Comments on: Financial sensibility... in America? Wow!

Financial sensibility... in America? Wow!

zoogleplex — Mon, 25 Apr 2005 16:16:03 -0800

This is not science fiction. It's really happening. (Links to Slate article) Apparently contrary to expectations, Americans seem to be exercising financial sense and paying down their credit card debt. Well, how about that! :) Anyone else here doing this?

By: zoogleplex

zoogleplex — Mon, 25 Apr 2005 16:21:12 -0800

Single link post, but this trend, if true, would be very interesting and possibly a surprise to the financial world - and hits close to home for me personally. I spent the time between February 2000 through July 2004 paying down some $30,000 in credit card debt (with all the interest the total was more like $40K) and now I'm carrying none from month to month. It was really difficult but things are a whole lot better now. I wonder if many MeFites are doing the same? What are the economic implications? Is this an indication of growing financial sensibility, or just a fluke? Some previous MeFi discussions of credit debt: 1 2 3 4

By: FormlessOne

FormlessOne — Mon, 25 Apr 2005 16:24:21 -0800

Yep. Pushing it down until I can use just cash for purchases - same thing with the mortgage. We're doubling our payments and going without a few things to get it nailed down fast, so we can get off the credit radar.

By: fixedgear

fixedgear — Mon, 25 Apr 2005 16:24:48 -0800

What is this credit card debt that you speak of?

By: mathowie

mathowie — Mon, 25 Apr 2005 16:30:13 -0800

I'm happy to say I got rid of the last remnants of credit card debt in 2004. In total, I think we had about $20k amassed from college and our first few years out whenever we needed emergency funds. I'll never do that again.

By: shmegegge

shmegegge — Mon, 25 Apr 2005 16:30:20 -0800

Well, I can't speak for anyone else, but I know they won't let me pay for the widescreen hdtv I want with my credit card until I pay off some of that debt, so that's what I'm doing. I'm serious.

By: defending chump

defending chump — Mon, 25 Apr 2005 16:30:35 -0800

I'm not sure this is an epidemic of fiscal responsibility. The money to pay off credit cards is often coming from home equity loans, which are growing in popularity as real estate prices skyrocket. It is certainly smart to pay off high interest loans by taking out lower interest ones. However, should the housing bubble ever burst, lots of these people could end up owing more for their homes than they can get for them on the market. I'd hardly call financing one's consumer spending with a home equity loan responsible.

By: StickyCarpet

StickyCarpet — Mon, 25 Apr 2005 16:32:13 -0800

Credit card debt? Never hoid of it.

By: cali

cali — Mon, 25 Apr 2005 16:37:30 -0800

What's more impressive to me are the number of people (myself included) who have quit their soul-sucking jobs recently, without having anything else lined up. That would've been unthinkable three years ago, when any job was considered a good job.

By: mcsweetie

mcsweetie — Mon, 25 Apr 2005 16:39:28 -0800

Anyone else here doing this? I wish.

By: Cranberry

Cranberry — Mon, 25 Apr 2005 16:42:11 -0800

defending chump has identified a worrisome procedure. By assuming an equity loan, a borrower risks his/her house. This is obviously an unwise way to purchase consumer goods since a layoff or downsizing could cause loss of the home. Perhaps the real danger of watching TV is not so much the mental stasis mentioned in a previous post, but the exposure to the advertising of "stuff" presented as necessities.

By: pmbuko

pmbuko — Mon, 25 Apr 2005 16:46:51 -0800

what is the credit card debt and home ownersip I keep hearing about? (debt-free and renting in SF Bay Area)

By: scody

scody — Mon, 25 Apr 2005 16:51:05 -0800

I'm paying mine down with a vengeance -- I'm aiming for having my balances paid off completely by this fall. And my credit card companies are doing everything they can to get me to reverse my habits: they keep raising my credit limits and extending my "introductory" low interest rates. But I laugh! I laugh at their puny tricks! Ha-ha-ha!

By: scody

scody — Mon, 25 Apr 2005 16:53:21 -0800

and yeah: home ownership? In L.A.? I do not speak that language.

By: Specklet

Specklet — Mon, 25 Apr 2005 16:53:48 -0800

I desperately want to pay off my debt (incurred during a horrific year of unemployment) but it's going so incredibly slowly I despair. I am terminally broke and can only manage the minimum payments...

By: mk1gti

mk1gti — Mon, 25 Apr 2005 16:58:30 -0800

I think people have finally become fed up with being squeezed by these onerous interest rates. Good riddance to the credit card companies. Greedy pigs all. I only pay cash now. If I don't have the money for it, I don't get it.

By: SirOmega

SirOmega — Mon, 25 Apr 2005 17:01:33 -0800

The only place I use a CC is online, and for purchases that are kinda risky and that I might want to chargeback. Well, and ones that I dont feel comfortable carrying around the cash to pay for it (anything > $500).

By: lsd4all

lsd4all — Mon, 25 Apr 2005 17:02:33 -0800

After recently getting married we consolidated a third of our $30k credit card debt. Our credit scores were perfect and we don't own a new car and/or house, so the bank wouldn't loan us the whole amount. Wifey borrowed money on her credit card to start her own bakery/coffee shop, so we are paying for that now too. We make enough to pay all the bills but in the debt reduction is moving slooooooooowly. It's quite a drag.

By: Foosnark

Foosnark — Mon, 25 Apr 2005 17:04:55 -0800

I wish I could afford to pay off my debt.

By: StickyCarpet

StickyCarpet — Mon, 25 Apr 2005 17:05:48 -0800

College loans? I don't know if this will work for everyone but I just completely ignored it for 3 years, when they tracked me down I said: I'll pay half today in one shot to make it go away. Take it or leave it. They took it.

By: slapshot57

slapshot57 — Mon, 25 Apr 2005 17:07:22 -0800

never had any of this there credit card debt. Of course, never had one of them there fancy big city HDTV's either. Fortunately the rents taught me well that if you don't have the cash for it, you don't buy it. And also I'm not that materialistic anyways, my big purchases for the last month were a few shirts and a blender. scody, I know what you're talking about. I tried to raise my credit limit (from 500-1000, I'm only 24 so still building credit) and they wanted to jack my limit up more than my monthly salary. Yeah, I'll be passing on stupidity for now. thanks.

By: jacobsee

jacobsee — Mon, 25 Apr 2005 17:14:15 -0800

related thread over on AskMefi

By: ThePinkSuperhero

ThePinkSuperhero — Mon, 25 Apr 2005 17:19:22 -0800

I just got a credit card about six months ago (I'm not really sure how- I got a $2,000 limit on my first unsecured card; I think it was because I got it through Paypal, which I use like crazy), and I'm doing the building credit thing- I pay off almost my whole balance every month, if not the whole thing. And I only use it for the phone bill, the subway fare, etc. But there is something sort of crazy about knowing, Hey, I technically have $2,000 in my wallet. I, of course, damp down that voice, but it's still really weird when you hear it for the first time.

By: ontic

ontic — Mon, 25 Apr 2005 17:26:11 -0800

Just paid off $6k accumulated through grad school. Feels pretty good.

By: Thorzdad

Thorzdad — Mon, 25 Apr 2005 17:26:33 -0800

We paid off our cards 10 or more years ago and have tried to pay cash for things as much as we can ever since. Cash is an amazingly effective self-regulator. There are the occasional large purchases that have to go on a card, but we make sure to pay that off within 2 billing cycles. Meanwhile, the younger people I work with barely know what cash is. They put everything on plastic...from a $2.00 coffee on up. Crazy.

By: languagehat

languagehat — Mon, 25 Apr 2005 17:28:05 -0800

Hey, I technically have $2,000 in my wallet. See, I don't understand this reaction, and it's the kind of thing that makes me feel un-American. To me, it's more like "Hey, Vinny down the block will lend you $2,000 any time you want! Of course, you gotta pay 30% interest, and if you don't pay on time he'll come after ya..." Thanks, but no thanks. I've paid my credit card off in full every month for as long as I've had one; to me, it's just a convenient way of paying for things without carrying around lots of cash. I don't understand how people can think that borrowing = owning. But I grew up abroad, so I write it off as one of those bits of Americana I'll never get, like Lost in Space and The Love Boat.

By: emjaybee

emjaybee — Mon, 25 Apr 2005 17:28:34 -0800

Yep. Should be done by summer, Lord willin' and the creek don't rise. Baby on the way. Debt has to go first, or else it's move in with the parents again. We're highly motivated, to say the least. We rent also, so no getting the money from our refi. Just the pain of being cheap. And a few cheesy but renumerative bass-playing gigs for my poor husband.

