How do people get in such credit card debt?

[datalink7]

I have a credit card, but I never spend more money than I am able to pay off immediatly from money in the bank. I always pay my full balance every month. If I want something expensive, I save up for it. I just use my credit card for added protection and online purchases, and to build up credit history.

Though it is tempting sometimes to go out and buy a big purchase of some kind, I just have to think about how much it would suck to be in debt and so I refrain.

I'm not great with money. Sometimes I'll go down and have no money in the bank, which sucks if something unexpected comes up. I really should save some for unexpected occurances. But I don't see how people go into thousands and thousands of credit card debt.

 

[PsychoAndy]

Originally posted by: datalink7
I have a credit card, but I never spend more money than I am able to pay off immediatly from money in the bank. I always pay my full balance every month. If I want something expensive, I save up for it. I just use my credit card for added protection and online purchases, and to build up credit history.

Though it is tempting sometimes to go out and buy a big purchase of some kind, I just have to think about how much it would suck to be in debt and so I refrain.

I'm not great with money. Sometimes I'll go down and have no money in the bank, which sucks if something unexpected comes up. I really should save some for unexpected occurances. But I don't see how people go into thousands and thousands of credit card debt.

Its an inability to say no. That about sums it up.

-PAB

 

[RossMAN]

Ignorance, stupidity, lack of self control, "I can handle it" mentality, you name it I got it.

:Q

 

[laFiera]

well, i got into debt when my old car broke down and couldnt afford one, so had to pay for the car to be repaired, which was done by a friend, but still had to pay for the expensive parts; yeah, i couldhave perhaps bought a new car, but at the time i was a student and couldnt afford one....so i think some people, s**t happens and then they go into debt, and then you have those that like the big ticket items but can't afford them....

 

[notfred]

People get in credit card debt for the same reasons they get in any type of debt:

Would you rather have a car for three years, or a big number in your bank acount for three years? Sure, you end up paying an extra ten percent annually, but you get your car three years sooner. Same with other stuff. It's worth it to me to have the stuff I want and a couple hundred $ monthly payment than to have nothing and a large bank account.

 

[wyvrn]

Spending more than you make. I had to take a cold, hard look at my spending habits a few years ago. I went as far as to get my full broker/dealer's licenses. Now we are MUCH better at my spending, fitting in a new house, two cars, paying off all of my CC debt, paying for school in cash and saving 15% of my GROSS income every month. We save much more our income percentage-wise than anyone else I know. It feels good not having to live paycheck to paycheck.

edit: I read at USAToday that August was the slowest month in consumer debt growth in a long time. Hopefully everyone is working themselves out of debt.

 

[datalink7]

Originally posted by: notfred
People get in credit card debt for the same reasons they get in any type of debt:

Would you rather have a car for three years, or a big number in your bank acount for three years? Sure, you end up paying an extra ten percent annually, but you get your car three years sooner. Same with other stuff. It's worth it to me to have the stuff I want and a couple hundred $ monthly payment than to have nothing and a large bank account.

I don't have a large bank balance. I spend money like water. I just don't go into debt to do it. For instance, I want to get a new computer. I'll definently want one by next summer. I could go into debt and get it now, or I could start saving now and buy it debt free in the summer (this is the plan).

That is just how I look at it. For a large purchase (like a car or house), I can see going into debt just because it is hard to get ahold of that much money. But that isn't what I am aiming at. I am looking at those who spend it on smaller stuff and then all of a sudden they have all this debt and are crushed by it.

 

[Viper GTS]

We (as a society) hemorrhage money.

In the last few months I have made some major changes in how I deal with my money, & while my debt is going away it's still going much slower than I would like.

My major bills (rent, utils, food, transportation) only account for 40% or so of my take home (and that's being generous on the estimates, in reality it's probably closer to 1/3), yet I still manage to make only piddly dents in my CC debt each month.

Guess I need to work on it some more.

Viper GTS

 

[goog]

I agree with notfred's post. My sister saves her money never wanting to spend it just in case (rarely buys anything, or goes out). Sure it's nice to have a wad of cash sitting in the bank, but it's even better enjoying the things you can buy with it. Now if I can find a happy medium I'd be set. Right now I have 3 loans, and a credit card balance. I get by alright but I'd really like to pay off the $1G+ (5.9%) on the Citi card, and add a few hundred to my RSP to balance out my mutual fund portfolio.
My new digital camera will be here tomorrow

 

[SCSIfreek]

1). They don't keep track of their spending habits?
2). People simply don't make enough money to cover their a$$. <------Major factor!!!!
3). Their jobless.

 

[Squisher]

I'll be the first to admit that my wife and I were not the most frugal people.

But, it's funny, we came to expect a certain level lifestyle and even though our income has almost doubled since she started working, we live about the same lifesyle.

I guess what I'm saying is that people just don't live a lifestyle that fits their income level, we didn't. It's just that now our income has caught up to our way of living.

 

[NogginBoink]

For most people, the wide availability of credit becomes an extension of their income.

For me, I had unexpected car repairs, tuition that I didn't plan properly for, new tires on the car, girlfriend's birthday... and yeah, some splurging all at the same time. So I'm in deeper than I'd like.

I'm anal about my money though and ALWAYS know how much I have and where it is. So although I'm in much more consumer debt than I'd like (~$4000, but ~$3000 is not accruing interest until Jan. 2004), I'm on track to get rid of it.

