I have been reading James Scurlock's book Maxed Out. I haven't seen the documentary, but he talks in detail about some of the cases in the book. Terrifying how easily some people fell into the debt trap. Having formerly been a volunteer tutor with an adult literacy group, I wouldn't be surprised if some of those folks can barely read. I blame it all on the education system for not teaching financial literacy. I can remember going off to university with my brand new checkbook and not knowing how to write a check for my fees - the woman at the registry desk had to tell me how!
I guess I am very fortunate I was reared by Depression Era family members who really dinned it into me debt is not a good thing. The only acceptable kind was a mortgage, and that was paid off as quickly as poss so you had a secure roof over your head. I only ever had one store card. When I bought my own house I had all sorts of little expenses, needing to buy tools, put up shelves etc, so I applied for a card with Mitre 10, the DIY supplies store. Wow did I ever get a shock when I ran up $500 worth of stuff in a couple months! Then I saw how much the fees and interest rate were on the statement. I sat down with a calculator and figured it would take me 5 years to pay it off and twice the amount charged if I kept making the minimum payment, so I paid it off as fast as I could and cancelled it. I am very fortunate I had an education and knew enough to go to the local library and start checking out books on personal finance when I realised I had a problem.
I wonder if people would be more careful if we legally obliged credit cards to be referred to as "debt cards"? There's a force - at least to me - about the word debt that doesn't seem to exist with available credit or home equity loan. Or maybe, as I did when I first tried my store card, they just think it's only $25 a month and don't focus on anything else. Of course I was a young knowitall new grad back in those days. Nowadays I see students putting beer and pizza on the student loan, never noticing how it adds up.
No debt for me
April 23rd, 2008 at 06:44 am
April 23rd, 2008 at 11:52 am 1208947951
April 23rd, 2008 at 01:28 pm 1208953686
April 23rd, 2008 at 05:22 pm 1208967740
BTW-Maxed Out is a good documentary. You can view it online at http://bestdocumentaries.blogspot.com/2007/10/maxed-out-full-documentary.html
April 23rd, 2008 at 05:24 pm 1208967889
April 24th, 2008 at 04:52 am 1209009177
I showed him how to write a check, how to pay bills online, how to use his debit card, how to balance his checkbook, how to get a job, how to budget, how to open an online savings account...
Good thing he didn't have to rely on school to teach him.