By: mrgrimm

mrgrimm — Mon, 25 Apr 2005 17:36:28 -0800

I was unemployed for about a year and a half and ended up about $7,500 in debt that I've worked down to ... about $2,500 (depending on the last interest cycle) at 9.9%. I should be able to finish it off this year if I'm good and frugal, but it should be close either way. I was listening to Jim Kunstler on the radio the other day, and I was suprised to hear that his number one advice to people for surviving the coming energy crisis is to get out of debt. Logical advice, but I was still surprised for some reason...

By: orange swan

orange swan — Mon, 25 Apr 2005 17:37:14 -0800

I quite like using my credit card as I have one of those dividend jobbies - I get a percentage of my total purchases back at the end of the year. I LOVE that they pay me to use the card without ever getting a dime from me. What I do is set a limit for how much I can put on my card a month, and keep track. When the limit is reached, I stop. For major purchases, it's definitely much safer and more convenient than carrying around a wad of cash.

By: darkness

darkness — Mon, 25 Apr 2005 17:38:49 -0800

I learned my lesson the hard way, going into serious debt and defaulting on basically everything, to the point that I couldn't even get a checking account for a few years and almost filed for bankruptcy. Thankfully I've since cleaned up my act and am now only a moderate credit risk. As for current debt? Zero. The only thing I owe money on is my house, which we can probably all agree is "good debt" since the value of the house is going up faster than the interest accrues. Now the whole idea using a credit card for discretionary purchases (and not paying the bill in full) sounds insane to me. Sure, something unexpected happens, your car breaks down and you don't have the cash for the repair bill, use a credit card. But buying that 87" plasma HDTV on a credit card? That's just dumb.

By: rw

rw — Mon, 25 Apr 2005 17:39:17 -0800

Don't know the current status of our credit card debt. Every few years, I go on a campaign of browbeating and cajoling the spouse (who lets it creep too hight) to pay it down again. This is a good reminder to check and you bet I'll forward on this article.

By: darkness

darkness — Mon, 25 Apr 2005 17:51:43 -0800

On a related note, I wonder how many spouses don't know about the others credit card debt? How often does this lead to divorce? I friend of mine just got a divorce based in part on the others secret and excessive debt. (The affair probably was also a factor though...)

By: gambit

gambit — Mon, 25 Apr 2005 17:56:53 -0800

I've seen a lot of people get overwhelmed with credit card debt, and maybe this trend is just a sign that people are starting to see the trouble it causes and wising up. We can hope at least. Also, I echo languagehat; I pay for almost everything with my credit card because it's convenient, but I keep track of my purchases and make sure I can cover the bill every month.

By: rw

rw — Mon, 25 Apr 2005 17:58:27 -0800

Ack! An affair!?! I don't think it's an issue in my case, but I don't comb through the statements line-by-line, either. You ask a good question, darkness. My spouse is pretty agreeable about paying things down when the debt starts to get out of hand, so no grounds for divorce there.

By: May Kasahara

May Kasahara — Mon, 25 Apr 2005 18:00:18 -0800

I haven't paid off my credit card completely, but I did pay off my computer a year early (financed by Dell, with interest rates similar to a credit card's). I've also completely paid off a couple of student loans early. The credit card (only carry one) and the rest of the loans are next...

By: Balisong

Balisong — Mon, 25 Apr 2005 18:01:00 -0800

I'll have em all paid off in September, along with a 25k personal debt I took. Feels so good! I don't know what I'll do with the $900 or so I've been used to paying for the past 5 years...

By: bitmage

bitmage — Mon, 25 Apr 2005 18:03:44 -0800

It's actually worse than Vinnie down the block. Vinnie only cared about his money, see? If you owed the grocer it wasn't no skin off his back... Credit card companies, in their endless thirst for your cash, are moving towards universal default. Remember that 30% rate they'd charge you if you didn't pay them? Well, now they're going to charge you that if you are late on payments to anybody. Gas bill, water bill, paper boy, doesn't matter. Whatever it takes to get you jacked into ruinous interest payments. Just got an application from Southwest Airlines for a Chase card today. I'd love to be getting free air miles with my purchases, but there in the fine print was the devil. Be late to any creditor, get jacked. No way. I'm just glad I got out of CC debt before they turned completely rabid.

By: zoogleplex

zoogleplex — Mon, 25 Apr 2005 18:06:55 -0800

scody, I'm with ya on home ownership in LA too... only way I'd buy a house here is if I could buy a rental property and become a landlord, with the tenants paying the mortgage for me! It's good to hear that many of you are doing this. To add a bit to my story, I must admit that I got extremely lucky. The week after I finally caught up with entering 6 months worth of statements and receipts into Quicken - and looked at the bottom line number of $-30,000+ - I (methinks miraculously, since I sure did me some prayin') got a bunch of calls from headhunters looking for graphic designers and HTML people, and landed a job that paid very well, just exactly when I needed it. WHEW!! I ran up the debt trying to make a living as a freelance artist, so it wasn't just blowing it on toys and clothes... but I knew when I looked at that big negative number that I'd need a job fast or I'd have to file bankruptcy, which I just couldn't stomach. Being an apartment dweller (thanks, LA rent control) I couldn't cash out any equity either, so I had no choice but to work my ass off. I set up a very aggressive plan whereby I sent in more than 50% of my net salary, and 2/3 of all the freelance income that I still pulled in on the side. And I stayed home a lot, lived on the cheap, thrift store clothes and shoes, cheap booze, etc. etc. It was really tough, but worth it. Now that 50% of my salary goes in the bank! And I shred every credit card offer that I get in the mail - which number in the dozens per month, since clearly I'm the kind of guy a credit card company wants, since I've shown that I'll run up a ton of debt and then actually pay it off... heh. At one point I had 4 credit cards with a total of nearly $60,000 credit limit. That just blows my mind that they would offer that to anyone... I keep having to call up the two card companies that I have now and tell them to lower the limits. It's pretty easy to see how people get into real trouble. Now I only use my CCs for gasoline and online or certain "big ticket" purchases, and pay them off at the end of the month. I like the "insurance" and warranty advantages you can get with certain cards, so they're not altogether useless or unwelcome. The only debt I carry is a car loan and a motorcycle loan - but these are objects with inherent worth that I can sell for more than I owe on them if I happen to get into some kind of financial bind. Well anyway that's my story on it. Interesting to see if it does indeed turn into a trend. And to everyone who's struggling with it, hang in there. It does take a long time, sometimes. My 4 1/2 year payoff could easily have taken 10 - I have the advantage of being single, house-less and childless, so I could make the sacrifices and live on the low end more easily than most, I'm sure. Make sure you find ways to still do nice things for yourself, too, it makes a big difference. Congrats to all who've made it out! Celebratory beers for all (cash bar only, of course)! On preview: darkness, that's a factor in many divorces! Although he didn't divorce her, a friend of mine found out after getting married that his wife had around $40,000 in credit debt that she'd been defaulting on - of course he found that out when he started looking to buy a house and ran his now-conjugal credit report. His solution? Well, he made really good money, and had saved up more than that in anticipation of buying a really nice house, so he paid her entire debt off immediately - and they had to wait another 6 years before they were able to buy a (much smaller and not as nice as they wanted) house. Not fun for either of them. Balisong: Put that $900 in the bank every month - start an IRA (don't do a Roth, yikes!!), open an ING Orange account, sock that cash away. That's $7200 a year!!! Well, break out a few bills here and there for treating yourself really nicely. A nice spa & massage once a month does wonders. I'm now working at a different job where I make slightly less than my old job, and I've cut out all my freelance work, so I'm bringing in about 10% less than last year... but putting around 40% away because I really would like to buy a nice 4-unit building, where I'll live in one and rent the other 3, and let the nice tenants pay the commercial housing loan... :)

By: zoogleplex

zoogleplex — Mon, 25 Apr 2005 18:08:09 -0800

OMG bitimage... late to ANY creditor??? Holy sweet mother!! They're gonna bankrupt everyone. Get out now, people... any way you can.

By: TheOnlyCoolTim

TheOnlyCoolTim — Mon, 25 Apr 2005 18:21:46 -0800

"Meanwhile, the younger people I work with barely know what cash is. They put everything on plastic...from a $2.00 coffee on up. Crazy." I pay for things $1.00 and up with the plastic, but it's a debit card. Mostly I use cash for: -Places that can't take cards. -Things I don't quite want my name attached to purchasing. I am in debt $35 and a beer.

By: scarabic

scarabic — Mon, 25 Apr 2005 18:22:35 -0800

(via kottke)

By: Captaintripps

Captaintripps — Mon, 25 Apr 2005 18:26:00 -0800

Never had any credit card debt.