-Noggin

 

[thomsbrain]

well for a lot of people, it only takes one emergancy (or perceived emergancy) to get yourself into debt, and once you're there, it's really hard to get back out without drastically changing your habits. so far i've been smart about spending and haven't had any big emergancies so i've been debt free. hopefully it will stay that way.

 

[Blieb]

Ok ... today I went to the doc, my boss is a fvckup and somehow i don't have insurance, but I need to get better.

$125 @ doc ... $70 in prescrips

Today I also dropped off my truck at the dealership as it's been making some wacked out noises and needs a servicing (don't we all ) ... I'm guessing it's going to be around $500, but I have no idea what all is busted yet.

I don't just have a "oh what the hell" fund sitting around ... since I'm using all my x-tra money to pay off my cc's from various other engagements that pop up as listed above.

THAT is how.

 

[vi edit]

It's basically the inverse reason that we're a nation of fatasses.

Calories in > than calories burnt
money spent > money earned

 

[dquan97]

Originally posted by: vi_edit
It's basically the inverse reason that we're a nation of fatasses.

Calories in > than calories burnt
money spent > money earned

I was going to put the same thing! Personally, I have about $10K in CC debt.

Now, dont be quick to condemn me for that statement. Here's the good part: they're all in a 0% APR from Discover, and I spent that amount in savings bonds, so I wouldn't exactly call it swimming in debt, but a shrewd decision.

<-- saving 44% of Net Income every month!

 

[StageLeft]

Mostly it's just ignorance and stupidity. You spend more than you make, thinking that you can pay it off later, and although that may be true the ultimate cost of what you could not afford now will be way more expensive in the long run. Eventually you have to pay the piper and the longer you wait the less you have to show for it because of throwing away money in interest. As vi_edit said people are greedy and not willing to work for what they want. That's why people are fat and that's why so many have credit card debt.

In time you have to confront each. If it's food you'll pay your dues when you're suffering from a heart attack. If it's credit card debt you'll pay them when you go bankrupt, or go into a stiff payback scheme that leaves you with much less than your next door neighbor who makes the same amount but never overextended himself.

Then there is the more rare case of people who are in CC debt through emergencies or unavoidable expenses. When I moved to Alabama my credit card went from $0 to about $3k. I needed the money for moving expenses, deposits, etc. Totally unavoidable. Of course I had to constrict my spending afterwards to get it back to $0. Personally the stress of having a credit card balance outweighs the enjoyment of products bought that required me to gain a balance, and so my goal is to always have them paid off and that goal is met as much as possible.

 

[klah]

Originally posted by: datalink7
How do people get in such credit card debt?

After 6 years of university I was $139,000(US) in debt, ~$20k of which was CC's. If I did not have partial scholarship it would have been closer to $200k.

Not everyone has wealthy parents to send them off to university. I was lucky and paid it off in less than 3 years, but I suppose if the economy was in a similar state to today then I would have been in trouble.

 

[Electric Amish]

My wife got sick and couldn't work anymore.

amish

 

[sciencetoy]

My kid's medical bills. Yes I have insurance. Lots of stuff isn't covered. When the doc says he needs a brain scan right away (2 weeks ago, kid passes out in school screaming in pain), insurance says they'll know in a few weeks if they will OK it, yep, I whip out the credit card.

You'd do the same thing.

 

[apoppin]

Originally posted by: Skoorb
Mostly it's just ignorance and stupidity. You spend more than you make . . .

Isn't that how the US Government works? Massive debt. People are no different than their leaders. It is the way the SYSTEM is set up.

What, you don't like being a slave? Too bad - that's the way it is.

And you "smug" people talking about how "smart" you are about money . . . an accident, illness or loss of your job can easily reverse all your good fortunes and years of careful planning in an instant.

 

[Hayabusa Rider]

once got injured between jobs after relocating to a different state. Wound up with 35k in CC debt. You have to eat. It beat stealing food.

 

[Demon-Xanth]

Where my money goes:
Car insurance: 10%
Car payment: 25% (two years left)
Student Loans: 25% (a year and a half left, though technically I'm paid until 2004 and can drop this below 10%)
Gas: 8%
Rent+food: 25%
Other/discretionary income: 7%

The problem is that people see themselves making so much money that they don't put it this way and never see that they only have 7% as discretionary, and don't think that the last little bit includes stuff like car repairs. For this reason I treat my bank balence as $1000==broke. That way it's always there if I need it and I never write bad checks.


(and my insurance and gas is so high because my car that turned 1 year old yesterday has almost 19,000 miles)

 

[CraigRT]

Its an inability to say no. That about sums it up.

That's pretty much what i was going to type.

 

[lilFajita]

There are times when I can understand credit card debt, because of emergencies and unusual situations. At least there is an option...

However, I had a work friend one time that justified her massive credit card debt saying "You only live once. You never know what can happen, so I might as well enjoy myself now"

This is the kind of attitude that drives credit card debt. Because you get a statement that says you only have to pay x% of a total use of money, it makes people feel like they are getting away with something. However, in a few years, they are faced with layers upon layers of expenses.

I hope to never be in a situation in which I have no choice but to turn to credit card debt...but I also know I would NEVER want the stress of taking it on voluntarily. I don't need a new PDA that bad.