How do people have so much debt?

[BourneWolf]

Simply put: People are not taught how to be responsible and what to watch out for when it comes to managing a budget.

They focus on looking like they got money instead of actually having money. They look at what it would be convenient for them instead of what is practical to them.

Do they REALLY need a truck that sucks gas like crazy? Or do they need a car to get them from point A to Point B and back?

The biggest lesson I learned from my parents: We are not rich. We are not poor. We are responsible. If we spend it big, it is because we know that it pays for itself in the long run. Finally, I don't use my credit card unless I actually got the cash for it to avoid interest rates. The only time I break that rule would be for an actual emergency that I am glad has yet to happen.




As for your other two questions:



That really depends on a lot of things. It could mean that they are currently on a payment plan that requires them to pay that much. For my new A/C and a used car, I got 16k total in debt. But, since I am doing them in monthly payments, I am fine. Debt is not entirely a bad thing. If you make your payments on time, this will boost your credit and result in you being able to have more buying power in buying a new car or a house.


It is only when everything in payments exceed the amount you make. I try to keep it to double the amount I pay each month. This is in case either something bad happens to me that prevents me from working, or I am planning on going to a nice place for vacation.


Honestly, this shit should be taught in schools. Imagine how much debt would be wiped out if we spent the time and money to actually teach children to not be dumbasses with money. Unfortunately, to quote Saiona,

You suddenly lose your job, and thus cant meet your monthly payments.

You get hit by a bus, your legs get amputated, and thus cant meet your paymentd.

You have a family member who is dieing and needs you at their side. You take another 16k out to support yourself while you look after them. Then you lose your job and cant meet payments.

There are a million unexpected things in life that can happen for you to not be able to meet your payments. And it has nothing to do with "herp herp i cant balance my outgoings against my income".

[Stiffle69]

I have immaculate credit. I owe absolutely nothing at all.

[kyoloco]

dragon ball z dokkan battle

[Nemrod]

That was with health insurance and a fairly decent one, far better than the majority of country at the time. Without insurance the entire birthing would have cost 15-20k, there was a small complication in the delivery. My lung collapse and everything involved in it was about 20k as well, I spent an entire week in the hospital which was the bulk of the cost. The tonsil removal was 5-6k.

There are also things like dental and vision that insurance doesn't really cover. For someone with vision issues like me, vision can also be a sizable expense.

If you say you have decent insurance but still pay tons of money for these procedures, is there insurance that would cover everything? The whole birth, tonsils, eyes, etc... and what would that cost per year?

For example I (and everybody else) pay around 7% taxes for health insurance and nearly everything is covered. For some stuff I have to pay a little extra, like my contact lenses, I have to pay 120 Euro for a pair, rest is covered by health insurance. Basic dentist stuff is free too, only if I want something fancy it costs extra (quite a lot actually, but we drive to Hungary then and it only costs 25% of what it would cost in my country).
If I have to buy medicine or have other medical bills I can get tax returns at the end of the year, that's usually a couple of hundred Euros.

I really do not understand how the most powerful country in the world has such a shitty healthcare system. Still cannot believe those 15000 dollars for having a child, that's the one thing in life that shouldn't cost a penny (the other would be death but even here funerals are expensive as hell).

[Stormspellz]

I don't get it. Whatever happened to living within your means?

For example :



What does it mean to have 16K debt exactly? 16K owing on your credit card bill?
Why would someone spend so much when they can't even pay it off at the end of the month?
This just doesn't add up.

credit cards can be used for many things like medical, cars, collage, ect. So with seeing a break down of what the debt is actually owed to.

[unfilteredJW]

Just popping in and checking out another thread by tenner where he pretends to be better than other people.

Must be exhausting constantly looking for validation. Even going so far as looking for it from anonymous forum goers on a gaming site.

[Dazu]

Firstly, that figure is an average of everyones. That includes people like Trump etc who would have 50-100k + credit cards and might only pay it off at the end of a promotion period etc.

Also alot of businesses use Credit cards to pay running costs and then pay balances when they get their invoices in. Say a trucking company for example might have 5-10k on fuel expenses alone before a invoice comes in to cover it.

Now personally, I have about 9k in credit debt (not USA, another country). Im trying to cut it back now but paying it off is hard whilst covering all my other expenses, considering my interest is at about 250-300 per month alone. My original debt came from when between jobs and having a hard time finding one due to local factors and needing to still pay rent/food/vehicle expenses etc. Unexpected issues have kept me from getting it paid off (Family in hospital, accidents etc). For example a visit to the hospital last weekend cost us about $50 in total from toll roads, parking etc.

Also, I like the 150 hour working week up above. So you worked all bar 18 hours a week for 4 and half months straight? So on roughly 1-2 hours sleep a day someone was paying you the equiv of probably 160-200k per year (35k in 4 and half months + living expenses on top of that would easily be 50-60k+ for just over a 3rd of a year) in a job and you think thats a normal world scenario?

[DoctorDoomkin]

You suddenly lose your job, and thus cant meet your monthly payments.