By: ursus_comiter

ursus_comiter — Mon, 25 Apr 2005 18:41:02 -0800

I had started getting out of debt around '98 by consolidating everything; computer loan, car loan, credit card debt, etc. and then making sure to pay off a good chunk every month. It was tough sledding just because I didn't have that much discretionary income to throw at it back then and owning a car required me to put more money on the card once or twice a year for repairs. I finally got clear in 2002 and have been debt free since. I pay off any balance I have at the end of every month.

By: Bugbread

Bugbread — Mon, 25 Apr 2005 18:41:04 -0800

slapshot57 : "Fortunately the rents taught me well that if you don't have the cash for it, you don't buy it." Ditto. I've never understood how most people can get into credit card debt. The extremely poor, sure, I can understand. The "doing well but then earthquake ate house, spouse spontaneously combusted, and got fired from company in same day" people, sure, I can understand. But normal folks? How the heck can you go around spending money that you don't actually have??

By: mullingitover

mullingitover — Mon, 25 Apr 2005 18:44:42 -0800

I have a debit card, I'm careful with how much I spend, and I have a credit union instead of a bank. Personally, I don't know why everyone isn't lined up outside credit unions trying to get signed up. They're a beautiful idea: an bank that isn't trying to profit from you. If they make more money than they spend, they give it back to you. I'm also in debt a beer, maybe several. I can't remember.

By: rougy

rougy — Mon, 25 Apr 2005 18:49:38 -0800

"But normal folks? How the heck can you go around spending money that you don't actually have??" Everybody cheerleading the banks for passing that bill is in for a very unpleasant surprise. Normal folks are usually either young folks who don't know how to manage their money (they're really going to get hosed) or folks who fall on hard times (unemployment, injury, a child getting sick). The credit card companies are going to figure out ways to jack up your interest rate if you pay your phone bill a day late. Bank on it.

By: emdog

emdog — Mon, 25 Apr 2005 18:55:24 -0800

i have no credit card debt, no car payment, a small mortgage payment and after years in the race, i won by dropping out 10 yrs ago, and without a job prospect. i'm now making 1/2 of what i used to make, in a completely different field, and loving life in the boonies of wv.

By: srboisvert

srboisvert — Mon, 25 Apr 2005 19:06:10 -0800

Spam works!

By: Hildago

Hildago — Mon, 25 Apr 2005 19:17:55 -0800

The people who are proud of not owning a credit card will find it much more difficult to buy a house or a car, unless they can pay cash on the barrel head. Like it or not, a credit card is almost a requirement today, so if you don't own one, you should probably get one, and then use it responsibly in order to have an easier time of it later.

By: spinifex23

spinifex23 — Mon, 25 Apr 2005 19:22:16 -0800

I have one credit card that I don't even carry around with me. The only reason I have it is for online purchases, which I barely make. I pay it off every month, and haven't carried over a balance since 1999. I do carry and use a debit card. However, YMMV, as I stopped driving in 2000 (medical issues), and haven't driven since. So I don't have the car/insurance/gas/maintenance fees that most of you have, which can just eat up money. (Ironically, I first got a credit card when I got my first car, so I could pay for repairs if I got stranded anywhere. Worked wonderfully for that.)

By: alms

alms — Mon, 25 Apr 2005 19:23:24 -0800

If people start paying down their credits cards rather than continuing to consume beyond their means, won't that be bad for the economy? (This is actually a serious question. What are the implications for consumer spending on which our economy is dependent.)

By: sfenders

sfenders — Mon, 25 Apr 2005 19:26:01 -0800

By: IndigoJones

IndigoJones — Mon, 25 Apr 2005 19:28:25 -0800

I don't comb through the statements line-by-line, Not to be prissy, but you really should. In the past two months I have twice had to tell merchants to cut out the double charge. I have also had to remind the cc company (BOA bought out Fleet, damn them) that the copying fee they had charged me for last year's statements (taxes) was officially waived. "Oh yeah. It should appear next month." Too late to query, of course, but I am curious on the ages/backgrounds of those with a horror of balance holding and those more accustomed to it. I'm the child of depression era parents, and the thought of a balance is anathema, not so much for moral reasons as out of fear.

By: nanojath

nanojath — Mon, 25 Apr 2005 19:35:14 -0800

I'm another one that fits this profile of having a focus on paying off debt and making sure I don't spend beyond my means. I don't know how big a part of it this is, but I think I'm among the first generations who were getting trained to spend on credit directly in college - my older brothers' generation was not getting credit card offers in their campus PO boxes. And so I think there are a lot of people like me who came out of college with some real dumb ideas about debt (like that I was so gosh darned special that I could just spend however I wanted and it would just work out somehow) and have since, well, grown up. To answer alms question, I would think that while it would have a negative impact in the immediate perspective, a stable economy cannot ultimately keep building up its consumer spending on the basis of money that isnt' really there. The economy cannot rely indefinitely on people basically buying their future earnings at a loss.

By: sfenders

sfenders — Mon, 25 Apr 2005 19:38:40 -0800

If people start paying down their credits cards rather than continuing to consume beyond their means, won't that be bad for the economy? It gets complicated. But you can't continue to spend more than you earn forever... has to stop sometime. If it starts with Americans spending less, then Chinese stop exporting so much, meaning they buy fewer US treasury bonds, meaning interest rates go up, meaning Americans will spend less. Housing market falls, stock market crashes, cats and dogs living together, and so on. Something like that. Opinions vary on whether it will be mostly deflation or hyper-inflation. I'm leaning towards deflation. So go forth and buy stuff on credit, like right now! Think of it as doing your small part to hold off the impending world economic collapse.

By: amber_dale

amber_dale — Mon, 25 Apr 2005 19:48:19 -0800

IndigoJones: 24, with parents who ran up 60-70K in credit card debt over the course of their marriage, which then promptly imploded. After the divorce (I helped out in the division of property by splitting up the debts: Sears card for dad, Penney's for mom, etc.), the credit card companies called half a dozen times a day; to this day I hate it when the phone rings a lot. That was ten years ago. This year my mother finally paid off the consolidation loan her parents had to go out on a limb and cosign. So, yeah, I don't carry a balance. I live cheaply, eat in, have some of the same clothes I did in high school, and chose a college that would let me graduate with no debt. Somehow just not being a instant-gratification-addicted consumer monkey allows me to have enough money for the things I value, like travel. But even those expenses are paid off every month. (You get better exchange rates if you buy things overseas with a credit card than you do exchanging cash.)

By: vaportrail

vaportrail — Mon, 25 Apr 2005 20:06:50 -0800

If you own a rug, you own to much -Jack Kerouac Can't say I live by these words but they do influence my financial decisions. Don't buy anything you cant pay off in a couple months time (other than car/house). Don't put $0 down on a car that will lose 20% of its value when you drive off the dealer's lot. Don't buy a boat on a 20 year loan, or the things you own will soon own you. My riches consist not in the extent of my possessions but in the fewness of my wants. - J. Brotherton

By: a3matrix

a3matrix — Mon, 25 Apr 2005 20:08:41 -0800

After my relocation at the beginning of the year, I took a job doing IT work for a Mortgage Broker. Since the companies inception, all they have done is refinancing for either rate reduction, debt consolidation, or cash from equity. I sat in on some of the training sessions for their new loan officers. They sometimes do loans for people 2-3 times in a year. The guy who does the training classes used to be a loan officer, but got in trouble for some "misconduct" and apparently is too good to not be doing something for them, so what better that to teach the new generation of silver tongued liars. A lot of people are using the equity in their homes to pay off CC debt. The real test will be, how many learned, and don't go nuts with the cards again. My wife and I have a bit on one card. Not too bad, and it will be paid off in a month or two. Credit cards are good to have for that odd emergency, or weekend car rental (airfare prior?) but other than that, you should really think twice about buying something with tomorrows money. Fiscal responsibility is a lesson hard learned, but usually one that sticks with you. Pay them down. Keep them clear. Good luck!

By: a3matrix

a3matrix — Mon, 25 Apr 2005 20:09:52 -0800

My riches consist not in the extent of my possessions but in the fewness of my wants. - J. Brotherton What an excellent quote. Thanks vaportrail.

By: dame

dame — Mon, 25 Apr 2005 20:14:34 -0800

I have debt and I'm not sorry. Really. It's slowly being reduced, and it will go on slowly being reduced, but other than that? Phht. Most of it is a student loan that resulted in a degree that actually makes people take me seriously. The rest is incidental expenses, because I don't make a hell of a lot. I could pay it off by getting a shitty job that paid more or by totally denying myself, but I like my job as it is--humane, not a cube farm. I don't want a house or a car. So I fail to see it as a large problem, frankly. And I find the own-nothing impulse of some anti-consumerists as silly as pretending you hate a band because it's popular. A pretty dress isn't going to make my life worth living but I'm not going to pretend that looking nice doesn't make life a little more enjoyable. I'm glad people who are averse to it are freeing themselves, though.

