Why do folks run up their CC?

[GoodSteward]

Oh man, all of this sounds so familiar. Especially ~ "I can pay all my bills so I'm responsible with money!" Also buying things when they are steeply discounted to "avoid paying more later". Ha!

I believe this is one of the biggest lies broke people will attach to(I did when I was broke). People get VERY offended if you even hint at the idea that they don't know what they are doing with their money. As long as they are not behind on anything, they KNOW what they are doing. To even recommend a change implies they don't. It doesn't matter that they have no savings, no retirement, and massive credit card debt.

[ceejay74]

I believe this is one of the biggest lies broke people will attach to(I did when I was broke). People get VERY offended if you even hint at the idea that they don't know what they are doing with their money. As long as they are not behind on anything, they KNOW what they are doing. To even recommend a change implies they don't. It doesn't matter that they have no savings, no retirement, and massive credit card debt.

Yep, that sounds exactly like me 10+ years ago! I got very defensive about it. Part of it was that I was compartmentalizing somewhat; I really could have (and did eventually) realized that what I was doing wasn't sustainable, so I kind of separated parts of my thinking/behavior to keep from having that realization.

[GoodSteward]

Yep, that sounds exactly like me 10+ years ago! I got very defensive about it. Part of it was that I was compartmentalizing somewhat; I really could have (and did eventually) realized that what I was doing wasn't sustainable, so I kind of separated parts of my thinking/behavior to keep from having that realization.

Out of site, out of mind. It's been justifying people's lives for centuries! lol

[sethmachine]

For the first time in my credit history I've been carrying a balance on a few of my CC's.

This is because they have a promotional 0% interest for a period of about a year. I am only required to pay the minimal balances.

I have budgeted so I will always be able to pay the balance in full on all of them before the promotion expires (to make sure nothing happens, I have at least the total balance in savings).

What this has done is essentially increased my take home money after all expenses considerably. I have been using that money to pay off debts that do accrue interest at an accelerated rate.

Otherwise of course I would never carry a balance on a CC.

[disneysteve]

For the first time in my credit history I've been carrying a balance on a few of my CC's.

This is because they have a promotional 0% interest

Minutes after posting this, you started another thread and said you have $4,000 of debt at 7%. Which is it? There's a big difference between 0% and 7%.

[JoeP]

This has come up countless times before, and so has a potential solution.

The solution involves education in basic finance skills, possibly starting in public schools around grade 8 or 9, when the adolescent mind can handle such concepts. Equipping young adults with this knowledge will at least give them options and skills they might not otherwise know exist.

Not a conspiracy theorists, but I suspect there are financial institutions and ancillary businesses (e.g., payday lenders, repo men, collections) that are happy to keep things they way they are now, with people in debt and behind in payments.

[Weird Tolkienish Figure]

This has come up countless times before, and so has a potential solution.

The solution involves education in basic finance skills, possibly starting in public schools around grade 8 or 9, when the adolescent mind can handle such concepts. Equipping young adults with this knowledge will at least give them options and skills they might not otherwise know exist.

Not a conspiracy theorists, but I suspect there are financial institutions and ancillary businesses (e.g., payday lenders, repo men, collections) that are happy to keep things they way they are now, with people in debt and behind in payments.

I'm so glad we have a forum filled with morally perfect people to look down their noses in condescension at the lowly serfs who aren't perfect frugal angels like they are!

[disneysteve]

I'm so glad we have a forum filled with morally perfect people to look down their noses in condescension at the lowly serfs who aren't perfect frugal angels like they are!

I didn't see anything at all condescending about JoeP's post. How is suggesting better financial education of our children a bad thing? I actually think it needs to start even before age 8 or 9. Even in kindergarten, money concepts can be taught at an age-appropriate level.

And I certainly agree that it is in the best interests of the financial institutions to keep people in debt. That's where they make most of their money - fees, late charges, interest payments, etc.

[MonkeyMama]

Not a conspiracy theorists, but I suspect there are financial institutions and ancillary businesses (e.g., payday lenders, repo men, collections) that are happy to keep things they way they are now, with people in debt and behind in payments.

True.

How many people out there believe they *have to* be in debt to have a decent credit score? I've heard bankers say this. I couldn't tell you how many people have told me they had to have a car payment (or student loans, or whatever kind of debt) so that they could get a mortgage later. I was just lucky to have financial mentors who knew better.

