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How Americans Get Out of Credit Card Debt

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Re: How Americans Get Out of Credit Card Debt

#11

Post by elvirs »

as long as there is money in society there always will be dept. if consumers pay off all their dept on credit cards. if homeowners pay off all their mortgage dept for property. if all small businesses pay off their dept. if all institutions pay off their dept. if all banks pay off their dept to investors, foundations, etc. if all states pay off their dept to banks, IMF and other organizations.

in other words, if every single individual or organization pays of their dept there wont be a single dollar bill in circulation which means an end to our current system, which is something most people do not want to happen (no matter how broken and inefficient it is)

Re: How Americans Get Out of Credit Card Debt

#13

Post by ithayer »

kirpekar wrote: post #2

"How Americans get out of credit card debt." Don't most of them just pay it off? Sure takes a long time, but eventually don't most people pay what they owe? BTW, there are only about 1.5Million bankruptcies in the US every year ... that's <1% of borrowers. So I wouldn't use it as the first kind of "traditional option".

Hey there, thanks for the comment!

You are absolutely right that there were about 1.5M bankruptcy filings last year [this number is growing (1)]. Note that we haven't made any claims about the ordering on the graphic, but bankruptcy is an option which is often under-considered, because people are scared of it, and driven by FUD to pursue other options which often have lower success rates.

Rod and I have learned a tremendous amount about debt since founding this company. We have heard every possible misconception from people who are not in debt, such as

- "people don't care about paying debt off as much as weight loss because it's not visible" - "only dumb people get in debt" - "people should just stop shopping and pay off their cards"

The list goes on. What we have learned from speaking with dozens (now probably hundreds) is that there is no "typical" debtor. People that have reached out to us vary in age, sex, location, education level, stress level, income, employment, height, weight, hacker cred, skin color, and so on. The number of people in this situation in the US number in the millions. The statement "Don't most of them just pay it off" trivializes situational problems which are extremely diverse and complex. And "take a long time" it does - people that are either not financially educated or unable to pay off their debt can live in a steady state of repayment, paying a perpetual existence tax to banks. This should not be the state of the world!

(1) http://www.uscourts.gov/News/NewsView/10-11-08/Bankruptcy_Fi...

Re: How Americans Get Out of Credit Card Debt

#14

Post by StavrosK »

randrews wrote: post #8
StavrosK wrote: post #6

What happened to "stop buying things you don't need"? I had a friend tell me he was considering a consumer loan because repaying his other loans didn't leave him with enough money. I swear, it's as if people have never seen money before.

You can buy things you don't need, and you can buy things with money you don't have, but doing both at the same time is a really bad idea.

Ah, yes. That's what I meant, good catch.

Re: How Americans Get Out of Credit Card Debt

#15

Post by ithayer »

jarin wrote: post #4

I love this idea, but I've been getting "We're sorry, our server is under heavy load. Please try again." during the verify phase for the last few days.

Thanks for checking us out - I'm really sorry about that. We are dealing with issues with some of our backend service providers. One of the difficulties of a financial site such as this is that the data which comes back is not very well normalized nor homogeneous, and we are seeing issues and response types which we have never seen before. Please send an email to support@readyforzero.com and we will track your issue. Thanks guys!

Re: How Americans Get Out of Credit Card Debt

#16

Post by phugoid »

StavrosK wrote: post #6

What happened to "stop buying things you don't need"? I had a friend tell me he was considering a consumer loan because repaying his other loans didn't leave him with enough money. I swear, it's as if people have never seen money before.

Though you're being rather flippant, I agree this is the key.

When there's a mountain of debt before you, the little spending decisions you make today seem to have no consequence on your fate. The cappuccino and Wired magazine that you buy on the way to work are of no consequence compared to all the money you owe.

Clearing debt can feel like digging at that mountain with a dessert spoon.

Re: How Americans Get Out of Credit Card Debt

#17

Post by randrews »

StavrosK wrote: post #14
randrews wrote: post #8

Earlier quoted context omitted.

You can buy things you don't need, and you can buy things with money you don't have, but doing both at the same time is a really bad idea.

Ah, yes. That's what I meant, good catch.

It's always been my rule. :) If I've had to put groceries (or whatever) on a credit card, I'm not also buying a video game that month.

Re: How Americans Get Out of Credit Card Debt

#18

Post by StavrosK »

randrews wrote: post #17
StavrosK wrote: post #14

Earlier quoted context omitted.

Ah, yes. That's what I meant, good catch.

It's always been my rule. :) If I've had to put groceries (or whatever) on a credit card, I'm not also buying a video game that month.

I think it's pretty safe to say that the people in debt don't know about this rule :/

Re: How Americans Get Out of Credit Card Debt

#19

Post by Retric »

randrews wrote: post #8
StavrosK wrote: post #6

What happened to "stop buying things you don't need"? I had a friend tell me he was considering a consumer loan because repaying his other loans didn't leave him with enough money. I swear, it's as if people have never seen money before.

You can buy things you don't need, and you can buy things with money you don't have, but doing both at the same time is a really bad idea.

The most useful way of thinking of CC debt is how much it INCREASES THE PRICE of what you buy.

That nice lunch might cost 20$ if you paid cash, but use your CC and it's really 20$ + the interest you are going to pay. If it's going to take you 4 years to pay off your 20% APR CC debt then that 20$ lunch is really 41$ 50c.

PS: That is not to say paying cash for lunch changes the numbers when you are in debt; CC increases the cost of "everything" you buy without exception.

Re: How Americans Get Out of Credit Card Debt

#20

Post by StavrosK »

phugoid wrote: post #16
StavrosK wrote: post #6

What happened to "stop buying things you don't need"? I had a friend tell me he was considering a consumer loan because repaying his other loans didn't leave him with enough money. I swear, it's as if people have never seen money before.

Though you're being rather flippant, I agree this is the key. When there's a mountain of debt before you, the little spending decisions you make today seem to have no consequence on your fate. The cappuccino and Wired magazine that you buy on the way to work are of no consequence compared to all the money you owe. Clearing debt can feel like digging at that mountain with a dessert spoon.

While you're heaping more things on it with a tablespoon.
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