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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

#81

Post by rick888 »

thompo wrote: post #75
TheAmazingIdiot wrote: post #62

Earlier quoted context omitted.

I'm sure you're up there with those who think that people who owe large sums of money should "just work harder" or "lay off alcohol and cigs". I had a medical injury that has royally screwed up my life. I also HAD insurance, but starbucks switched insurance and I was now in preexisting condition hell. I had no money for a lawsuit, so I'm now 12k in the hole, along with basic living expenses that I had to cover while…

'I'm sure you're up there with those who think that people who owe large sums of money should "just work harder" or "lay off alcohol and cigs".' You say I'm "up there" like I'm some sort of snooty asshole for working my face off for six months to pay off my debt. I have my vices (I love you, Mary Jane) and I still managed to afford them so make whatever assumptions you will about me, I just found it more gratifying t…

I was 25K in credit card debt when I got out of school. I moved back in with my parents and pretty much didn't do anything outside of working and sleeping for a year, and paid it off I am still debt free (this was 5 years ago).

It takes self control and discipline, which most people don't have.

Re: How Americans Get Out of Credit Card Debt

#82

Post by whatusername »

joubert wrote: post #67
joe_the_user wrote: post #63

Earlier quoted context omitted.

And a "medical emergency" can have unlimited costs today...

The parent wrote: "They did it because they overextended themselves to get a house in a good school district and then one of them lost their job or they had a medical emergency." So, they overextended themselves and THEN lost a job or had a medical emergency. The problem is people choose to live on the edge financially, which I think is irresponsible, especially if you have others who depend on you for their life.

From an outsiders perspective of the US --- If you have a $200K medical emergency -- I'm not sure how you prepare yourself for that...

Re: How Americans Get Out of Credit Card Debt

#83

Post by timwiseman »

joubert wrote: post #72
mkr-hn wrote: post #60

Earlier quoted context omitted.

Putting yourself in heavy debt to make sure your kids have a good shot is not difficult to defend. It's not something I'd do, but I have a hard time blaming someone for making that sacrifice.

It's not something I'd do, but I have a hard time blaming someone for making that sacrifice. a) Why is it that you won't do it? b) The issue is that they're sacrificing the financial security of their kids by living on the edge and that is irresponsible if you're someone's guardian. Imagine a company/government says we'll go into heavy debt because we want to give our shareholders/citizens a good shot - is that not i…

Imagine a company/government says we'll go into heavy debt because we want to give our shareholders/citizens a good shot - is that not irresponsible?

Those are two different questions.

When it comes to a company, the answer is very often Yes. The purpose of most companies (there are some exceptions) is to maximize profits using all ethical and legal means. If the expected payoff of the capital investment the loan would finance is greater than the interest of the loan, then taking it very often makes sense even if it would risk bankruptcy if something goes wrong.

When asking about the government, it matters a lot about what you think the purpose of government is, and that is a philosophical question I will leave alone for now.

Re: How Americans Get Out of Credit Card Debt

#84

Post by ramchip »

nostrademons wrote: post #73
joe_the_user wrote: post #64

Earlier quoted context omitted.

By say, taking out student loans? Considering that this is pretty much the primary way that education is paid for these days, simply repeating "debt is a bad idea" hardly seems adequate. (and I am personally happy to be debt-free but I can see why my indebted friends made the choices they did, however badly they may have worked out).

Unless you're going to a top-tier college and majoring in a marketable skill, that is a bad idea too. There's a bubble in higher education where many people are being promised a good life merely by going to college. These people get out of college, find out that such a good life was just a mirage, and then find out that the $200K in debt they took on for it wasn't such a great idea either. The responsible thing to do…

> The responsible thing to do there is to just say no.

Or just go to a college that doesn't charge $200k in fees?

Re: How Americans Get Out of Credit Card Debt

#85

Post by Retric »

rbranson wrote: post #5
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".

It's kind of misleading to say that it's "only" 1% of borrowers file, because the scope of time is focused on one year, but not only do borrowers have a much larger average lifetime, but the impacts of bankruptcy last 10 years. If we say that the borrower pool stays fairly static over a 10 year period, that means really you're talking about AT LEAST 15% of borrowers are filing bankruptcy.