By: sfenders

sfenders — Mon, 25 Apr 2005 20:45:37 -0800

A concise statement of the case for deflation here, which includes a "not pretty" picture of consumer spending as a percentage of wages. Apparently, wages account for about 60% of personal income. I'm not sure what that means. Maybe that 1/3rd of the economy is based on real estate speculation.

By: deborah

deborah — Mon, 25 Apr 2005 21:01:18 -0800

bugbread asked the question "how can people spend money they don't have". It's really easy, or at least it was for me and I'm sure countless others. I grew up poor and didn't have a lot of the things my friends and schoolmates had. I didn't have the things TV said I "should" have. I had a hunger for all that I thought I was missing. And our (North American) society makes it especially rough because it's continually telling you to, "spend spend spend! You're nothing without these clothes, you need this TV, you must have this XYZ!" And hey, the CC company approved me so it must be okay. Then you get caught in a vicious cycle. Your credit card is almost maxed because you don't have the cash to pay for stuff and since you don't have the cash to pay for stuff it has to go on your credit card. Please, don't get me wrong. I'm not excusing my behaviour, I'm just trying to explain it. I wised up years ago and now have only a gas card. Living within your means is the way to go (although having mortgages, car loans and student loans make sense).

By: TheOnlyCoolTim

TheOnlyCoolTim — Mon, 25 Apr 2005 21:02:42 -0800

By: dame

dame — Mon, 25 Apr 2005 21:13:35 -0800

And our (North American) society makes it especially rough because it's continually telling you to, "spend spend spend! You're nothing without these clothes, you need this TV, you must have this XYZ!" Of course, to a certain extent, you do need those things. I know some economist whose name I can't recall wrote about this: There are things that aren't strict necessities that are necessary to seem respectable. And seeming respectable can be important to getting anywhere.

By: johnj

johnj — Mon, 25 Apr 2005 21:17:26 -0800

40 years old, don't have debt, never did! It's not always easy to live in this culture (U.S.) and live debt free but it can be done. It's all about basic values and personal choices.

By: dglynn

dglynn — Mon, 25 Apr 2005 21:44:15 -0800

I suspect this conversation is a bit self-selecting, and an unknown percentage of MeFites absolutely will never participate in it for one reason: shame. Personal finances are the biggest unspoken taboo in the US today. Everybody is doing fine, nobody is in trouble, so whatever situation you've managed to tangle yourself in means you don't actually belong in your apparent social class, you (with your credit card) are just "passing". Hence, shame. Don't be so sure your neighbors aren't in the same boat you are. Me? $50K in medical expenses in the mid 90's pushed me underwater, and it was 5 years before I saw light, let alone breathed air. And then I decided to pay for my daughter's college out of pocket. So I'm thin, but she graduates this summer, and I'm currently carrying nothing but a mortgage. I'm most proud of the fact that she'll have her degree and no debt of her own. And if you think credit card companies are collection fiends, wait till you tangle with three or four hospital corporations.

By: Bugbread

Bugbread — Mon, 25 Apr 2005 22:18:54 -0800

IndigoJones : " Too late to query, of course, but I am curious on the ages/backgrounds of those with a horror of balance holding and those more accustomed to it." I'm 30. My family is moderately well off but my mom was born and raised in wartime Spanish poverty, and is cheap as hell. As such, I always got the things I needed (parents were able to pay for college without loans, I always got proper medical care, summer academic camp, etc.), but not the things I wanted but didn't need (new computer, Nintendo, Atari, things like that). I now make enough money that I spend it roughly the same way: I have no problem spending on books, medical care, utilities, etc., but I am not one for spending on luxuries (except for a weakness for computer related gadgetry). So I'm not really a candidate for credit card debt in the first place (salary is sufficient), but when times were lean (after uni, for example), it never occured to me to spend money if I didn't have it, unless I was bleeding or missing a limb. I do understand people in debt due to student loans, medical emergency, etc., but I don't understand people in debt from buying new cars, TVs, clothes, or anything else. If you don't have the money, and you won't die without something, I have a hard time understanding why you would choose to buy it anyway. My guess is it's really more a matter of upbringing than of age, though there's probably a bit of overlap. dame : "The rest is incidental expenses, because I don't make a hell of a lot. I could pay it off by getting a shitty job that paid more or by totally denying myself, but I like my job as it is--humane, not a cube farm. I don't want a house or a car. So I fail to see it as a large problem, frankly. And I find the own-nothing impulse of some anti-consumerists as silly as pretending you hate a band because it's popular. A pretty dress isn't going to make my life worth living but I'm not going to pretend that looking nice doesn't make life a little more enjoyable." This is an example of something I can't wrap my head quite around. I fully understand the student loan aspect, but the idea of "I could buy something if I had a better paying job that I disliked, but I'd rather have a job I like and buy stuff anyway." For me the choice would clearly be "job I hate that allows me extra creature comforts, or job I like but without creature comforts". I can't really grok "job I like but creature comforts anyway".

By: davy

davy — Mon, 25 Apr 2005 22:24:37 -0800

I have never had a credit card, and I have a hard time getting an apartment because when they do a credit check I simply don't show up. I caught on eventually and started walking out when they insist on that "formality" after I paid $25 for the 4th or 5th time only to be insulted: 'No you numbnuts realty flunky, I am not using a false name complete with drivers license, Social Security card, HMO card and two library cards; it's just like I told you to begin with, I have simply never had any bloody credit at all.' (At least not officially: if I have to bum $10 till I get paid I will pay you back plus I'll buy you a beer.) Some asshole in Frisco once accused me of being a 50 year old Nam vet who got evicted from public housing in San Jose -- being told I looked 50 when I was 34 was bad enough, but nobody who's ever seen the inside the inside of a VFW hall would mistake ME for a Nam vet; plus I was, as I'd said and had showed him government documentation of, 3000 miles away in Baltimore at the time -- and if I were going to use a false name I'd change more about it than my middle initial. If I can't pay cash in full up front, or save up till I can, then I can't blipping afford it. And that's also true of most "normal citizens", really, if you think about it. If that sounds "un-American" then that's just too damn bad for America. And by the way, I'm actually rather proud of this: it's called "thrift" and "financial responsibility", and it used to be a Virtue -- as debt slavery assuredly is still not. Nobody own my ass but me. So anybody who goes into debt to "SEEM respectable" has contradicted him/herself as far as I'm concerned, and anywhere in life you have to do that to do yourself to get to ain't worth the bother. "What does it profit a person to gain the whole world and lose one's own soul?" (And hey, if I can do it then anybody can.) [This concludes this ~~off-the-wall rant~~ public service announcement. Go home, go home!] Oh, on preview, I'm glad to see bugbread already agrees with me on this issue of vital importance before I post this. There may be hope for that one after all.

By: Bugbread

Bugbread — Mon, 25 Apr 2005 22:31:06 -0800

Only one caveat: I live in Tokyo, so I can fully appreciate the possibility of going into debt in order to buy a house. The "buy it when you've saved up the money" thing doesn't work as well when you're talking about a half-million dollar home, especially if it's one you want in order to provide a good atmosphere for future children (unless, of course, you plan on not having children until you're 50 or 60). However, that isn't really credit card debt (don't know many places that would let you charge a home on your credit card). So I guess the categories I can understand debt for are: Home Car (though this one is iffy...there are always cheap used cars available) Medical Putting children through college Putting self through college (student loans) None of those are really credit card loans, though. They're big, investmenty loans. They suck, but are sometimes unavoidable. But credit card debt? Weird.

By: vaportrail

vaportrail — Mon, 25 Apr 2005 23:10:35 -0800

In case anyone missed mullingitover's comment above, any of y'all not using a credit union are nuts. If they make to much money in a given year.. they send a refund to it's members. Usually around Christmas time in my experience. My credit union, Pacific Service has a branch in San Francisco. You only need to be a resident of any number of California counties to qualify. They have always treated me like a king, despite the fact I had little to no assets until recent years. Check them out if you're in Northern Ca: Pacific Service Credit Union

By: ROU_Xenophobe

ROU_Xenophobe — Mon, 25 Apr 2005 23:34:29 -0800

I don't see why moderate or small amounts of credit card debt is baffling. I can save up and buy a new widget next year, for 100 quatloos. I can buy it on credit now, and pay for it afterwards. If I pay it off over a year, then I'll end up paying 110 or 115 quatloos, but I'll also have the enjoyment of the widget for a year. If having a widget for a year is worth 10 or 15 quatloos, I get it on credit because that's the rational thing to do.

