, the bills are more than the income, one must decide if he or she will eat or put gas in the car. Cash from credit is welcomed when it is the only way to eat and drive.
Maybe until they obtain a job, have to pay their own way for something, buy their own car? As long as someone is still being provided for by their parents, pay no bills of their own, never held a job ---- they might be old enough to be one but have not become an adult.
A guy I know has a daughter who graduated from college a couple years (she never had a job) with $16,000 in credit card debt ---- and yes --- he did what the credit cart issues count on parents doing --- he is paying it off for her.
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