Many people also die with debt. I suspect less than 50% of people ever get back to zero after gaining significant amounts of debt.

Re: How Americans Get Out of Credit Card Debt

#86

Post by Retric »

dalore wrote: post #26
Retric wrote: post #19

Earlier quoted context omitted.

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 increase…

If you pay it off in full, and get 2% cashback then that lunch cost you $19.60

Debit cards also give cash back.

Re: How Americans Get Out of Credit Card Debt

#87

Post by consultutah »

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.

Your comment reminded me of this SNL skit: http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-...

Re: How Americans Get Out of Credit Card Debt

#88

Post by amalcon »

joubert wrote: post #72
mkr-hn wrote: post #60

Earlier quoted context omitted.

Putting yourself in heavy debt to make sure your kids have a good shot is not difficult to defend. It's not something I'd do, but I have a hard time blaming someone for making that sacrifice.

It's not something I'd do, but I have a hard time blaming someone for making that sacrifice. a) Why is it that you won't do it? b) The issue is that they're sacrificing the financial security of their kids by living on the edge and that is irresponsible if you're someone's guardian. Imagine a company/government says we'll go into heavy debt because we want to give our shareholders/citizens a good shot - is that not i…

They are risking having their kids grow up with less access to resources in order to give those same kids one of the primary benefits of access to resources. If they did the research, understood the consequences, and were sincere about their reasons, it is the very epitome of a calculated risk.

It's not like the potential downside is living in the car. The potential downside is maybe being forced to rent in a worse area, and having trouble buying things on credit for a while.

Re: How Americans Get Out of Credit Card Debt

#89

Post by giardini »

lutorm wrote: post #47
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.

Elizabeth Warren said that in their bankruptcy study, the vast majority of people who filed for bankruptcy didn't do it because they "bought things they didn't need". They did it because they overextended themselves to get a house in a good school district and then one of them lost their job or they had a medical emergency. It's easy to paint those people as irresponsible, but according to her, it's very far from the…

tutorm states:

"They did it because they overextended themselves to get a house in a good school district "

That cannot be true. Furthermore you are taking her too literally and/or misunderstanding her intent. What she actually said was ( http://www.guernicamag.com/interviews/1485/generation_gap/ ):

“Families with children are tightening the belt one more notch,” she says, “are working extra hours, are sending both people into the workforce, to try to get into the best possible school district for their children.” But she adds one key, and very humane, caveat: “Families are in financial trouble, not because they’re irresponsible but because they’re too responsible.”

Warren is of course sympathetic, but she is obviously using the "search for a good school district" as only one example of how families are "too responsible".

Not that I believe Warren's last sentence is correct: my simpler and less charitable framing of the facts is that people simply bought homes that they could not afford.

Re: How Americans Get Out of Credit Card Debt

#90

Post by hartror »

mkr-hn wrote: post #60
joubert wrote: post #57

Earlier quoted context omitted.

"overextending" oneself, especially if you have dependents, is irresponsible.

Putting yourself in heavy debt to make sure your kids have a good shot is not difficult to defend. It's not something I'd do, but I have a hard time blaming someone for making that sacrifice.

I truely don't buy into the whole "good school" thing as being overwealmingly important for a child's future happiness and success. Though this is based on my own personal experience rather than solid data.

Certainly in my childhood and young adult life there were a number of factors to my success or lack of it that had nothing to do with which school I attended. I think the main factors to my economic success was being taught to enjoy reading at a young age by my parents. I have always devoured information and through that have made a career without any qualifications.

The emotional/social success and general happiness I experience is a little harder to point to a source but certainly didn't come from the shit hole high school I attended. I generally attribute it to my parents teaching me what to value and growing up in an emotionally secure environment.

This security and parenting happened even though my parents fought each other constantly and divorced in my early teens. The were both dedicated parents who presented a consistent set of rules and values.

Of course I could just be on the further end of the bell curve?

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