Credit Crunch

One of the best decisions I made as a 17 year old was to get my first credit card. Yes, I said best. I was just watching TV while eating my lunch and one of those ads was on to help people solve their credit crunch. It's not that people were having credit card or debt issues that I find offensive -- everybody has those now and again. It was one line in the ad that got me fuming:

"It's probably not your fault."

I loathe this ad. First of all to see all these people rejoicing that they only had to pay a fraction of what they rightfully owed -- well that makes me a little ill. But the implication that people are not responsible for their own spending habits drives. me. nuts. You spent the money. You know how much you make. Getting into money trouble, getting overextended is nothing to be ashamed of. Not taking responsibility for it is.

I know people want to blame unscrupulous banks credit card companies, for putting their interest rates in tiny print. But it IS there in print. People just don't want to see it. And trust me I am not defending banks -- I just hate this attitude out there that people who spent twice what they make are SO SHOCKED that they are in trouble. Like I said -- it happens, but overspending is not the fault of banks who may charge insane amounts of interest -- they don't make you spend. I so wish people would take responsibility for their own actions.

When I was 17 I worked for a department store and the only way I could get my discount was with their store credit card. So I got one. And I overspent. I bought this AWESOME green leather jacket with massive shoulder pads. It was amazing. Ahem. And some other stuff. I got my first bill and almost threw up. I owed $400. Way, way more than I even made in several months. And then as I paid it down over several months I saw the insane 29% interest rate that was being charged to me. And I learned my lesson.

That lesson was not that credit cards are evil. It was a lesson on how to manage my cash flow and manage my debt. I think I was very lucky to have learned that lesson at a really young age, when it was really only a small amount of money I was dealing with.  Since that time I have paid off my credit card balance in full every single month.  I have one of those credit cards that you get free groceries with when you use it, so I buy everything on my card and I get $100 or more of free grocs every month.  I have a budget that I stick to like a fanatic. Every two weeks I update my spreadsheet -- I've had this same, very basic spreadsheet for 13 years now. And I am sooo not a spreadsheet person.

That's not to say we don't have debt. I have a low interest line of credit for big purchases that I do not want to or cannot wait to buy at a later date. And then I put a line in my spreadsheet for paying that down. We have car loans and a mortgage. But that's it.  We have debt, but it is managed debt.

I realize that I am fortunate that we both make decent wages, although mine is half what it used to be now that I freelance. But we also have perfect credit ratings -- and have no trouble getting the best mortgage rate, a good car loan etc. I don't think people need to have credit cards of course. But I think learning financial management, including how to manage debt, is a good lesson to learn.

Comments

[Jessica]

So, do you still have the awesome green leather coat? I'm still laughing.
I feel the same way as you...I wish people would take responsibility of their debt and live within their means.

[Jen]

Adding that I wish people would not treat extras as "must haves" just because they live in a certain tax bracket. I've heard more complaints about "tight budgets" lately and then I see the same people buying ipods and wii's for their kids and talking about their tivo'ed shows in the next breath... if your husband just got laid off.....maybe you don't need the wii right this second??? I hear all the time that people want to 'give their kids nice things' because they can afford it so why not. But they really CAN'T afford it if they are going to be complaining about a tight budget the next day.

[carole]

It was an awesome green jacket )