Do you pay your full credit card statement every month?

SixOfWands

Mon, Dec 04 2017, 3:40 pm

amother wrote:

There are so many ways to be in debt. Not all of them involve paying high interest.

Please, help us all out.

Let's say that Dad lost his job 4 months ago, and hasn't found anything yet. Even with unemployment, savings are very low by now. Mom has been trying to find a job, but hasn't been able to, either. Need to pay mortgage. And COBRA. Meanwhile, the car needs repairs (and you can't be without -- its needed to get to interviews), and Munchkin falls sick.

With no income, and no firm plan of when you'll have income, do you really think that a bank will make a loan? Not everyone has parents or relatives to help, and most don't have access to a gmach.

33055

Mon, Dec 04 2017, 4:29 pm

SixOfWands wrote:

Go on Medicaid. Free up COBRA payments and make sure Munchkin is taken care of. Medicaid has no copays and even vitamins are paid for. Then go to local social service organizations and see what funds are available for job interviewing. In other words, cut expenses to the bone first before you go into debt.

They can look for other social services to pay food and utilities. They can get free cell phone service. Perhaps they qualify for welfare. They need to explore what is available.

Also, have mom or dad consider out of the box jobs to tide things over.

33055

Mon, Dec 04 2017, 6:33 pm

Squishy wrote:

I just want to add that these safety net programs are there for hard working Americans who are down on their luck. People who need them should consider them before excessive credit card debt.

Amarante

Mon, Dec 04 2017, 7:49 pm

Burgundy's example of her neighbors is the textbook example of how not to use credit cards because it appears that the credit cards are essentially financing a lifestyle of DISCRETIONARY spending that their incomes don't support.

If someone has a genuine emergency, there is no shame in using a credit card to finance unexpected high dental bills or car repairs. But generally those can and should be paid off as quickly as possible by pulling in your belt for a few months in other areas. Generally people in this position are able to pay off that kind of emergency expense fairly quickly and get back on track.

However, if you are financing your non-discretionary spending with credit cards - pay off the minimum each month and have charged up to the maximum on multiple cards, your economic life is out of control. You are essentially in the same position as the coal miners who owed their soul to the company store because there is no foreseeable way out of your economic bind unless you either drastically increase income or drastically decrease spending. There are people who have dug themselves out of this kind of credit card trap but you would have to be prepared to take some drastic measures. This isn't a judgment at all - it's a horrible gut wrenching way to live so close to the economic edge. But credit cards with their high interest rates (I believe some are close to 30% and they effectively compound since you wind up paying that high interest on the interest as time goes on) are not a viable solution.

amother

Beige

Mon, Dec 04 2017, 10:07 pm

Amarante wrote:

Amarante, you make it sound as if everyone has a choice whether to use credit cards or not, and that everyone who has credit card debt is a. not aware of how much interest they are paying, and b. using their credit cards to finance discretionary spending.

I currently have about $8000 in credit card debt, and yes, I am very much aware that I am paying 30% interest yearly (more, if you realize its compounded monthly). At one point I realized that credit cards are the lesser of the two evils, as checks that were overdrafted had a $35 fee per check, which in some cases would be more than 30% of the amount on the check, so putting stuff on the credit card made more sense than writing out checks and hoping they will be covered.

Some of the expenses put on my credit card recently: glasses for my kids - about $200 a pair. Dentist for one of my children - I just put about $2000 on my credit card for the dentist, after my child was crying in pain for months. Pizza because I did not have time to make supper, some nights. Yom tov food expenses. Car repairs. Camp expenses. Speech therapy expense for one child. Tutoring for another child. Miscellaneous kid expenses. We spend very little on clothing and my younger children mostly wear hand me downs, and we are pretty careful with our food budget, but there are so many other expenses.

I am not eligible for government programs. As you can imagine, the expenses of a Jewish family can be more than even a decent middle sized income.

I don't think that we are "bad" people because we have credit card debt. I think that we are people who are barely making it, BUT B'h, we have enough food to eat, we have a decent house, we have our health, and my kids are all doing well in their respective schools. We consider ourselves blessed.

Amarante

Mon, Dec 04 2017, 10:43 pm

amother wrote:

I don’t think people with credit card debt are bad people and my post differentiated between those who are using credit cards to finance discretionary spending and those who are using it for necessities.

However, something has to give if your income isn’t adequate to fund basic needs because if you only pay off minimum amounts each month and continue to charge, then at some point you will either end up with credit maxed out or with such enormous debt that there is no way to dig yourself out of the hole except bankruptcy. In the long term, either income has to increase or expenses have to decrease. That’s not a value judgment - that’s just a statement of economic reality.

amother

Beige

Mon, Dec 04 2017, 10:55 pm

Amarante wrote:

Many people do live with long term credit card debt. Other people end up settling with their credit card companies to pay a percentage on the dollar. Other people take out a different loan with a lower interest rate such as a home equity loan.

