Can we talk about credit card debt

[Pisces Coda]

No debt. Car paid off. I have three credit cards and a debit card. Use the credit cards for whatever I'm buying, go home, jump on the internet a day or two later and pay the balance with my checking account/debit. Pay my bills the day I get 'em. I definitely could stand to be more thrifty. I don't spend more than I make..but I spend pretty damn close to all I make. I get paid 2x a month. First check, I pay cell phone/cable & HSI/energy, 2nd I pay the rent. Car insurance and stuff like that I tend to pay a few months at a time. I've got a routine. :nod:

[rabid_child]

I don't consider my car loan a debt. I somehow consider "financing" different than "I spent money I didn't have and now have to pay it off." I'm two years paid on a 5 yr loan with a 2.9% apr. I owe about $9500 on it now, and I could pay it off, but my fathers advice was that it'd be stupid cause the APR is so low, might as well save my money for when I need it. Maybe I'll pay it off next year... I'm kinda pissy that my car loan isn't showing up on my credit rating though. My dad co-signed on my loan so I could get the low APR (his credit rating is much higher than mine), and I don't seem to be getting any credit for the fact that I'm the one paying off the loan? My parents also screwed up my credit rating by contesting charges, thus not paying the bill, on one of their credit cards that they added my name to the account. *shakes head*

Soon I'll have student loan debt. I'm trying to think of that as "financing my education." I'm hoping to get an assistantship to cut the amount of dependencies on loans i'll have... I hope to get out of grad school with under $30k in loans. At that point, I'll be just about done paying off my car, so it'll be like paying off a whole other car! Only you can't drive it anywhere.

[remilard]

I don't consider my car loan a debt. I somehow consider "financing" different than "I spent money I didn't have and now have to pay it off." I'm two years paid on a 5 yr loan with a 2.9% apr. I owe about $9500 on it now, and I could pay it off, but my fathers advice was that it'd be stupid cause the APR is so low, might as well save my money for when I need it.

As long as you are saving the money where it it getting better than 2.9% apr thats the best move. You should have, ideally, 6 months expenses in checking before you worry about investing or paying of loans anyway though.


Maybe I'll pay it off next year... I'm kinda pissy that my car loan isn't showing up on my credit rating though. My dad co-signed on my loan so I could get the low APR (his credit rating is much higher than mine), and I don't seem to be getting any credit for the fact that I'm the one paying off the loan? Have you checked all three credit reports? Lenders can report to 0, 1, 2 or all of them. Some small lenders don't report at all because it costs them money, in this case they should at least be able to give you a referral which could come in handy for say, a home mortgage. Either way, if it is reported to credit agencys at all, it should be reported for you and your dad.

My parents also screwed up my credit rating by contesting charges, thus not paying the bill, on one of their credit cards that they added my name to the account. *shakes head*
If they contested the bill within the limits the law allows (i.e. the made payments, just not on the contested part) this shouldn't have happened. If the contested a portion of the charges but made zero payments, I'm afraid the late payments ought to show up on the credit report of all the account holders.

[crystalteacup]

I have 570 dollars on my credit card and I hate it hate it hate it hate it!!!!! Gah!

I also have student dept, but I think that's nothing to worry about, and I'm on scholarships this year.

The 570 is from things like loaning money and buying gifts for Christmas and Birthdays. From now on, I'm just getting everyone a card if I can't afford it.

[Pigeonwhole]

I dont have any cc debt, instead I just use a debit card. But, I've been told by many that I need to get a cc to start building a credit history. Is that true? I'm in college right now and I would rather not have the temptation of having a cc around. But, I would want to be able to get a car or house when older. Are there any other ways of buiding a financial history or whatever its called. Uh and I'm a finance major, hmm.

[remilard]

I dont have any cc debt, instead I just use a debit card. But, I've been told by many that I need to get a cc to start building a credit history. Is that true? I'm in college right now and I would rather not have the temptation of having a cc around. But, I would want to be able to get a car or house when older. Are there any other ways of buiding a financial history or whatever its called. Uh and I'm a finance major, hmm.

In order to have a good credit score you need to borrow money and pay it as agreed to show that you are a good risk. The easiest way to do that is with a major credit card. You aren't going to be responsible enough to own a home if you aren't responsible enough to have a credit card. I would recommend getting a card with a low limit (say $500) so you can't get too far under if you do handle it poorly. Use the card, pay the balance in full each month. I use my cc for everything, but I write the amounts in my checkbook just like I was using the debit card, then when I pay the bill my checkbook is balanced and I always know I didn't spend too much.

Having a strong credit score isn't only about getting a house, it is also about being able to rent an apartment without a cosigner, or being able to get electric service without a deposit. Some employers get a credit score before hiring potential employees. Your credit score is one of the most important numbers in your life so you would be wise to start working on it now.

