Why would you charge something on CC you couldn't pay off in 1 month?

[ladyelle]

It appears as though many people, who are fortunate enough not to have credit card debt, look down on those who have debt. IT IS NONE OF YOUR BUSINESS how others conduct their financial business. It is not fair of you to judge others when you do not know the circumstances of their lives.

 

[goin2disneyagain]

Originally posted by lc1965
goin2disneyagain -- please let me clarify -- i was not singling you out. in fact, i was trying to be careful NOT to. i incorrectly drew teh conclusion from yoru post that you probbaly carried a balance. i know some people who legitimately carry a balance too, out of necessity. bit for every one of them, i know 3 or 4 who revolve debt because they don't understand why they shouldn't. that's all i meant.

I guess I found it a little odd that you came to that conclusion just from me saying that it isn't realistic. Like I said earlier, I know lots of people that carry a balance even though I don't and I just know it isn't always feasible for everyone. I was also trying to point out that the banks like for people to carry a balance so they can get that finance charge.

I agree with the other posters that say it isn't anyone else's business. As long as they are not paying my bills then I am not concerned.

 

[JudyS]

Originally posted by FredS
....you may not be aware that there are such things as job, disability and life insurance. We are very fortunate to have good jobs that are secure. However, we have insurance to cover us if we lose our jobs, are disabled or die. It is foolish to not have insurance to cover your living costs if something should happen to your job. ....

I want to point out that many people are unable to get life or disability insurance. I make very little teaching at a private college, so my husband tried to get some life/disability insurance on himself when we married. Even though he was only in his mid-thirties at the time, no one would insure him because he's a diabetic. If anyone knows a way around this problem, please let me know!!!

I'm not sure what job insurance is, unless it's the unemployment insurance offered by state governments.

As for charging a DVC membership to one's credit card, I agree that this isn't terribly risky because one can generally sell a DVC membership for about what one paid. However, I *strongly* recommend against financing non-DVC timeshares. I hang out at the Timeshare Users' Group (www.tug2.net) and have heard many sad stories of people who financed expensive timeshares, only to find that they couldn't make the payments, and that the timeshares really weren't worth anything. They are stuck making payments on a worthless contract. Truly scary!

 

[arminnie]

Originally posted by ladyelle
IT IS NONE OF YOUR BUSINESS how others conduct their financial business.

Well actually it really is my business - I've worked for the largest CC organization for many, many years since it was quite tiny. I also worked for a large credit reporting agency for several years.

The credit card industry has been my business for a long, long time. I probably know about as much as anyone about the industry from it's inception to the present day.

And contrary to popular belief the credit card companies are not that interested in people going into debt. The BANKS (not the CC companies) are the ones that make the money off the interest. The CC companies - MC and Visa- only make a few pennies per transaction and have absolutely no financial interest in whether or not you carry a balance. They just want you to use the card - a lot.

I've had to use my credit cards to finance my living expenses a couple of times in my life, but I made sure that was a temporary situation not a permanent way of life.

Sometimes I wish that I'd had access to credit when I was in college. It could have made things much easier. But then I made do with what little money I did have and only had school loans to pay off later. When I went back to graduate school I did have credit cards but I did not use them unless I could pay it off at the end of the month.

I still think it is a valid question for you to ask yourself "why am I buying this item that I cannot pay for." There's a wide range of answers from I just absolutely cannot livewith out this fabulous "fill in the blank" to I need to borrow money to get food and medicine for the baby.

Carrying a balance as a permanent way of financing life is just not something a prudent person should do. Believe me if you can get rid of revolving debt your life will be so much easier.

 

[FayeW]

I think it is all about finding a balance that suits your lifestyle. We have debt, lots of it, and some of our purchases may not have been well thought out. HOWEVER, we also have assets, lots of them, and we pay our bills on time, everymonth. We are not savers but we recognized that early on so we borrowed for our retirement savings. Here in Canada, for every $1000. you put in your retirement fund, you get back approx. $300 in tax refund. So it made sense to us to borrow money at bank prime (currently 4%) to get a 30% return via our tax refund. We then used our refund to fund the next year's RRSP, so we earned 30% return again, and so on.