[LivingAlmostLarge]

By the same point many people also say "I don't charge anything and we're not in debt. But we are just not able save anything." People are always making excuses about not being able to afford to save for retirement. Or just saving in general. Then sometimes they dip into debt because of it.

[sv2007]

By the same point many people also say "I don't charge anything and we're not in debt. But we are just not able save anything." People are always making excuses about not being able to afford to save for retirement. Or just saving in general. Then sometimes they dip into debt because of it.

Debt isn't all bad; I'd bet a lot of folks have appreciated houses where they've only put down maybe 20%. Or financed their college thru debt and now able to make good money because of the improved knowledge and research skills.

The thing about debt is the compounding of interest. In the same way that your savings interest compound; the exponential growth will eventually make it unbearable. So just keep an eye on it and don't let that happen.

[GoodSteward]

As someone who has been in credit card debt two different times in my life, I can share another thought. People who have been in debt for years grow dependent on it. I know that sounds odd, but it's like a habit you have a hard time breaking.

When I finally got out of debt, I had this weird feeling like something was wrong. I NEEDED to have debt and payments, possibly to have something to work towards. Savings didn't seem real to me because all I ever knew was debt. There is something about it when you have been in so long that makes you feel like life isn't "normal" without a little debt. 0% or 6 easy payments. Doesn't matter, debt in even "financially responsible" forms was at least debt.

It maybe the chocolate covered strawberries talking right now, but that is something I recalled sitting here.

[bigdaddybus]

My wife and I had credit card debt early in our marriage. I was a veteran going to college on the GI Bill and she was working a new job in a new town where she hadn't built up clientele yet.

We were the couple that ran out of money on Wednesday and didn't get paid till Friday. We quickly depleted our savings. Putting gas in car, buying basics from the grocery store, paying car insurance, etc. just kept growing our account balance.

Thankfully we were able to work our way out if it. It was tough, and interest rates were in the high teens/low 20's. My wife's job picked up and I was able to work more hours my last 2 years in college to make ends meet. I often tell people that I graduated college with $186 on a credit card. For me, giving the military 3.5 years of my life was the right decision vs taking on student loan debt.

[annibe11e]

I have a fear of running out of cash.

Having been extremely poor in the past, I'm terrified off running out of cash. I'll use my credit card(s) with the best intentions to pay them off. Then, when the bill comes, I'm afraid to part with the cash, so I pay a little (or a lot) less. Eventually, I'm paying minimums and my card is pretty much maxed out.

Also I have ADD and it seems no matter how much I plan and budget, I always forget things. I can't tell you how many times I have spent money I thought was available only to remember something I needed it for. For instance, I'll take my son school clothes shopping and, in my mind, school expenses are out of the way. My brain completely forgot that we also needed school supplies. (Yes, I made a list. I have no idea where it is.) In the meantime, I've used that "extra" money to buy some luxuries like a new sheet set for my bed or car seat covers for my car. Then I'm left charging for the school supplies.

Anyway, those are some of my reasons...

[sv2007]

I have a fear of running out of cash.

Having been extremely poor in the past, I'm terrified off running out of cash. I'll use my credit card(s) with the best intentions to pay them off. Then, when the bill comes, I'm afraid to part with the cash, so I pay a little (or a lot) less. Eventually, I'm paying minimums and my card is pretty much maxed out.

Also I have ADD and it seems no matter how much I plan and budget, I always forget things. I can't tell you how many times I have spent money I thought was available only to remember something I needed it for. For instance, I'll take my son school clothes shopping and, in my mind, school expenses are out of the way. My brain completely forgot that we also needed school supplies. (Yes, I made a list. I have no idea where it is.) In the meantime, I've used that "extra" money to buy some luxuries like a new sheet set for my bed or car seat covers for my car. Then I'm left charging for the school supplies.

Anyway, those are some of my reasons...

May I suggest a debt card?

1. You aren't parting with cash, just like CC
2. You can't spend what you don't have (saves lots of money in interests and fees)

The next step is for you to realize that cash is just ink on paper (really, that's all it is, fiat money). So maybe it'll comfort you by photocopying a bunch and hang on for that security/comfort feeling?