And of course, many are hoping for income to increase or expenses to decrease, in the future.

But when someone is using a credit card for necessities, they are not thinking about the long term at that moment, they are just thinking about getting through the month. You can't tell your children no glasses this year, or no dentist this year. And not all of us have the luxury of thinking ahead. That's just a fact.

33055

Mon, Dec 04 2017, 11:21 pm

amother wrote:

There is a difference between wants and needs. It is how you define it. Perhaps instead of a $200 pair of glasses for your child, you buy their glasses on the internet or at a clinic or at Wal-Mart.

Often I see people spending money on what they think is needs but I consider a want. Credit makes it very easy to reclassify things as a must have.

Without credit many people would have to put off instant gratification.

amother

Beige

Mon, Dec 04 2017, 11:22 pm

Squishy wrote:

No, I priced Wal-Mart, it was the same price. Also, it's the lens that's expensive, in any case. And glasses is a need, not a want. At least in first world countries.

And pricing things out takes time, a lot of time, time that two working parents with a myriad of responsibilities don't have.

33055

Mon, Dec 04 2017, 11:57 pm

amother wrote:

I just bought glasses. I could have gone to refuah health center Monsey and got my glasses much cheaper than I paid. When you start adding upgrades on the lens, that's where the expenses come in. I wanted light weight tinted progressive scratch resistant lenses, so I paid many times the price of the first pair which was $75 complete. I also didn't want to wait for an appointment, and I didn't want to drive to Wal-Mart. I wanted my glasses. My friend OTOH paid $35 for her glasses on the internet. She bought all her kids glasses in that price range for less than my one pair.

I also priced glasses in Wal-Mart when I was out of state recently. They had complete glasses for less than $100. Unless your child needs special lens, glasses can be gotten cheaper.

Anyway, if you don't want to shop, ask imothers. They collectively know how to save money. The point is there are alternatives to expensive credit even in the first world.

Google prices. Locate what you need and put the item number in and buy it cheaper. It doesn't take so much time.

It is interesting how people who often live on the edge financially think that there are more must haves than people who are frugle. I have fewer things than friends who are chronically scrounging.

amother

Beige

Tue, Dec 05 2017, 12:04 am

Squishy wrote:

My kids lenses were more expensive because they are thicker, not because I paid extra for special treatment. When you have a prescription of 800 or 900, you don't play games. Someone I know priced out Wal-Mart where I lived, and said that the price is very similar to what I paid. I also actually priced out the glasses at a few stores near me, and the prices were all similar. As far as I know, and I asked extensively, there are no $75 option for glasses where I live. If there is, please tell me, I would love to know.

And I actually spent a bit less because I did not pay for upgrades in the lens.

I would never buy glasses on the internet, unless they are play glasses.

In any case, it's my credit card, so I get to decide what is a need and what is a want. That was my point.

Teomima

Tue, Dec 05 2017, 5:46 am

I always pay off my credit card. I treat it like a debit card and only ever spend what I have. We live within our means. Either dh or I (or both) have always worked and whatever we were able to make, that's how we lived. We paid off the most important expenses first (rent/mortgage, insurances, etc) skimped where we could (extra sweaters in winter instead of the heaters) and stayed as frugal as possible (there were years we could only afford homemade bread, cheese was a luxury, and frozen veggies were out of the question). We've both individually been in debt in the past and b"h have been able to stay debt-free in our marriage. Hardly any savings, but no debt.

33055

Tue, Dec 05 2017, 6:13 am

amother wrote:

You do get to run up your credit cards for whatever you like. But it is discretionary spending- that's the truth. Pizza for the nights you don't cook is discretionary. It is not a must. People survive without pizza. Armante's point is that it isn't a good thing to use credit cards for discretionary spending holds.

You had a choice whether to stress preventive dentistry or get your child's problem fixed early. I don't know if I would waited months if my child was in pain. Perhaps a little problem became a big one.

I can't micromanage your budget. Well, actuallyI could, but I don't have access to your numbers. I suggest you use Mesila to gain financial literacy. They are a respected Jewish organization who is geared to the special needs of a Jewish household. You will probably gain clarity on financial issues.

You may realize that you don't have to be $8000 in credit card debt.

33055

Tue, Dec 05 2017, 6:21 am

Teomima wrote:

It is being in debt at a young age that made me anti-credit cards. When I was in grad school, the credit card companies aggressively marketed to students saying their income will be higher to pay off the debt. What they failed to mention is that expenses will also be higher. Student loan repayments kick in as well.

This type of marketing is illegal now. Unfortunately, I got caught in it.

The same holds true for today. Expenses grow. I won't be in any kind of debt even if I need to do without.