It is important to plan ahead for your future, but it is also important to live life as best you can, because you don't know how many "tomorrows" you have. We try to find a balance, and even though we may not pay the debt in full, we can always pay our bills. Having said that, we do recognize that the we are paying a lot in interest costs, and have a plan in place to reduce our debt. Our gauge has always been our "Net Assets". Our assets outweigh our liabilities, and that is a nice feeling.

 

[disneysteve]

Originally posted by FredS
Are you saying that every person who ever finances something is consciously aware that they aren't going to be able to pay for it??

I didn't say that at all. I only said that I'm curious about the people who do do that.

But it sounds as if you believe that you get to criticize everyone who lives below the poverty level because clearly they are inferior to us and their obvious financial mismanagement might affect us.

And I most certainly didn't say that or anything of the kind. In fact, I said in an earlier post that sometimes going into debt is the only possible way to get by. I'm not curious about those who are truly poor. Obviously, I understand why those folks have trouble paying the bills.

I was simply expressing curiousity (I didn't know that was a crime) about folks who earn good money but choose to buy things they know they can't afford. I never asked anyone for personal financial details, nor is it any of my business to do so, so I agree with you there.

I believe the latest data suggests that the average US household has $8000 in CC debt. Not everyone takes on debt by choice - some do it out of necessity. I just wonder about the others who we see on Oprah or Dr. Phil or in Money magazine or wherever - folks with great jobs, fantastic incomes and drowning in debt because they can't control their spending. Perhaps it is a type of obsessive-compulsive disorder. I don't know - but I'm curious.

By the way, this whole topic is kind of my business, though not to the extent of arminnie. But I am a published author on the topic of living within your means. I've had letters and feature articles published in 4 different national financial magazines and I'm on the contributer panel for one of those publications so I try to understand why people choose to spend their money the way they do.

If my question offended you, I apologize.

 

[SWVA BGSU Fan]

I wanted to add my $.02 to some of the comments made on this thread. Most banks do not like to see high credit card debt from consumers. This debt limits other potential and more desirable loans such as mortgage loans or auto loans.

It's true that banks make money off interest income but unsecured credit card is a risky proposition for lenders.

I understand that there is a need and market for credit cards. Like most things a credit card is neither good nor bad. It's the manner that the consumer uses it that determines if it is good or bad. We all pay for those who mis-handle finances. And to be sure, there is debt mismangement among ALL economic classes.

My hope is that everyone uses credit wisely.

 

[BethR]

Originally posted by SWVA BGSU Fan
Like most things a credit card is neither good nor bad. It's the manner that the consumer uses it that determines if it is good or bad. ...

My hope is that everyone uses credit wisely.

A very reasonable statement, to be sure. Not like the blanket one that my SIL made last night - "NO one needs a credit card if they can't pay it off each month!"

Credit - making a purchase over "time" and paying a premium to do so.
It is a choice that some of us chose to make for various reasons. But like SWVA BGSU Fan says - it should be used wisely.

 

[MrsPete]

FredS -- I'm guessing you've never taken a business course. Or, if you have, it wasn't a very good one.

"We" are the economy -- not the government, but all of us. When people spend beyond their means (for example, buying too much house or car, or carrying revolving credit), they strain the economy to its breaking point. This affects not only the individuals but the economy as a whole; then Alan Greenspan zaps it to all of us.

 

[ladyelle]

Originally posted by arminnie
Well actually it really is my business - I've worked for the largest CC organization for many, many years since it was quite tiny. I also worked for a large credit reporting agency for several years.

The credit card industry has been my business for a long, long time. I probably know about as much as anyone about the industry from it's inception to the present day.

And contrary to popular belief the credit card companies are not that interested in people going into debt. The BANKS (not the CC companies) are the ones that make the money off the interest. The CC companies - MC and Visa- only make a few pennies per transaction and have absolutely no financial interest in whether or not you carry a balance. They just want you to use the card - a lot.

I've had to use my credit cards to finance my living expenses a couple of times in my life, but I made sure that was a temporary situation not a permanent way of life.

