When Is It Enough? (Retirement Funds)

[dvcgirl]

That's a good question. Yes, if you just look at a snapshot of our accounts, at any given time we may have a balance of a few thousand dollars, but we pay them in full when the bills come. I've always assumed the figures we hear only refer to those who are carrying balances over time. I'm sure the companies are able to track that. Does anyone know how that works? Where is arminnie?

I'm not you Steve, but I think I have the answer . Here's a blurb I found on it.......they take the total of outstanding CC debt in America at the end of a given year and divide it by the total number of Americans with at least one CC.

Interestingly enough, this article also says that 55% of us have no CC debt, and so those who are charging are charging it up bigtime...

From Liz Pulliam Weston's column on msnbc.com.....

"Most of the people citing the $8,000 figure credit it to CardWeb.com, a service that tracks credit card trends.


CardWeb, however, doesn’t contend that the average American owes more than $8,000 on cards. Their statistics show that the average debt per American household with at least one credit card was $8,940 in 2002, the last year for which figures are available.

To get that number, CardWeb simply divided the total outstanding credit card debt at the end of 2002 -- $750.9 billion -- by the 84 million American households that it says have at least one credit card. (CardWeb uses a slightly different definition of household than the Fed does. And the company contends that 80% of households, rather than the Fed’s 76.2%, have at least one credit card.)


We don’t carry that much debt
Of the households that did carry a balance, the median amount owed was $1,900. That means half of the households with a balance owed more, and half owed less. (Medians are less subject to the skewing phenomenon that plagues averages; that’s why economists tend to favor them.)

Bill Whitt at the VIP Forum, a Washington D.C. research firm, helped me dig even deeper. By analyzing the credit card debts of all the households the Fed surveyed, Whitt discovered:
Only 29% of households owe $1,000 or more on their cards.
21% owe $2,000 or more.
6% owe $8,000 or more.
4% owe $10,500 or more.
1% owe $21,400 or more."


This is a little old...couple years I think. But you get the gist of it anyway.

 

[DVC Sadie]

That's a good question. Yes, if you just look at a snapshot of our accounts, at any given time we may have a balance of a few thousand dollars, but we pay them in full when the bills come. I've always assumed the figures we hear only refer to those who are carrying balances over time. I'm sure the companies are able to track that. Does anyone know how that works? Where is arminnie?

I don't exactly know how companies track credit card debt but I do know that they do/can. Heck its so easy now to track spending whether its how much you spend at the grocery store to electronics. Ever use a grocery stores card to get a discount? Ever buy electronics that they ask for a zip code? Just to give a few examples. Thats one reason I believe that there is so much data out there on each of us that its probably scary. Psssst. I do think whoever is tracking our monthly credit card bills know who pays them off every month and who doesn't .

Just because I'm paranoid doesn't make me wrong.

 

[disneysteve]

they take the total of outstanding CC debt in America at the end of a given year and divide it by the total number of Americans with at least one CC.

So if on December 31, the balance on my card is $3,000, I get counted into that national average debt even if on January 2, I mail a $3,000 check to the CC folks?

If that's true, then the "average" CC debt probably is considerably lower than we have all been led to believe since the stats I've seen say about 40% of Americans pay their bill in full each month.

 

[dvcgirl]

So if on December 31, the balance on my card is $3,000, I get counted into that national average debt even if on January 2, I mail a $3,000 check to the CC folks?

If that's true, then the "average" CC debt probably is considerably lower than we have all been led to believe since the stats I've seen say about 40% of Americans pay their bill in full each month.

I'm not sure...they do say this...

"To get that number, CardWeb simply divided the total outstanding credit card debt at the end of 2002 -- $750.9 billion -- by the 84 million American households that it says have at least one credit card. (CardWeb uses a slightly different definition of household than the Fed does. And the company contends that 80% of households, rather than the Fed’s 76.2%, have at least one credit card.)"

So does "total outstanding credit card debt" mean that they're referring to a revolving balance? It sort of sounds like that to me. Or, it could simply be another statistic where we need to just watch the trends.

Here's the whole article...

http://moneycentral.msn.com/content/Banking/creditcardsmarts/P74808.asp

 

[DMRick]

And again, although I did quite good in statistics in college, I don't like them. They can often be made out to be what fits in good for what the artical wants them to say. For sure, if they take my debt on Dec 31st, which includes my entire Christmas spending, and all my inventory for the year to come for my DTP/eBay business..I look like a reall CC loser.

So if on December 31, the balance on my card is $3,000, I get counted into that national average debt even if on January 2, I mail a $3,000 check to the CC folks?

If that's true, then the "average" CC debt probably is considerably lower than we have all been led to believe since the stats I've seen say about 40% of Americans pay their bill in full each month.

 

[disneysteve]

For sure, if they take my debt on Dec 31st, which includes my entire Christmas spending, and all my inventory for the year to come for my DTP/eBay business..I look like a reall CC loser.

I didn't even think about the Christmas stuff (not my holiday). That's true. If they base their data on end-of-year balances, that is probably when most families have their highest balances of the year. I bet the numbers would be different if they took their "snapshot" on June 30th instead.

 

[disneysteve]

Here's the whole article...

http://moneycentral.msn.com/content/Banking/creditcardsmarts/P74808.asp

Great article. It really shoots down some of the common financial stuff we hear over and over and have just come to accept as truth.

 

[DMRick]

Great article. It really shoots down some of the common financial stuff we hear over and over and have just come to accept as truth.

It is a good one isn't it. We don't look so domed anymore. I love the analogy of being in a room with Bill Gates and Warren Buffet. I love the net worth of the room being $4 billion..even if I was one of those in "room" LOL. That's how I feel when I see "averages" of those saving versus those not. As the article says, statistical averages don't always tell the tale. It depends on whose in the "room", and what they need the figures for. One interesting thing too, is that it shows CC debt going up. Some of that higher credit card debt can be the people followed earning more money now, than in 1990. We just don't know.