An "Oh shit!" fund usually prevents you from going broke. Again, don't spend like a dumbass as if everyday is going to treat you well. Save your money instead of buying stupid shit.

You get hit by a bus, your legs get amputated, and thus cant meet your paymentd.

I am not going to play with hypothetical bullshit. Stop protesting on the fucking highway.

You have a family member who is dieing and needs you at their side. You take another 16k out to support yourself while you look after them. Then you lose your job and cant meet payments.

If you live in the US, there is a little thing called the FMLA. Short version: Your boss CANNOT fire you for medical leave of absence due to a random fuck up that isn't your fault, or if a family member has become dependent on you for help. Also, if they are dying, they would already be labled as retired and can pull out of their 401k (assuming they have one. AGAIN, this is because they got their shit together and have the financial sense to not act like they are going to see the sun rise tomorrow). or retirement plan. Yes, they get taxed. But if they got the money, the tax means nothing in the long run.

There are a million unexpected things in life that can happen for you to not be able to meet your payments. And it has nothing to do with "herp herp i cant balance my outgoings against my income".

I was told my mother was going to live for another 10 years after my father died. Turned out she actually got 3 and a half. Still, if everyone had their shit together, like she did by having her 401k, and my boss who knows full well I can come at them with a lawsuit for firing me in a condition that is completely covered by FMLA, no one comes out broke.


You are right, there are a million things that COULD happen. That is why you don't act retarded and let them happen in the first place. Prepare for the worse for the income that you got. Live within your own budget. Buy what you NEED, not what you WANT. If something is going to cost you a lot, make sure it is RELIABLE.

[Deleted]

I don't get credit card debt. While I haven't bought a house yet, and I'll still be renting for at least 2 years, I'm completely debt-free.
I buy stuff with my credit card quite frequently, but for me it's simply a delayed payment with my debit card, and that's how I look at it. I'll never buy anything on credit that I know I won't be able to afford when payment is due next month and I never pick fragmented payment plans with exorbitant interest rates.

Of course my situation is simple. I'm single, live on my own, have a job that pays really well. I've heard the stories of how my parents started out and they had it a lot tougher than I had and sometimes had to go into small debts for unforeseen expenses early on, but nothing that wouldn't be resolved soon. They were always conscientious when it came to spending and saving.

[Aori]

If you say you have decent insurance but still pay tons of money for these procedures, is there insurance that would cover everything? The whole birth, tonsils, eyes, etc... and what would that cost per year?

For example I (and everybody else) pay around 7% taxes for health insurance and nearly everything is covered. For some stuff I have to pay a little extra, like my contact lenses, I have to pay 120 Euro for a pair, rest is covered by health insurance. Basic dentist stuff is free too, only if I want something fancy it costs extra (quite a lot actually, but we drive to Hungary then and it only costs 25% of what it would cost in my country).
If I have to buy medicine or have other medical bills I can get tax returns at the end of the year, that's usually a couple of hundred Euros.

I really do not understand how the most powerful country in the world has such a shitty healthcare system. Still cannot believe those 15000 dollars for having a child, that's the one thing in life that shouldn't cost a penny (the other would be death but even here funerals are expensive as hell).

100% coverage is usually reserved for the rich, federal and/or state employees. There are some companies that offer 100% coverage but they aren't common. Most insurance plans do have a maximum yearly out of pocket costs. So if your plan has an 8k maximum, they will cover 100% for the rest of the calendar year. Specialized medical isn't covered, vision and dental isn't covered by most general medical coverage. I had to pay a different company for my vision, I had no dental. Rehabilitation, chiropractics and similar other medical services are hit or miss on coverage, sometimes they be covered with referrals and prior authorizations. You also have in network and out of network care, that is another mindfuck for people.

Our healthcare system is probably one of the most confusing in the world. I've worked in medical for a few years, I dealt a lot with insurance and third party billing, it is a freaking clusterfuck that they themselves don't even understand.

Pharmacy coverage is some of the worst and can be an even higher expense than medical procedures. My father has to take pancreatic enzymes, about 960 pills a month. This medicine isn't covered by many insurance companies, this pill out of pocket is about $700 a month its cost changes a lot as supply is wonky and generics disappear and reappear.

And don't get me started on medicare D, the most absurd thing is making and forcing the elderly to deal with medicare D.

- - - Updated - - -

I don't get credit card debt. While I haven't bought a house yet, and I'll still be renting for at least 2 years, I'm completely debt-free.
I buy stuff with my credit card quite frequently, but for me it's simply a delayed payment with my debit card, and that's how I look at it. I'll never buy anything on credit that I know I won't be able to afford when payment is due next month and I never pick fragmented payment plans with exorbitant interest rates.

Of course my situation is simple. I'm single, live on my own, have a job that pays really well. I've heard the stories of how my parents started out and they had it a lot tougher than I had and sometimes had to go into small debts for unforeseen expenses early on, but nothing that wouldn't be resolved soon. They were always conscientious when it came to spending and saving.

A lot of people put medical expenses on credit cards, they don't have a choice.