Sometimes I wish that I'd had access to credit when I was in college. It could have made things much easier. But then I made do with what little money I did have and only had school loans to pay off later. When I went back to graduate school I did have credit cards but I did not use them unless I could pay it off at the end of the month.

I still think it is a valid question for you to ask yourself "why am I buying this item that I cannot pay for." There's a wide range of answers from I just absolutely cannot livewith out this fabulous "fill in the blank" to I need to borrow money to get food and medicine for the baby.

Carrying a balance as a permanent way of financing life is just not something a prudent person should do. Believe me if you can get rid of revolving debt your life will be so much easier.

 

[ladyelle]

I also was in the banking business ARMINNIE. IT IS STILL NONE OF YOUR BUSINESS.

 

[FredS]

Originally posted by MrsPete
FredS -- I'm guessing you've never taken a business course. Or, if you have, it wasn't a very good one.

"We" are the economy -- not the government, but all of us. When people spend beyond their means (for example, buying too much house or car, or carrying revolving credit), they strain the economy to its breaking point. This affects not only the individuals but the economy as a whole; then Alan Greenspan zaps it to all of us.

Thank you for your OPINION. Not so much for your attempted slam. "....strain the economy to its breaking point." Sounds aaaalllll scary, but your silly example of carrying revolving credit to equal spending beyond ones to reach this breaking point is absurd. Ever give a thought as to why the Fed reduces the interest rate? Oh, so that people will spend more and thereby ruin our economy according to your "logic".

You might want to think about a "good business course" for yourself.

 

[yoopermom]

because I was laid off from my teaching job, and have had to deal with getting "over it". DH and I knew it was coming, so sold the vehicle we still owed on, paid off the cc, upped our savings as much as we could, and now, only owe on our house. Is it fun? No. But at least I only have to worry about getting another job for the purpose of health insurance, not about losing everything we own.

No, I have no right to "judge" how anyone else spends their $$. However, when I read about how the US population now has lower savings then ever before in recent history, owe more on their houses, have pulled the equity out of those houses to pay off other debts, etc, I do worry. I still (substitute) teach, and I want today's kids to grow up understanding money, and how to use it sensibly while still having "fun" in life.

Rant off, love everyone who loves Disney!

Terri the Yoopermom/Substitute Teacher

 

[Miss Jasmine]

I carry some CC debt. Yep I admit it. Start throwing the stones at me now.

And I don't have to justify to you WHY I do it. It works for us.

 

[BethR]

Come on everyone. This thread is heading down a dangerous path.
If the tone of it cannot be turned back to "friendly" it will be closed.

Please consider what and HOW you post before you post. Sometimes hitting the "Back" button is very helpful.

This is indeed an emotional subject for some of us. But please consider if you are posting with your head or your heart. A conversation is fine (and I think that most of you can go through the posts and pick out the "conversational" ones), an argument is NOT (and I think that most of you can pick out the argumentative posts.)

Thank you!

 

[Lisa loves Pooh]

In my case--I have problems with the concept of credit cards--I just cannot visually grasp how much I spend--and then when I see the statement come--YIKES! Now, I charge for budgeted expenses--but boy do those numbers add up.

My husband will only finance on a CC if he has a no-interest deal.

My credit "non"savvy comes from my mother who has attempted declaring bankruptcy 3 times and was successful twice and still hasn't learned diddly from those experiences.

Credit cards are my evil--but I use them as responsibily as possible. We only got into trouble in the past few months as we did home upgrades and built a pool. Some very unforeseen situations came up and we had to carry a balance that my husband transferred to a lower interest route so that we can get it paid off. We're talking less than $2000 in comparison to the HELOC we had--it was peanuts in comparison but still peanuts that we couldn't pay for with the loan or cash on hand.

My opinion is--if you are fully aware of your finances and are fully aware of your abilities to pay your CCs off in whatever way you choose--then good for you! If you are like me and cannot get past the fact that a CC isn't monopoly money--then it would be best to avoid them as you will find yourself onto a very fragile debt road.