 

[mickeyfan2]

I found this quote "All of that is more than enough evidence to suggest that a large number of people are overdosing on debt. The average American, though, seems to be doing just fine." to be very interesting. So the average American is doing just fine.

 

[dvcgirl]

I found this quote "All of that is more than enough evidence to suggest that a large number of people are overdosing on debt. The average American, though, seems to be doing just fine." to be very interesting. So the average American is doing just fine.

Well, again, it depends on what your definition of "just fine" is. While this particular study skews the info in a way that makes it look like many are carrying incredibly high CC balances....when really only a few are carrying a great majority of the debt. The same thing goes for 401K and IRA balances. The government knows what that number is, and again, it's an average. Well, some of us have been doing a very good job there...and have big balances, pulling that average balance up for those who have been saving very little. We know one thing...that number is far too low, the average amount in 401Ks and IRAs at every age group, even with some of us being way ahead of the game. In other words, even if the CC picture isn't accurate, it doesn't necessarily equate to "The Average American being just fine." Maybe we're all not in horrendous CC debt, but that doesn't mean that we're not spending more than we should be.

 

[arminnie]

That's a good question. Yes, if you just look at a snapshot of our accounts, at any given time we may have a balance of a few thousand dollars, but we pay them in full when the bills come. I've always assumed the figures we hear only refer to those who are carrying balances over time. I'm sure the companies are able to track that. Does anyone know how that works? Where is arminnie?

Here I am - I'm not absolutely sure how it works today, but I know at one time it was just a snapshot of the current status. When the account was opened, account limit, highest balance, current balance, monthly payment and status (paid on time, etc) were the items that were reported to the credit bureaus.

It really is more geared to those who did not pay their balances in full. Like the rest of you who pay the balance off each month I can often show a balance of several thousand dollars, but I do not ever pay any interest. And I'm not talking about those "no interest" deals either.

I think our balances are included in the credit card debt as the banks cannot assume that next month we won't change our minds and decide to only pay the minimum instead of the whole thing.

So technically I had $8000 in credit card debt a few days ago. I paid a statement of about $4500 and will pay off next months bill when it closes. That of course is not at all the same thing as the person with $8000 in debt who makes the minimum payment. I don't know this for sure but I would hope the cc banks are now reporting the minimum due (legal obligation) and the payment actually made for credit scoring purposes.

fyi - I don't usually spent $4000 a month. I had some travel expenditures, some charitable donations, and some things that I got reimbursed for.

 

[disneysteve]

So technically I had $8000 in credit card debt a few days ago. I paid a statement of about $4500 and will pay off next months bill when it closes. That of course is not at all the same thing as the person with $8000 in debt who makes the minimum payment.

some things that I got reimbursed for.

If that's the case, then that national average CC debt we always hear about is a crock because it includes all the people like you and me who pay the bills in full each month.

You gotta love those reimbursed charges, though. You get the reward points and they don't cost you anything.

 

[mickeyfan2]

If that's the case, then that national average CC debt we always hear about is a crock because it includes all the people like you and me who pay the bills in full each month.

You gotta love those reimbursed charges, though. You get the reward points and they don't cost you anything.

We pay ours off too, so we are skewing the numbers up. I guess the trend matters to a degree, but we are putting more and more on our cards as more companies accept it as payment. We are not really putting on more, just writing checks less.

 

[disneysteve]

I guess the trend matters to a degree, but we are putting more and more on our cards as more companies accept it as payment. We are not really putting on more, just writing checks less.

Same here. We definitely charge a lot more than we did 5 or 10 years ago, but it is just an alternate form of payment. We still pay the bill each month. Just easier to pay Visa once instead of paying 10 other companies individually.

As Mark Twain said, "There are lies, damn lies and statistics."

 

[DMRick]

Same here. We definitely charge a lot more than we did 5 or 10 years ago, but it is just an alternate form of payment. We still pay the bill each month. Just easier to pay Visa once instead of paying 10 other companies individually.

As Mark Twain said, "There are lies, damn lies and statistics."

We're in this camp. I had to write a check last night and I almost needed a lesson in how to! I don't even write one to pay off the charge cards. I do it on line.

 

[arminnie]

Quote:
Originally Posted by arminnie
I really don't make decisions on what to spend based on my earnings. I try to look at whether I need it or if it is something that I really want and that I can afford out of my savings.

What a novel concept! It's amazing how many folks just can't comprehend that.

I think it's a concept that would serve people well at many stages of their lives.

No one should be spending more than they make unless it really is for an unusual circumstance like getting an education, dealing with illness or temporary unemployment.

But on the other hand you don't have to spend every penny that you have either. Even if you take out a substantial sum for savings, retirement, etc. there are some people with large incomes that have to "work" to spend the money left over.

 

[MrsPete]

Same here. We definitely charge a lot more than we did 5 or 10 years ago, but it is just an alternate form of payment. We still pay the bill each month. Just easier to pay Visa once instead of paying 10 other companies individually.

As Mark Twain said, "There are lies, damn lies and statistics."

We're also charging more but paying it off each month. As you said, it's just a different form of payment. Since the credit card company will give me various types of rewards for using their card, why shouldn't I use a credit card instead of a check? It costs me literally nothing to use their card, and I'm getting some nice rewards: free Blockbuster video rentals, ship credit for our upcoming cruise, gift certificates to restaurants.

I'm not advocating spending more just so you can get rewards --that'd be counterproductive -- but charging what you'd spend anyway is a good choice.