[mysteriouspoet]

In order to have a good credit score you need to borrow money and pay it as agreed to show that you are a good risk. The easiest way to do that is with a major credit card. You aren't going to be responsible enough to own a home if you aren't responsible enough to have a credit card. I would recommend getting a card with a low limit (say $500) so you can't get too far under if you do handle it poorly. Use the card, pay the balance in full each month. I use my cc for everything, but I write the amounts in my checkbook just like I was using the debit card, then when I pay the bill my checkbook is balanced and I always know I didn't spend too much.

Having a strong credit score isn't only about getting a house, it is also about being able to rent an apartment without a cosigner, or being able to get electric service without a deposit. Some employers get a credit score before hiring potential employees. Your credit score is one of the most important numbers in your life so you would be wise to start working on it now.

I don't understand why an employer would be concerned with employees' credit scores.

[Gracie]

I don't understand why an employer would be concerned with employees' credit scores.

For one thing, a good credit score shows that you are responsible. Also, if creditors are after you, they will call your job, and your employer might have to garnish your wages, causing more work for the payroll department. And if you are in debt and desperate for money, you might be more likely to steal from your employer.

[mysteriouspoet]

For one thing, a good credit score shows that you are responsible.

What if it's debt from a relative who passed it on to you?


Also, if creditors are after you, they will call your job, and your employer might have to garnish your wages, causing more work for the payroll department.

This cannot be done without just cause.


And if you are in debt and desperate for money, you might be more likely to steal from your employer.

Any employer who thinks this way oughtn't to be an employer.

Edited to say, if you don't trust the people...why are you hiring the people?

lol.

[remilard]

What if it's debt from a relative who passed it on to you?



No individual is ever legally entitled to take on another individuals debt (unless they have signed a contract creating such an obligation).

Welcome to the real world, if you can't show you are responsible, you will be treated as if you aren't.

[Gracie]

This cannot be done without just cause.



Sure, but if the employee has debtors after him/her, the employer can be forced to garnish his/her wages. It causes more work for the people doing the payroll (I know, because it's one of the things I do.)

[remilard]

Any employer who thinks this way oughtn't to be an employer.

Edited to say, if you don't trust the people...why are you hiring the people?



An employer who thinks that way is smart. Businesses want to trust the people they hire, thats why they check credit scores, which are an effective tool for predicting future behavior. There are plenty of jobs you can get without a background check or credit check, unfortunately not many of them are very satisfactory or offer a high level of pay.

[JLRodgers]

The messed up thing with doing credit checks for employment is this: let's say you have a good paying job and bills that are well within your means... then you get laid off. Can't pay bills, can't find another job to pay them (or one that pays enough to cover housing/food+bills), then your credit's shot, but you can't get a job that pays enough to cover the old bills, and so on... all because you get laid off.

I know a lot of people that fall into that category.

And it doesn't just apply to high end jobs either... Some of the people I knew that that applied for were making $7.50/hr... but then they could only get min wage at a replacement job (at the time, a $2/hr pay cut about) and only 25-35 hours a week as compared to 40-50. They only had living expenses and food to pay for, no other bills. But just because of that, they had to move back in with relatives.

All it takes is getting laid off/fired, or being in a hospital for a few days to completely wreck your credit. But, what makes it bad is, credit scores aren't just for employment... it also effects your insurance rates (medical/car), rent, deposits. Which means you have to make even more money to cover them, but the job you can get wouldn't pay enough.

[remilard]

The bottom line is, credit reporting agencies do a service for consumers. If they didn't exist lenders, insurers, employers etc would have to assume everyone was a bad risk and there would be no loans without significant collateral, down payments, or interest rates etc. The system doesn't punish people with bad credit nearly as much as it rewards people with good credit.

Most people who have 6 months living expenses in a checking account, and have accumulated some savings (even if they are young) can handle a year of unemployment without defaulting on loans or missing payments. Some people get bad breaks, but a lot of people choose to live beyond there means and are screwed if their income dips.

[JLRodgers]

I guess it depends on your unenployment.... I made at a job $3900/mo before taxes.... unemployment? $500/mo I believe. That wouldn't of covered rent at the town I was working (min rent was around $750/mo, average around $1250). After taxes, that was still a loss of $2000/month. Unemployment worked out to be $3.12 an hour @ 40 hours a week * 4 weeks (as an example, my "hourly" wage while working was $24.37/hr). This meant, that for 1 year of unemployment, I'd have to have money saved for: food, water, utilities, bills + around 250 for rent for each month, starting with the first! Quite easy to fall behind. If I hadn't of made as much before that, a normal "monthly" income is about $240-$280/month for unemployment. Easy way to look at it... bare mins for a month (not including internet/cable) was $1250. So to have enough to live off of with unemployment, it'd mean that I'd have to of had saved up $9000 (which, after expenses for one year & taxes from the job's base pay, meant that I'd of had to of saved 50% of my income each month) - and hope that I didn't have any car repairs, and limited travel. Or, for the six month period, was $4500 -- but then I'd of had to of moved, for I wouldn't of been able to pay rent at a min wage job.

