Well it’s about time for another one of my rants...credit card debt. There are a number of shows out there now ie - “Till Debt Do Us Part” that profile a couple or family with debt issues and provide them with debt counseling, if they listen to the counselor they receive some cash to put towards their debts. I’ve painfully watched a few shows, not because they were so good, but because it was so pathetic that I just couldn’t look away…In each show a middle class couple with decent jobs ended up racking up so much credit card debt that they had trouble paying the interest each month. The stupidity of this blows my mind. If people are using their credit card to buy food, shelter, emergency medical treatment etc... than that would be just sad…but if it’s being used to buy consumer items (wants instead of needs) than that’s just stupid. Although I don’t personally know anyone who’s gone bankrupt (except the person I bought my house from) I do know many people who are so incompetent at managing their money and debt levels that it’s borderline unbelievable. It’s usually not one or two large items that tip peoples debt levels from manageable to unmanageable, it’s usually multiple smaller ones that accumulate over the months, yet they all seem so shocked when they finally realize that they're over-extended. I can just imagine the thought process before raking up that much debt... “hmm...I can just make my minimum house payments, my credit card is almost maxed but I definitely need a flatscreen TV and hey maybe I’ll grab some takeout on the way home to celebrate...”
Don’t get me wrong I think debt is essential and often beneficial (keeps the economy going) but the uncontrolled consumerism that ruins families is just stupid...but hey maybe it’s just a new form Darwinism...I’ll call it Financial Darwinism...just filtering the weak from the moneypool…..
Good post MCM, definitely on side with you. I think the biggest problem is that people aren't financially educated when they get their first credit card.
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Great rant, I totally agree.
ReplyDeleteFurther more, I think a lot credit card debt is caused by simple ignorance, which could be prevented with some basic education.
Why can't classes covering the basics of money management be taught to teens in high school?
Otherwise financially incompetent people will just keep passing on their poor habits and behaviors to their kids.
I agree Jordan. I doesn't even have to be a whole semester course. A 2hr workshop would be enough to at least make kids aware of the issue. It would cost the school boards nothing as I assume there would be plenty of financial advisors who would volunteer to do a 2 hour workshop for the kids (as long as they could hand out their business cards at the end of it.)
ReplyDeleteUnfortunately this is something my wife and I are all too familiar with . The problem is once you start living on credit it gets very hard to break the cycle. The problem that we always had (thankfully now changing) is that when you are maxed out and something goes wrong you don't have an any savings to draw on so you end up using CCs to pay for everything and it becomes a vicious cycle.
ReplyDeleteThe other big problem is when the banks started offering to convert mortgages into lines of credit, those little bastards rake in loads of profits for the banks and leave misery in its wake. My brother resisted getting one and an another family member didn't and after 10 years of heavy mortgage payments they maxed it out.
A Capitalist system + human nature = credit card debt
ReplyDeleteI agree with the high school comments though...
Hi MCM, I would have definitely considered myself a "caveman" last year according to your theory! In my case, I am an early 30's male in Toronto, married. My wife is in her mid 20's and has just started working 1 1/2 months ago (she just graduated from university). Until last year, we had 0 net worth - constantly - for years, and I did to before meeting her for the most part, because of my financial immaturity.
ReplyDeleteAnyway, we're starting to evolve, we've definitely thrown our clubs out into the garbage can - we're walking upright now!
I'm earning about 120K / Yr before extra consulting revenue that I normally do, and my wife's starting income right now is about 42K / Yr. I never received any financial lessons of any sort from my parents - my dad is almost 60, still rents a small apartment, is a factory worker, has about 0 saved except his defined benefit pensions from his factory job...I was following in a similar path but decided to reprioritize and goal set recently.
Considering our net worth today of $6,000 or so today though, we have a long way to go, but we're in it for the long haul! I'll keep my information posted on my blog, hopefully it helps to motivate other cavepeople to start improving their finances too!
SavingsJourney
congratulations savingsjourney on your recent evolution! With your new found financial knowledge and great salary I'm sure you'll have a decent nestegg in no time.
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