STATUS SYMBOL — OR ALBATROSS?
- More than 25% of households with income below $10,000 carry credit card debt
- More than 40% of households with $10,000-$25,000 in income do
- More than 50 million households carry credit card debt — average balance: $7,000
- Credit card debt of the average person going bankrupt: $17,544
- Americans going bankrupt last year: 1.4 million
- Versus 20 years ago: 8 times as many
Palo Alto, CA
“In Buddhist philosophy, one of the four noble truths takes the form that desire is the cause of all suffering. I would modify it thus: desire for material goods beyond your means is a cause of suffering.” Ram racked up $18,000 in debt but is now methodically paying it off. He got his first cards in college, he says, “because they served as status symbols. I had a roommate who struggled to get a card, but on my 18th birthday, I applied for an Amex and AT&T Universal Card and got them both, much to the consternation of my roommate. In fact, AT&T Universal sent me five cards.” In other words: Be careful what you wish for.
TWISTED BY CARDS
New Orleans, LA
Occupation: Urban Planner
Credit Cards: 1
“I got my first credit card when I was 19; it was a Visa with a $500 limit. For the first year or so, I paid it off every month. Then I started paying most of it … half of it … I began getting offers for other cards with higher limits and lower rates, so I kept taking them. I also hit on the trick of accepting a card with a low introductory interest rate, say 5.9% for the first six months, and transferring all my balances to that one card. Then, before the intro rate ended, I got another intro rate from a different card and moved the balances again. The only problem was that my total debt was increasing. By the end of graduate school, I had twelve Visas and MasterCards, with a total credit line of well over $100,000. I owed $12,000 before I’d ever gotten a real job. We’re all too dependent on credit that’s just too easy to get. I’ve become terrified of incurring any debt at all. I pay for everything with cash or debit card, and have become obsessive about tracking every penny. I feel almost nauseated when I spend money on a large purchase and worry about it for weeks afterward. I feel like I’m going to end up one of those people with $2 million dollars in a savings account but who eats cat food and government cheese and won’t turn on any lights. I think I’ve developed an unhealthy attitude to finances in general.”
I think so, too. For many people, a debit card is actually a better solution. It looks just like a credit card, but it works only when there’s cash in your checking account to cover it.
Quote of the Day
Quality is never an accident. It is always the result of intelligent effort.~John Ruskin
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