Of course when that happened to me... I was living by the "pay off everything each month" and kept only the student loan around (that I was doubling payments on to get it paid down some). So I only had the one bill, and never completely moved to the town (I knew the job wouldn't last), so I saved a LOT of money in the process.

It's not always easy to pay bills on unemployment. Especially when by itself it doesn't always pay for rent, let alone anything else. -- AND you sometimes/frequently lose your medical insurance.

Point being that it's really easy to fall behind if you do lose your job. If you don't make as much to start off, you can't save as much money. I've lost count of the people that live from month to month, paycheck to paycheck. Not that they want to, but their income barely covers thier living expenses, and they can't get a better job.

[pato1]

10 years ago my husband had cancer. We had a mortgage and some CC debt and we had to move to another city for a year to get him the right treatment. We almost lost our house, but fortunately my mom made most of those payments for that year while I supported us in Houston. I learned my lesson. My house is paid, my cars are paid, our student loans are paid, and the CC is paid in full each month. Scarry to see how easily you can loose everything.

[April]

I'm up to 11K in student loans and I'm considering nearly doubling that next year to graduate with about 20K in student loans, you can't be further in debt than that (can you?) albeit, my interest rates are probably much lower.


I currently have about $74,000 in student loan debt, and I'll probably finish my masters degree with a total of about $70,000. This doesn't count any of the interest that's been accruing.

Beat THAT! I also have about 3k in credit card debt.

WHoops! Edited to make that $79,000 that I expect to graduate with.

[beforewisdom]

Wow, this thread has made me feel better.

I am poor for my age, but I have no debts. I own my own car and I never had to use my credit card for basic necessities. I don't have much, but what is mine is mine.

[Jinga]

I currently have about $74,000 in student loan debt, and I'll probably finish my masters degree with a total of about $70,000. This doesn't count any of the interest that's been accruing.

Beat THAT! I also have about 3k in credit card debt.

Gah!!! If I combine all my debts, including my car, I am under 20k. Its really hard to get ahead when you are living on one income and only make enough to pay the essential 'now' bills (food, shelter, utilities, transportation). I hope all that education goes towards a high-paying job!

[lollypop]

i am quite majorly in debt and only 19 but its not all my debt. Me and my partner have been living together since i was 17 and actually had a joint bank account at 16 our debt is 50 thousand as we took out a loan than we are paying off over 8 years. 28 thousand is our debt the rest to make it up to 50k is the interest.

The money? and why? when i first turned 18 my irresonsible bank suggest i start to build my credit rating by taking out store cards but NOT using them!!! well at 18 finding myself with 2k worth of credit i went crazy and then me and my partner moved out on or own and had to kit out a whole flat freezer, bed,kitchen utensils the list goes on and on and on.

we are in it together though and all our debts are consolidated so only one payment plus as its just a regular loan and not a special consolidation loan our credit rating hasnt really suffered.

[FalafelsRule]

Yeah, I feel better about my situation after reading some the debt others have accumulated. I was careless with credit cars in my twenties and ran up some balances which I eventually just gave up on paying. That of course caused damage to my credit rating. However, some of the bad debt has now disappeared off my credit report due to the 7 year clause. I now am making my credit rating better by making timely payments on my car loan. My score should be well again in about 2 more years. I was surprised to find out that I was even able to qualify for a car loan and even more recently a home loan. I could not however obtain a "no money down" FHA mortgage, they are a bit more strict than conventional lenders but I will qualify in about two years. Soon as the remaining bad debt reporting disappears, with a home loan and a car loan (assuming all payments are made before they are tagged as 30 days late) my score will be looking really good. I also disputed everything negative on my reports and some of the companies reporting the bad debt were not able to provide any proof (things tend to get lost in the shuffle and transfer of bad debt to the collection agencies) so those came off, too. I highly suggest anyone with a bad credit rating to dispute everything, you may be suprised to see some of it be removed, thus allowing for a higher score.

[April]

I should add that my field is opera performance, so there's a chance I could hit it big, there's a reasonable chance I'll just 'get by' for my entire life, and there's also a reasonable chance that I'll be up Shiite creek in about 10 years.

[mysteriouspoet]

I should add that my field is opera performance, so there's a chance I could hit it big, there's a reasonable chance I'll just 'get by' for my entire life, and there's also a reasonable chance that I'll be up Shiite creek in about 10 years.

For your sake, I hope you have a career plan other than this. Not being a jerk, just realistic. :)

[April]

The realistic people are never professional opera singers. :)

[epski]

I was reconciling my highest-balance card today, and did a little math. If (big if) I always paid the same amount each month, it would take me 44 years to pay off that card! And that's paying $10 over the minimum each month. The monthly interest kills you. If you can keep from losing your shirt on that expense, credit isn't half bad.