By: davejay

davejay — Mon, 25 Apr 2005 23:53:52 -0800

Doing this? Done this. A few years ago. Our only debt is our mortgage and one car payment, and if I could eliminate those, I'd do that too. ROU_X, you make a reasonable case, but one of the nice things about paying cash is that you find yourself thinking "do I really need that new widget?" I find that, more often than not, the answer is "no" -- which frees up money so that when the answer is "yes" I have cash on hand. That can also save you quatloos; I thought about getting an iPod shuffle for a few weeks, went to buy one, then thought "I don't want to put this on my credit card. Ah, nevermind." A few weeks later, a friend who had just purchased one sold it to me for $10 less + no sales tax, because his wife surprised him with an iPod photo. Oh, and by then I had the cash on hand, because my wife has convinced me that getting books from the library is better than buying them from Barnes and Noble, so my monthly book budget was just sitting there unused. On preview: boy, that makes me sound cheap. Don't think of me as frugal; think of me as a reforming spendaholic.

By: Bugbread

Bugbread — Tue, 26 Apr 2005 00:34:20 -0800

davejay : " On preview: boy, that makes me sound cheap. Don't think of me as frugal; think of me as a reforming spendaholic." That's half the problem right there: it sure didn't make you sound cheap to me. If you said you reused toilet paper, sure, you'd sound cheap. But waiting before buying an iPod, or using the library, does not make you sound remotely cheap (to me). The fact that you thought it may have just shows how fricked up values appear to be nowadays.

By: i_am_joe's_spleen

i_am_joe's_spleen — Tue, 26 Apr 2005 00:56:51 -0800

dame: as far as your student goes, I applaud that. For one thign, your education cannot be repossessed, and may well be worth it to you, no matter what the cost. Getting in debt to pay for clothes is just terrible though. It costs you more that way, not less - if you continute to amass debt, you end up at a point where you cannot afford anything at all, and must go bankrupt. I honestly hope you are using the term "incidentals" loosely and broadly, or you will be in deep, deep shit one day. ROU_Xenophobe - I completely agree. However, there are plenty of people out there who don't do the maths like you, and for whom the decision is more WANT! IT! NOW! (or, as we used to say in the days before uqbuitous credit cards: "but I've still got cheques left in the chequebook!")

By: corbinamman

corbinamman — Tue, 26 Apr 2005 01:54:12 -0800

My name is corbin, I'm 30 years old, and I have been known to buy various items on credit, ranging from those apparently sanctioned by MeFi (house, car, degree) to those not (ohh, you know stuff). I'm with dame et al. Calculate the risk, make a choice, and live with the consequences is what I say. Don't make it a moral issue. I'm happy for those who have dug themselves out of a hole and discovered the concept of responsibility in the process. Honestly. But the smugness of the never-carried-a-balance contingent is annoying. Or maybe I'm just jealous of your zero balances.

By: i_am_joe's_spleen

i_am_joe's_spleen — Tue, 26 Apr 2005 02:20:47 -0800

corbinamman - depends entirely on your ability to accurately reckon the consequences. (my goodness, a bottle of wine and my typing goes to shit. sorry, folks.)

By: Bugbread

Bugbread — Tue, 26 Apr 2005 02:41:47 -0800

True. If you're in debt, and you have it under control, and you're fine with the consequences of said debt, then more power to you. I gather, though, that that is the exception more than the rule.

By: Doohickie

Doohickie — Tue, 26 Apr 2005 04:43:57 -0800

Specklet (and others who are buried in debt): I highly recommend going to a NON-PROFIT credit counseling service (Consumer Credit Counseling Services- CCCS- is the archetype) to help you get out from under revolving debt. CCCS and other credit counselors have standing agreements with many creditors whereby you can have your interest lowered or eliminated by going through them. What's the catch? No debt increase (new purchases) allowed on accounts with the credit counseling service. The amount you pay to the service is more than made up for by the savings in interest. I make my final payment in May for an account with a credit counseling service; I think it took 4 years to get it paid down. Many of these services can be accessed online and you never have to visit their office. What's in it for the credit card companies? They would much rather you go this route than have to deal with bankruptcy or sending your account to collections. Most credit card companies will only lower interest for existing debt if you go through an established credit counseling service.

By: rainbaby

rainbaby — Tue, 26 Apr 2005 04:55:16 -0800

Working on it. Took a second job to work on it. It's slow going, but empowering to just use cash. Some quick advice from what I've noticed in the thread: you can deduct your student loan interest from your taxable income, so you may consider paying credit cards off first. Second, if married, make sure you and your spouse each carry enough life insurance to cover your own and any joint debt in the event of a death.

By: fullerine

fullerine — Tue, 26 Apr 2005 04:59:03 -0800

Man, you debt-free folks are dull.

By: melt away

melt away — Tue, 26 Apr 2005 05:03:19 -0800

For those that feel like it's okay to live with debt and that they have it all under control, I suggest watching Frontline's Secret History of the Credit Card. It's eye opening even if you think you know these things already. Personally, I have lived with debt for a short time after first getting out of school. Credit cards, car loans.... Well now let's say I live a different kind of life. I save up a few months for large purchases and buy with cash (or debit card). My car? It cost me $2k and has lasted me two years. It's not the prettiest thing on the block, but why is that important? At least I'm not paying hundreds in car payments and *that* goes towards saving for those big purchases I mentioned. Well worth it.

By: Busithoth

Busithoth — Tue, 26 Apr 2005 06:07:07 -0800

Maybe the Congress could push through another bill that penalizes people for paying a certain amount higher than the minimum on their credit cards, to alleviate this potential disaster to a true friend of representatives everywhere. I'm heartened to hear this, even if it's only a baby step towards actually saving money...

By: languagehat

languagehat — Tue, 26 Apr 2005 06:29:44 -0800

Too late to query, of course, but I am curious on the ages/backgrounds of those with a horror of balance holding and those more accustomed to it. I'm the child of depression era parents, and the thought of a balance is anathema, not so much for moral reasons as out of fear. Same here. Depression-era parents; horror of debt (the latter exacerbated by the years spent paying off grad-school debt I wasn't supposed to have in the first place -- *shakes fist at lying scumbag university*). dame, corbinamman: Good luck with that, but what exactly do you plan to do when they cut off the credit and start calling at all hours? Change your name and move to Texas (as we used to say in my family)? Man, you debt-free folks are dull. Yes, because we all know you can't lead a rich and fulfilling life without being up to your eyeballs in debt. If I go to a party and discover the person I'm talking to doesn't owe any money, I make an excuse and move away so I can talk to one of those hot debt-ridden people. *rolls eyes*

By: bitmage

bitmage — Tue, 26 Apr 2005 06:30:40 -0800

I was thinking last night, with the universal default changes and the tightening of bankruptcy laws, what was next? Debtor's prisons? And then I realized - the point of debtor's prison was to keep you around to pay off your debt. Otherwise you might vanish into the forest, go west, sail for the New World, etc. Today, debtor's prison is unnecessary. A judge can just rule that, for the rest of your life, 30% of your income goes to pay off CreditMegaCorp. And you can't hide. Wherever you go, there they are. There's no need to chain you physically when you are already chained financially. Remember, you are what your credit report says you are. These days it controls what you can buy, where you can live, what job you have, what insurance you get. Think carefully before taking on more debt.

By: ThePinkSuperhero

ThePinkSuperhero — Tue, 26 Apr 2005 06:43:53 -0800

Make sure you and your spouse each carry enough life insurance to cover your own and any joint debt in the event of a death. But doesn't the debt that's only in your name die when you do? I ask this because I was looking to volunteer with the Florida Hospice (one of the country's biggest, as you might imagine based on all the old people in Florida), and at the introductory meeting, a Hospice worker says that if you're dying, you can just max out all the cards in your name, and once you die, the debt disappears. I feel like Hospice would know better than most about that subject... was she right?

By: Verdant

Verdant — Tue, 26 Apr 2005 06:57:03 -0800

I suggest watching Frontline's Secret History of the Credit Card. Wow. While I do not consider myself naive, and understand that lending money is a business meant to enrich the lender in exchange for the service provided, I now feel a little dirty carrying a balance. It's not that they should not make money, but that they do so under the scummiest (though fairly disclosed) terms. What's worse, in my mind, is that through the Bankruptcy Reform bill, these companies are now insulated from their own bad business practices (e.g., issuing credit to college kids) at the expense of people who are otherwise excellent customers who suffer some kind of life catastrophe. With that said, my partner and I have a smidgen more than the "Average American Household" credit card debt but are working on paying it down aggressively. But the sooner I stop doing business with these people the better.

