etetet

floofy

Wubbytoes

Televiper

There is such a thing as good debt. In business, a company will take a loan to make more profit than they pay in interest. As a consumer, we'll be buying my wife a car this year. I could pay in cash, but the car is actual cheaper if I finance with the manufacturer due to a rebate. I've had car loans before where the interest being charged me was less then I was making keeping that money in a high interest bearing account. I qualified for the great rate by developing my credit history. So you go ahead to that manual underwriter to get a mortgage, I'll be happy with a lower rate than you. And that is what financial freedom is about.

~smart and crafty ChristianSysAdmin

notMinnesota

Debt isn't a tool. It's a product that is being marketed to the middle class and the poor as a way for them to feel like they are rich without having to go through the hard work of saving and investing like most rich people do.

To those who think credit cards are a smart move: smart people question the assumptions of "conventional wisdom". Think about it - do you really think you are putting one over banks and credit card companies when you pay off your card every month. Why would they let you do that if it was a money losing position for them? The answer: most people overspend when they use a credit card because it's a painless way to spend. There's no emotional connection to the plastic as there is to cash. Why do you think businesses are willing to pay a 3% kickback fee on every credit card transaction? Because the amount of money spend on every transaction goes up on average with plastic.
You likely aren't smarter and more crafty than the average consumer - most people aren't, that's why it's the average. You are likely spending more than you realize and whatever "rewards points" you get are probably not making up for that - that's why the banks are willing to give rewards points in the first place. They aren't losing anything - they are multibillion dollar organizations with very sophisticated market research tools and analysts from Ivy League graduate schools. You - the average consumer - are not going to win at that game. Just like Las Vegas isn't built on winners, the credit card industry isn't built on winners either. Most consumers are losers in the deal.

You don't need a credit score if you don't borrow money. If you absolutely need to buy a house with a loan, find a manual underwriter who uses your income to make the decision, not a credit score.

Guys, I go to a Top 20 law school and I'm paying cash for it. I'm debt free, and always will be. I pray that you stop trying to be clever with credit - you're not going to win. Instead, work hard, get 2 or 3 jobs if you have to for a short time to reach financial goals, save your money, and invest it wisely. You'll never regret the feeling of freedom that you will have.

christianlawyer09

hmmmmmmmm

Tyr_Anasazi

When people need medical attention, they should seek it. Most often, they don't have to pay for it all right there (unless they go to the little commercial doc-in-a-box) but they're definitely going to get a bill, and may have to choose between paying that and buying a few Big Macs or paying the electric bill. It's definitely not a fun position to be in, but IT'S NOT THE FAULT OF CREDIT CARDS. You can put yourself in crappy financial positions without any help from credit cards, and irresponsible use of credit can put you way deep on the hole, but as someone said higher up in the thread, they don't use themselves (and if someone else uses it without your consent, you don't have to pay for that anyway.)

I'm one of those guys who puts all the bills I can on a credit card that gives me a little rebate, so I essentially get a couple % off those bills. Yeah, I pay the bill in full every month, and I watch what I've been spending all month so I don't get rude surprises (these interweb tube thingies are so HANDY for that!) Yes, if in the middle of the month my car's engine explodes I'll be spending way more than I've budgeted, but that would be no different if I were paying cash for things as I go along. The trick is to PAY IT OFF and not spend more than your budget (you all have budgets you follow, right? Sure you do.)

GearheadGeek

You have a valid point in that if you pay off your card each month, it's not a bad thing. Unfortunately most people do not for one reason or another. There are plenty of people who don't use their credit for fancy extravagances, but rather for medical bills because they are under insured, or other emergencies. When I was younger I remember maxing out my first credit card because the brake-lines on my car burst on me.

Sometimes a little humility goes a long way, that's something most of us Americans can use. Sometimes the best answers come from those on the outside looking in as they can sometimes see things we can't.

Optimistic Prime

There are plenty of stories of people getting screwed by credit card companies or of people getting in over their heads with credit. Whether someone don't trust the companies or theirselves doesn't it make sense to not get the card? If you can't trust what you or the company's going to do why get it?

Rectilinear Propagation

There is a big difference. It is this thing called risk. Credit card holders like to negate it as they "pay it off every month", but its still there. There are also many many studies showing that you'll spend more when you use plastic as opposed to cash. But I'm sure that doesn't apply to you... just like the risk thing.

@sardaukar:
"As far as I know, there is no such thing as 'building credit'. To me, that just sounds like some artificial bank thing that keeps you paying interest? I dont know."

No, you've pretty much got it.

thrillhouse

There was a large photo of their old apartment on the night they were going to be ejected by police.
In this one photo I saw: An Xbox-360 ($300.00), what appeared to be a leather Brookstone massage chair ($1500.00), a 35 inch TV ($500.00) and several pairs of very new, very expensive looking sneakers. The woman was wearing a leather jacket and several pieces of gold jewelery (at least one of the kids was also wearing a gold chain).

The new apartment was subsidized by the government (me and you).

I believe that the vast majority of the "poor" people in this country that we all send a chunk of our paychecks to every month are actually just stupid, lazy or both.

bdgbill

poornotignorant

Brian Gee

Anyway, I'd love to know how having a few reward cards that I never pay fees or finance charges on, that reward me with about $150 each per year, and that I use for convenience is the banks "having me by the balls." (Maybe if I weren't a girl that would make more sense, since I currently don't have balls by which to be had).