[BourneWolf]

An "Oh shit!" fund usually prevents you from going broke. Again, don't spend like a dumbass as if everyday is going to treat you well. Save your money instead of buying stupid shit.



I am not going to play with hypothetical bullshit. Stop protesting on the fucking highway.



If you live in the US, there is a little thing called the FMLA. Short version: Your boss CANNOT fire you for medical leave of absence due to a random fuck up that isn't your fault, or if a family member has become dependent on you for help. Also, if they are dying, they would already be labled as retired and can pull out of their 401k (assuming they have one. AGAIN, this is because they got their shit together and have the financial sense to not act like they are going to see the sun rise tomorrow). or retirement plan. Yes, they get taxed. But if they got the money, the tax means nothing in the long run.



I was told my mother was going to live for another 10 years after my father died. Turned out she actually got 3 and a half. Still, if everyone had their shit together, like she did by having her 401k, and my boss who knows full well I can come at them with a lawsuit for firing me in a condition that is completely covered by FMLA, no one comes out broke.


You are right, there are a million things that COULD happen. That is why you don't act retarded and let them happen in the first place. Prepare for the worse for the income that you got. Live within your own budget. Buy what you NEED, not what you WANT. If something is going to cost you a lot, make sure it is RELIABLE.

Congratulations.

You are either a genius who has solved World poverty,

Or

You are a dumbass who thinks he knows best.



Hmmmmmm.....which one to choose.....

[Nemrod]

100% coverage is usually reserved for the rich, federal and/or state employees. There are some companies that offer 100% coverage but they aren't common. Most insurance plans do have a maximum yearly out of pocket costs. So if your plan has an 8k maximum, they will cover 100% for the rest of the calendar year. Specialized medical isn't covered, vision and dental isn't covered by most general medical coverage. I had to pay a different company for my vision, I had no dental. Rehabilitation, chiropractics and similar other medical services are hit or miss on coverage, sometimes they be covered with referrals and prior authorizations. You also have in network and out of network care, that is another mindfuck for people.

Interesting. Especially about medication.
I saw some documentary about how Big Pharma has screwed over the US insurance companies, and that the US pays a lot more than other countries, especially European ones. If we need drugs you get a recipe from a doctor, pay the recipe fee which is under 6 Euro and be done with it. Everything you get in a hospital is free, including cancer drugs or pain meds.
Of course if you are very sick and need many different drugs it can amount to a hefty sum, but usually those people are exempt from the recipe fee. And if you already paid 2% of your year's net income you are also exempt, so most people pay a maximum of 400 to 500 Euro for prescription drugs.

Maybe the US should try some universal healthcare some time, not all taxes are bad.

[Flarelaine]

Then why not live at home with their parents and work part time while going to uni/college. That way you graduate with a lot less debt. Then before you know it, you're in the clear.

Many want to live it up and enjoy the dorm lifestyle and now they're suffering for it.

That sounds like my brother. He chose a univerity a hundred miles away to be with his friends.

What do you know, he was right, those connections keep getting him good jobs.

- - - Updated - - -

Why not?

My credit card interest rate is only 11% today, compare to 16% in 2008.

These are free money you know.

So paying $111 for something that costs $100 is free money? I'll stick to my debit card and pay $100.

[Ifeanychukwu]

It's easy to live within your means for a while and suddenly find yourself with unexpected expenses by no fault of your own. Besides that, people take on expenses that at the time they can manage just fine but due to previously mentioned unexpected expenses can become unmanageable. Sometimes people take on debt with the idea of being able to better themselves to be able to make more money and allow for more expenses (college) and that doesn't always work out as intended.

[Lilly32]

I dont understand either. I am 36 and only debt I have is a few visits to the doctor, but total isnt more than like $1200. My house and trucks are paid for. I honestly dont understand how people are in debt for tens of thousands of dollars.

[Deleted]

[Rezhial]

I've never understood how people get themselves into so much debt. I am not talking about school loans, mortgage, or car even, but the mass amount of credit card debt is just astounding. Just don't spend money you don't have, and you're good. I have had a credit card since 18, and have successfully paid the full amount every single month, for over 8 years. It really isn't a difficult concept.

How people think paying the minimum amount each month is okay, is mind blowing.

[Gratlim]

Consumption society. People are pushed or influenced by media to live above their rightful place when it comes to goods, cars, houses.
Ex: unemployed student buy a coupé, the last iPhone, the last luxury close with money they never had and never earned. Banks and credit corps charge you with super high interest rate making a living on your credits. Companies producing the coupé, iPhone and clothes make a living on your credits.
Social media enhance the phenomenon by creating jealousy between people, creating the demand.

There you have it, everyone is happy: the bank, the producer and the consumer.

..that is until law take over when you can't pay your depts anymore and everything is taken back from you. But no one cares about that, because you only care about yourself in a nice and happy capitalist society

Conclusion: don't take credits, work for your money and don't spend money you do not have.

[GennGreymane]

People need to manage debt better.

[Gamdwelf]

I feel like I'm on the wrong side of this thread when I'm agreeing with lady dragonfart, but she's saying all the right things.