By: OmieWise

OmieWise — Tue, 26 Apr 2005 07:07:56 -0800

As far as paying down goes, I think an accelerator margin is the way to go. It builds on itself in a rational way that makes sense to me. It may not be for everyone, but I like the structure. ( I don't have much debt.) bugbread et al, I envy your very clear-eyed approach. I think part of the problem for me was not really being educated about what debt was, how it worked, how credit card reporting worked, etc when I was younger. I'm glad I understand it better now, but I still am not as disciplined as I should be. Juliet Schor's book The Overspent American is virtually required reading, I think, and not simply in order to understand debt. Schor is just a very good sociologist. One of the most interesting things from her book was the finding that people who watch more TV spend more money, in a predictable curve. What she found is that it is not commercials that drive the spending, but the items in the lives of the TV characters. Those things begin to seem normal, so even if none of your friends have a Blackberry, and you have no need for one, it seems like everyone should have one because they are there in the lives of TV characters you identify with. This echoes dame's comment above about needing some things to seem respectable.

By: emjaybee

emjaybee — Tue, 26 Apr 2005 07:26:47 -0800

Also, if you have just the one credit card, you may learn as I did that they will discontinue it without telling you if it's paid up but doesn't show activity for six months or more. And then decide they don't want to re-continue it, even though you've shown your ability to pay. Actually, because you've shown your ability to pay, they don't want you. So maybe charge and pay something each month to keep it active. I have heard that some cards were charging extra fees to people who paid up each month? Though I cannot find the link anymore. Also I used a credit union, and they sucked. YMMV.

By: rainbaby

rainbaby — Tue, 26 Apr 2005 08:07:01 -0800

Make sure you and your spouse each carry enough life insurance to cover your own and any joint debt in the event of a death My understanding is that the surviving partner would be responsible for any joint debt (like a mortgage) and any debt incurred after the marriage, such as a car loan that the other person took out and paid, any cards issued in the other person's name since the marriage, etc. It's all joint property, so it's all joint debt. Now my student loan, incurred before the marriage, maybe that would be forgiven, I don't know. In a hospice situation, a single person with no estate and no spouse could possibly max the cards and have them forgiven by the company, I don't know. Any time one tries to get the debt forgiven it's on a case by case basis with the credit company making the call. In other words, a hassle. Any other insight is welcome. . .I know I could use a better understanding of it all.

By: kookywon

kookywon — Tue, 26 Apr 2005 08:16:39 -0800

I'm so glad this thread didn't turn out like the 'turn off tv week' thread. I, for one, am very glad to see this trend. I think that the security of the U.S. depends on Americans getting out of debt and saving.

By: jefeweiss

jefeweiss — Tue, 26 Apr 2005 08:36:16 -0800

To all of those who live in markets where houses are outrageously expensive (LA, SF, etc) just save the money you would be making on house payments. Those markets are headed for a crash, and when they crash the prices tend to go way below the rational market value. That's the nature of a speculative bubble. Rising interest rates are the factor most likely to bring the house of cards down, so being able to make a bigger down payment will make buying much more affordable. I have heard that people are taking out interest only mortgages, and buying properties where the rents won't even come close to making mortgage payments. These kind of things tell me that the end is nigh for the real estate bubble in these areas. Another factor is the large number of people who have taken out adjustable rate mortgages because that was the only way they could afford to make the payments. If that's anyone of you, I'd suggest refinancing to a fixed rate mortgage if at all possible. Or sell soon if you own a house in LA. Put the cash in the bank and rent for a couple years and you can buy a palatial estate.

By: dame

dame — Tue, 26 Apr 2005 08:51:11 -0800

bugbread & languagehat: As I said, the debt is slowly going down--on a yearly level, I probably make slightly more than I spend, which would make me fall into the group bugbread defines here. At the same time, I don't think that having debt makes me a bad person with a dark dark stain on my soul. As much as people like to decry debt as the new original sin of American society, I find the adoration of frugality to be just that tiresome puritanism over again. bugbread: For me the choice would clearly be "job I hate that allows me extra creature comforts, or job I like but without creature comforts". I can't really grok "job I like but creature comforts anyway". I find that choice unacceptable, and consider its very existence far more a stain on the American soul than any moderate debt. I will to everything legal to avoid it as far as possible. I will never own a house to avoid that choice. I will never have children if that's what it takes to avoid that choice. I will carry a debt to not make that choice. In the end, I don't really see the value in a zero balance beyond its appeal to the joy you find in feeling free. I find joy in other things.

By: nofundy

nofundy — Tue, 26 Apr 2005 08:51:35 -0800

Does this mean no one on MeFi has a trust fund from daddy? :-)

By: amber_dale

amber_dale — Tue, 26 Apr 2005 09:37:42 -0800

I am genuinely curious, dame—are you arguing that we all have some sort of moral entitlement to both a job we enjoy and whatever level of creature comforts we require to be happy? You've taken some steps to make your choice of job less burdensome, but the longer you go on consuming more than you earn the greater debt you will accumulate. Will you still be joyful when you are old and owe some massive sum to creditors? How does your refusal to choose affect your future prospects for retirement?

By: zoogleplex

zoogleplex — Tue, 26 Apr 2005 10:13:59 -0800

jefeweiss: "To all of those who live in markets where houses are outrageously expensive (LA, SF, etc) just save the money you would be making on house payments. Those markets are headed for a crash, and when they crash the prices tend to go way below the rational market value... Put the cash in the bank and rent for a couple years and you can buy a palatial estate." And that is exactly why I'm socking my money in the bank in anticipation of buying a rental property... after the market drops. Of course if the bubble doesn't burst, I'll still have a lot of money in the bank. :) This morning as I was waking up I realized I needed to very belatedly correct a glaring math error in my last post way above... $900 x 12 months is in fact $10,800 per year, not $7,200. Now you see why I have to use Quicken. *blush* I'm lousy at math in my head... So Balisong, sock that cash away for a few years and you'll be able to put a down payment on a house or condo or something (depending on where you live of course), or buy a nice used car with cash and still have quite a bit left over. You could even invest some, put that money to work. About cars - taking out a loan on a new car is, in my eyes, well... silly. New cars lose from around 25% up to (in a few extreme cases) as much as 40% of their value the instant you drive them off the lot. Even on an inexpensive car this means several thousand dollars that literally just goes *poof* into nonexistence. If you're going to take out a loan on a car - and yeah, for most of us it's necessary - you're far better off getting last year's model as a "Certified Used" car, many of which have come in off short-term corporate leases and were well cared for. dame, I don't think anyone will begrudge you some moderate, well-tended debt. You don't sound like you're overextended, which many people are (and I surely was). A few nice creature comforts are probably worth it. A zero balance does indeed give a nice feeling of freedom, though, I can attest. Being able to get the few neat toys and creature comforts that I like using cash feels pretty good too. I won't be throwing my cards out, though, because they're useful. nofundy... I only wish. At this point for me it might be the other way around! Another little anecdote about the perils of financial irresponsibility... my former stepdad and his present wife both got into major financial trouble, he through not paying child support to my mom for my two half-siblings, she through maxing out credit cards. While he managed to get his mother to deed them her summer camp house to live in (which he retrofitted for year-round living), their combined financial problems added up to the government putting a lien on the house, seizing and auctioning some of their possessions, and garnishing their wages heavily. I don't think they're allowed to leave the state they live in, either - and now he's facing extended prison time for alleged drug dealing. He's around 57 years old, and will likely be in hock to, and under the thumb of, the State for the rest of his life. If that ain't "debtor's prison" as described above... well I don't know what is. *shudder*

By: dame

dame — Tue, 26 Apr 2005 10:21:01 -0800

amber_dale: As I've said twice now, I don't actually spend more than I make on a yearly basis (though there are weeks when I do and am therefore glad of my credit cards). But, yes, I think we do have a moral entitlement to jobs that treat us like humans and a reasonable level of creature comforts.* And I think that every person who argues, "Suck it up, that's what grownups do!" contributes to a situation wherein employers feel they have a right to demand you spend a third of your week miserable in exchange for a chance at a life in the third that isn't devoted to being miserable or sleeping. Retirement is sticky, I'll agree. In my case, I have good reason to expect I will make more than I do now in the future. Further, I work in a field that doesn't consider you useless at 65 or whatever and I don't really want to stop working--I like what I do and I'd rather keep doing it than give up work altogether. That is, rather than be miserable so that one I day I can give it up, I'd prefer to do something that doesn't make me miserable and not give it up. Work is central to a fulfilling life, so I would like to see us take it in reasonable amounts instead of binging and purging. Think of all the people who find themselves lost upon retirement. If to get this I have to carry some moderate debt, that's okay. Maybe it won't work out and in another five or ten years I'll have to reconsider. That's okay. I'm twenty-five; if I have anything it's time. But to not try to demand what I think I deserve, and to wake up one day to find I wasted my youth fulfilling other people's idea of what it means to be a grown-up? I can't make that up later. *To say "whatever level" would be to open it to excessive greed, and however selfish I am, I don't think I am actually greedy--on the level of a few new bits of clothes each season as opposed to a whole new wardrobe, if that makes sense.