And yes, our system is better because, hey, if you can make silly snap judgments, so can I (and how obtuse do you have to be not to catch the sarcasm in my post on that point?).

kimsama

and you say yours is better? i agree with sardaukar even more now; the banks really do have you by the balls. this is up there with the way the telecom industry convinces you youve got to pay to take calls.

aestheticity

For those of you who are European and don't understand the U.S. credit-scoring system, please don't make silly assumptions that it's categorically different from your system (it's just better, nah nah nah nah nah). Our credit worthiness is assessed by using a myriad of factors, such as length of credit history, types of debt (or "revolving debt" such as credit cards, which you do NOT need to carry a balance on), timeliness of payment, etc. One will have a lower score if one has never had an open line of credit or a loan because they have no (or a limited) history. Therefore, it is beneficial to hold a credit card or three to have a record that you can maturely manage debt.

I have never been in debt, and always pay my credit card balances in full at the end of the period. After 10+ years of doing this, I have a nifty score, and a long history that I can point to when I want a loan.

"Building credit" is shorthand for "building credit history," which one of you even mentioned. I can't believe anyone would be obtuse enough not to figure that out.

kimsama

golgiapparatus

I work for the buster, and the first time my manager told someone they couldn't use a debit card to secure their account I asked her why that was. Apparently Blockbuster got sued for overdrawing people's checking accounts on debit cards when they didn't return their movies.

But yeah, some stores are stricter than others. I don't even ask people if its a credit card or not. It asks for a credit card on the app, I'll give them the benefit of the doubt.

golgiapparatus

zolielo

me, i dont buy stuff i cant afford. i got no shiny shit to show off, but never been in debt either.

aestheticity

j_dot

Steve Martin is a bona-fide success, but how many people leave SNL and are never heard from again?

Anyone seen Chris Parnell lately?

John

But there's one thing that hasn't been brought up yet, and that's using a credit card for an investment. All investments carry some risk but if you feel your purchase has the potential to be more valuable than the cost incurred in paying it off, this can be a smart move. Not talking about gucci handbags or a $1500 barbeque, but a piece of equipment that increases productivity, or inventory for a lucrative project. Smart purchases that you may not have the cash to cover otherwise.

BillyB

kcs

Perhaps the best way to keep people from getting into debt, is when their young let them buy something that's fairly expensive, about $150. Let them earn about...$10-14 a week doing chores around the house, and refuse to let them buy anything else until they pay you back.
Then they'll learn.

superlayne

Building credit? Jesus, does the banks have you guys by the balls :P

sardaukar

PBH

I have 4 credit cards, use cash, maybe, once or twice a month and I haven't the faintest idea where my check book is. Shocking as it may seem, I'm never in debt more than month at a time, at which point, I pay my bill in full.

Short version? Credit cards are not evil. Don't distrust them. Distrust you.

jeffj-nj

brattpowered

Yeah, I know! It's kinda like how I had to use my credit card to buy food for my family and stuff because well, housing cost doubled, my income was stagnant and I was one minor emergency away from the pavement. Yep. Now that was funny!

You should see all those fabulous hand-me-downs that I can't afford that decorate my overpriced wreck of a house!

Really, the skit is funny. I am now a little more financially secure but unless you've been there (in debt up to your eyeballs for necessities because food, electricity and gas to go to work are required) it's hard not to feel a little victimized.

And yeah, don't buy stuff if you can afford.

A.Twafeletta

I think you will ultimately need to succumb to #1. You don't necessarily have to use them. I have recently seen my credit score go from 520 to 785 (a LOT of bad stuff dropped off this year). And even with my 785 score, I had a tough time getting a car lease because I only had 1 credit card (from my bank... which I never use). You'll need credit cards to have open lines of credit.

I've never been a person who would be irresponsible, but all of my early credit woes came from being unemployed frequently (IT contractor). Since then, I have become used to never using a credit card, but keeping one around.

GenXCub

something_amazing

#1 also hurts me on car rentals.

something_amazing

Which is why I:

1. Do not ever have or plan to have a credit card
2. Use a debit card/check card which acts like a Visa but if the money's not there, i can't spend it
3. Save money, and do not ever touch the savings unless for big spending like taxes, or emergencies.

crosenblum

My partner and I share a car, are selective about what we spend money on, save, and still travel and have a nice dinner out once a week. You don't have to be a miser to save and be debt free, just selective.

jamesdenver

"Don't Buy Thing's You Can't Afford" is something that most of can adhere to. Don't confuse that with rich people telling you not to buy a car unless you can pay cash for it.

ReverendDrGladhands

lindyman77

I wouldn't go that far. A lot of them get into the same sort of traps by trying to create an appearance for themselves. Like spending $35,000 on a Vertu cell phone because they don't want to be photographed talking on a RAZR that common people use.

weave

consumatron

Also, do any of you have cable channels where they play the same 30-60 second commercial over & over again for an hour? I'm thinking this skit would be perfect advice for those channels.

FLConsumer

"Those dumb poor people with all their debts. When will they ever learn!? Muffy, pass the remote and the caviar. I want to snort some fish eggs while channel surfing on my brand new 110" Plasma TV."

I'm looking forward to next week's skit, 'Eliminate the ruling class and afford groceries again.'

str1cken

ShadeWalker

IC18

hemaphore

Because as credit card debt mounts, and your credit card payments increase, you have less money to buy stuff with. So you end up putting more stuff on the card. Which makes you have even less money to buy stuff with. So you put more stuff on the card...

mantari

Bankruptcy 75 years ago was almost impossible to recover from.

There is an economic benefit to being able to borrow to invest (leverage) but borrowing to buy essentially dispsable appliances and electronics is hurting our economy in the long run.

The rules for consumer debt should be tightened.

gareth6609

Rajio

I have a another book title: The best place to go when you are broke; to work.

jameslutz

Don't Buy Stuff You Can't Afford.

People that can't get this baffle me. My wife is the same way and I have to pound it into her head with a 2x4 most days.

mopar_man