By: amber_dale

amber_dale — Tue, 26 Apr 2005 11:49:55 -0800

sorry for the misunderstanding re: your repayment rates. I suppose the problem is that "a reasonable level of creature comforts" is contextual and changes over time; few of us would want to retire and have our current standard of living, if everyone 50 years in the future is zipping around in flying cars and watching virtual reality TV. That's the sort of goad that makes me worry about saving now, along with the possibility that something could happen that would make it difficult or impossible to work once you're old, regardless of how nice an employer you have. But then I'm extremely risk-averse.

By: Smedleyman

Smedleyman — Tue, 26 Apr 2005 12:00:46 -0800

I had almost paid off my CCards....when some friends of mine demanded I go to this town in Nevada called 'Las Vegas' with them. Booze, Vegas, hookers, gambling and ATMs close at hand don't mix. What happens in Vegas, stays on your credit cards. Big time stupid.

By: mouthnoize

mouthnoize — Tue, 26 Apr 2005 12:20:40 -0800

Bankrupt in Jan04 - annihilated $38,000 of post-divorce debt - wow, was that sweet and easy. Best decision I ever made. Now I have a gas card that I pay off monthly - everything else is CASH baby.

By: davy

davy — Tue, 26 Apr 2005 13:05:53 -0800

Does this mean no one on MeFi has a trust fund from daddy? :-) "And when he died all he left us was alone." Actually it wasn't like that, "Papa" laid his hat in the same place for almost 40 years, but he died broke -- and in fact a little in debt. As for a trust fund, hell, as a kid my allowance never topped $5 a week, and out of that I was expected to buy my own condoms. "If you can't be good, be careful."

By: davy

davy — Tue, 26 Apr 2005 13:06:42 -0800

I think we do have a moral entitlement to jobs that treat us like humans and a reasonable level of creature comforts.* So you're a communist, I take it?

By: dame

dame — Tue, 26 Apr 2005 13:23:41 -0800

More like a socialist.

By: five fresh fish

five fresh fish — Tue, 26 Apr 2005 16:48:06 -0800

I find the best way to not spend money is to delay the decision. I seldom impulse purchase.

By: mrgrimm

mrgrimm — Tue, 26 Apr 2005 17:02:10 -0800

I'm so glad this thread didn't turn out like the 'turn off tv week' thread. Fascinating. I didn't see the connection at first, until I checked out Judith Schor per OmieWise's post. Apparently, it's much more acceptable to say "stop spending on credit" than "stop watching TV," even though they might as well be the same thing. ... each added hour of TV watched increases a consumer's annual spending by roughly $200 per year. So, an average level of TV watching of 15 hours a week equals nearly $3,000 per year.

By: apis mellifera

apis mellifera — Tue, 26 Apr 2005 18:55:01 -0800

I got my first credit cards as a college freshman. Discover and MBNA, etc. set up little booths outside the campus bookstore, offering free gifts for signing up. I remember putting down that I made $2000/year on my Discover Card application. They gave me a credit limit of $1000. I was way irresponsible with it and it became a huge, unwieldily pain in the ass after a while. I haven't had a credit card in years. Those companies are evil. If you can use them to get the rewards, pay off your balance every month, they're worth it. I don't personally have that kind of will power. People who spend beyond their means and pay all those fees and high interest rates, they're the credit card companys' bread and butter.

By: Bugbread

Bugbread — Tue, 26 Apr 2005 20:22:18 -0800

dame : "I think we do have a moral entitlement to jobs that treat us like humans and a reasonable level of creature comforts." I'm just...flabbergasted. I don't know what to say. To my ears, it's like you're saying "I'll smoke and shoot up heroin and eat steak three meals a day, because I think we have a moral right to live forever." I neither understand the foundation of belief in this moral right, nor the idea that even though reality doesn't conform with one's ideas, one should ignore reality and live like one wishes it were. In political terms, it seems like the difference between "faith-based" action and "reality-based" action. Don't get me wrong. Trying to change the world to match your beliefs (trying to get work hour regulations passed, trying to increase minimum wage, etc.) makes sense, but not trying to change the environment but pretending that reality is like you'd like it to be instead of what it is is just beyond my ken. However, I should clarify: some of the folks supporting debt as a good thing are depicting us anti-debt people as thinking of debt as "immoral" or "evil". That may be true for others, I don't know, but it certainly isn't true for me. I think smoking is stupid and harmful, but I don't think it's immoral. I think of heroin use as stupid and harmful, but I don't think it's immoral. So when I say that I think (excessive, unnecessary levels of) debt are a bad thing, I'm certainly not saying they're immoral. The other misconception I see is that us frugal folks are being puritanical and denying ourselves creature comforts we should have. The best way I can explain it is: think of a luxury jet with a pilot. That would be fucking wonderful to have. But you don't sit there and think life is awful because you don't have one, and you don't decide to go out and buy one. You realize that you don't have the money to get one, so you don't, and that's it. You're not being puritanical, and you're not feeling deprived by not purchasing it. For me, at least, that's where the other purchases also lay. I would love to have a big plasma TV. But it's expensive, so I'm not going to get one for a few years until the prices go down. I don't feel that I'm scourging myself by avoiding the purchase. I just think "That would be nice to have. I'll get one in a few years, when the prices drop". And that's it. It doesn't sit on my mind any more than the fact that I don't have a private luxury jet sits on my mind.

By: five fresh fish

five fresh fish — Tue, 26 Apr 2005 20:33:37 -0800

Wow. That Judith Schor link is well worth reading.

By: mkdg

mkdg — Tue, 26 Apr 2005 21:55:01 -0800

I got my first credit cards as a college freshman. Discover and MBNA, etc. set up little booths outside the campus bookstore, offering free gifts for signing up. Yet we need to have a war on drugs? Credit card companies are more predatory, and affect more lives than homeboy hawking a bag 'o weed on the corner. As for myself, my wife and I just finished paying off 15k or so in credit card debt through a credit counseling agency (over the last 6 years). Of course, in our efforts to become "responsible adults" (early 30's [me] and late 20's [her]) we've racked up over $50k in student loan debts. Now we'll have 4 degrees between us so the gamble will hopefully pay off in the long run. We'll see though...

By: dame

dame — Tue, 26 Apr 2005 23:20:21 -0800

Bugbread, I don't know if I can explain this to you well enough, but let me give it a shot. I assume a moral right to a humane working environment and reasonable creature comforts because I live in one of the wealthiest nations in the world. Together we have the means for such to be created, and to sacrifice the majority of millions' lives to the greed of the few is utterly immoral. I don't see how you can not see it, to be honest. Beyond that, there's the fact that we aren't only driving ourselves crazy for those who profit from out labor, but we do it to one another. Every person who buys into the "shut up, do what you're told, that's life" bullshit makes it harder for those who see the fundamental bankruptcy in that approach. Why hire a troublemaker when you can get one of the more docile specimens? As for faith-based v. reality-based, sometimes you make something true by pretending it is true. If I am wrong, I have decades ahead to make myself miserable. But why capitulate early? Why give up before trying? I am only here now. I do wish for work-hour changes and minimum-wage improvements; I vote for people who are for such and I support organizations advocating for such (not everything I could do and not nothing). But shit like that takes forever and again, this is my life right now. When I die, I'm not going to say, Gee, I wish I had no debt. I'm going to ask myself if I lived a life that I was proud of, if I did what I could to remain loyal to my vision of worthiness and value. And giving up without a fair go doesn't qualify. So even if other people can't get their shit together to make it possible for all of us, I'm still going to try to make it possible for me. You compare it to smoking, shooting herion, and inhaling steak but wishing to live forever. That's a bad comparison. Those are physiological and this is social. Rather I would say it's like doing those things and knowing that you may die earlier, but doing it anyway because you don't care for a life without them and telling people to shut the fuck up about smoking already. I have given up things to do it this way: I probably will never have kids and home ownership is equally unlikely; I won't move anywhere that requires a car, which means I look forward to a lifetime of New York City rents. And I will tend a little debt garden that blossoms and dies year after year. But I will also have tried (and maybe succeeded). I will have not gone gentle. That is worth more to me than anything else. One last note: You seem to be looking at this from a rather more monied perspective than mine. You talk about plasma-screen TVs. I'm talking about buying a Metrocard on my credit card because I just haven't got the cash this week (and I know if I take it out of savings it'll never get back in) or buying a dress because it's spring. They'll get paid off and then some and some other week it won't quite get paid off and the little garden will blossom and wither. As you say it isn't all puritanism on your end, it's hardly reckless hedonism here. Anyway, this is obscenely long, and the thread is near dead. If you'd rather continue this on email, I'd be happy to. I think it's interesting. I'll check in here when I roll out of bed around eleven, too.

By: mecran01

mecran01 — Wed, 27 Apr 2005 08:34:05 -0800

Our credit card debt is mostly car repairs, and we pay it off this Summer when I teach extra courses. I usually buy crap i don't need when I'm stressed or unhappy or pissed off at someone or feel trapped by life. I'm surprised there aren't more books on the psychology of frugality.

By: NortonDC

NortonDC — Wed, 27 Apr 2005 17:59:28 -0800

One thing I've figured out is that if money doesn't buy happiness, then you can be damn sure that credit won't buy it, either.

By: five fresh fish

five fresh fish — Wed, 27 Apr 2005 19:33:40 -0800

I dunno. I'm in a power-tool-purchasing phase of my life, and it's making me damn happy. And I haven't even made anything useful yet!

By: Bugbread

Bugbread — Wed, 27 Apr 2005 22:25:05 -0800

dame : " I assume a moral right to a humane working environment and reasonable creature comforts because I live in one of the wealthiest nations in the world. Together we have the means for such to be created, and to sacrifice the majority of millions' lives to the greed of the few is utterly immoral. I don't see how you can not see it, to be honest. " Well, first, and I know this ends the conversation and makes me the bad guy, but in general I don't believe in rights. But if I take my usual simplified tack, which is assuming that rights exist for the sake of argument, then I'd say that we are in fact benefiting from a humane working environment and reasonable creature comforts, and people in debt are assuming unreasonable creature comforts are reasonable creature comforts. By living in one of the wealthiest nations in the world, on a moderate salary, you can have three square meals a day, own a television and a stereo, own a car, own an air conditioner, have an apartment of your own without flatmates, own a computer and an internet connection, go out and watch a movie from time to time...One does pretty damn well. Extremely damn well. In my opinion, folks in debt have somehow taken "reasonable creature comforts" to mean "anything I want that my neighbor is likely to have", forgetting that the neighbor is thinking the same thing, and has the same credit cards. If you live in America, do a reasonable job (not a "dream job" like sitting around eating tasty meals and having sex, but a real job that treats one 'humanely'), and spend money comensurate with reasonable creature comforts, you don't go into debt. Debt comes when you spend on unreasonable creature comforts. And, sure, the question arises "who is to define reasonable?" A computer, for example, is reasonable now, but would not have been in 1970. We all define reasonable. But that just makes the term meaningless. "I have a right to a job that treats me well and as much stuff as everyone else figures is right because they're buying on credit" means, ipso facto, that you will only be able to attain that standard of living through debt. In which case, it isn't companies' payment structures that's to blame for your going into debt to keep up with the Joneses, it's the Joneses fault for setting the standard of "reasonable" outside what can actually be afforded. With the way that "reasonable" is being defined in America, it is tautologically impossible for companies to improve conditions to eliminate debt. The more companies pay, the more people will buy. "Reasonable" creature comforts will always be more than ones' salary can provide for, no matter how much said salary might increase. dame : "Every person who buys into the 'shut up, do what you're told, that's life' bullshit makes it harder for those who see the fundamental bankruptcy in that approach." And everybody who buys into the "buy more shit! buy more shit! You need this! Your neighbors have it! If you don't buy it, you're the same as an Opus Dei adherent scourging himself to atone for greed! Your life is uncomfortable without this shit!" bullshit makes 1) Credit card companies bigger, and 2) the appeal of working for shitty companies bigger. dame : "As you say it isn't all puritanism on your end, it's hardly reckless hedonism here." Ok, fair dinkum. As always, debt is pretty hard to discuss unless you know exactly what kinds of things it's being made for. "I went into debt because I had to pay for surgery" is far different from "I went into debt because I thought it would be really cool to see what a washing machine looked like dropped off a roof, so I bought one on credit and smashed it". So take all of my comments above as general statements directed at the general statements you made, and not specifics directed at your own situation.

By: NortonDC

NortonDC — Thu, 28 Apr 2005 04:37:48 -0800

five fresh fish, despite living in the Northern Nirvana of socialized medicine, isn't just a bit possible that your family fits into the medical category of appropriate uses of credit? I suspect there's more to the picture than power tools.

By: five fresh fish

five fresh fish — Thu, 28 Apr 2005 10:19:27 -0800

Granted, NortonDC. Our only debt is our mortgage. This makes an unbelievable difference in the ol' cashflow, and I strongly recommend everyone try to give it a shot.

By: dame

dame — Thu, 28 Apr 2005 12:08:43 -0800

By living in one of the wealthiest nations in the world, on a moderate salary, you can have three square meals a day, own a television and a stereo, own a car, own an air conditioner, have an apartment of your own without flatmates, own a computer and an internet connection, go out and watch a movie from time to time...One does pretty damn well. Extremely damn well. Well, you can have those things if you take a totally dehumanizing corporate job that treats you like an expendable robot. If you don't want to do that (because you have actual self-respect or something), then you have to kind of make it up as you go along to afford an apartment with roommates a little further out than you'd like to live and an enjoyable social and intellectual life. So you fudge things a bit with moderate debt and keep your eye on it, because you want to keep going this way. Which has been my point all along. In my opinion, folks in debt have somehow taken "reasonable creature comforts" to mean "anything I want that my neighbor is likely to have", forgetting that the neighbor is thinking the same thing, and has the same credit cards. This is the equivalent of your impression of all pro–(moderate) debt folks saying that being debt free makes you an Opus Dei level scourger. Many people I know with reasonable debt are not crazy consumer whores. They are trying to do something that runs against what they are meant to do, and that means some debt. It's a trade-off. If being debt-free is worth being a corporate tool, then good for you. But I'm not going back to cube-hell until I have no other choice. If you live in America, do a reasonable job (not a "dream job" like sitting around eating tasty meals and having sex, but a real job that treats one 'humanely'), and spend money comensurate with reasonable creature comforts, you don't go into debt. Debt comes when you spend on unreasonable creature comforts. That is only true if you think most jobs in America come with reasonable requirements. I do not. When I had one of those jobs, I was depressed to the point that life did not seem worth it. When I left, I felt entirely better. And it was definitely a job you would think "reasonable." Now I work a fuckload harder than I did then, but I am treated like a human. But it takes a little debt. It's worth it. More generally, just because debt would only come to you for being "unreasonable" doesn't make that the case for everyone. Is that the case for some people? Sure. The more companies pay, the more people will buy. You seem to think I expect companies to pay more as a definition of humane. Frankly, outside the lowest ends of the scale, pay is not my biggest concern by far. It's the way employees are treated--as though they are children, as though they are trying to fuck a boss to whom unquestioned loyalty should be given instead, as though they have no autonomy, etc. It was bullshit when we were in school and five, and it's still bullshit now; moreso really, considering that we are actual adults. Nor is it about only doing things that are "fun." Lots of parts of work aren't fun, but it doesn't matter because they are worthwhile. Anyway, I should stop babbling because the thread is dead and you don't seem to be able to wrap your head around the system I'm working from.

By: Bugbread

Bugbread — Thu, 28 Apr 2005 12:15:46 -0800

Dame, I do understand what you're saying, and your additional emphasis on reasonable debt makes me pretty much agree with you. As I said, I don't find debt immoral, and if the debt is reasonable and controlled, I don't think there's anything wrong with it. So we basically agree in the end. The only little quibble (I've always got a little quibble; nature of my personality) is with the phrase "You seem to think I expect companies to pay more as a definition of humane." I don't. But I suspect that your issue is that companies which treat one humanely don't pay well enough to buy the creature comforts you want. Since those companies are already humane, the only recourse to alleviate the need for debt would be to raise salaries. I suppose what I should have said is that (it appears to me that) you would want humane companies to offer more money, and well-paying companies to offer more humane-ness. But other than that, I think I can understand your position, especially with the caveat of reasonableness in debt.