How do people have so much debt?

[Annoying]

Eh, I have debt, but I keep it at a level that is entirely manageable and not detrimental in any way. Actually using a credit card is good for building and maintaining credit score, as is having a loan of some sort. Given, you don't have to sit on a balance in a card to build credit, just have to use it. Keep it under 30% credit utilization. I personally pay off my card entirely every month unless I've intentionally used it for something larger that I planned on paying over more than a month on. Car loan is similar, but obviously not something most can pay off quickly, but if I have extra income from a bonus or something else, I'll put more toward it.

[cam5778]

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.

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

Don't mean to insult you, but your math is wrong. It's APR, so the interest rate is (0.11/12) or 0.92%. So, it would actually cost him 100*1.0092 = $100.92.

[Rezhial]

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

My credit card has 1.5% cash back on every purchase, with 5% on select categories each quarter. I pay my credit card off fully at the end of every month. That is literally free money.

[Flarelaine]

Don't mean to insult you, but your math is wrong. It's APR, so the interest rate is (0.11/12) or 0.92%. So, it would actually cost him 100*1.0092 = $100.92.

Ah, that sounds more reasonable.

[Tennis]

My credit card has 1.5% cash back on every purchase, with 5% on select categories each quarter. I pay my credit card off fully at the end of every month. That is literally free money.

1.5% really isn't that much at the end of the day.

[Tinykong]

Not all credit card debt is bad debt.

If I'm going to make a big purchase, why would I pay cash, when I can open and use an interest free credit card, and then earn a return on my money via an investment, and pay the card off over time? Even better if it has a rewards/cash back program, which you can get 5-10% back on, on top of the modest return on the investment.

[Tierbook]

School mostly, I went to Clemson for a year in engineering and it cost about 6k for everything. Didn't like it so much and did poorly in general so I switched to a local technical college for programming and it costs about 1.5k per semester. Neither of those are all that bad but then you look at my Aunt who went to the university of Georgia for a degree in graphic design and she didn't get the degree and now owes about 200k in debt for the few years she was there, that's including housing and food etc.

[Rezhial]

1.5% really isn't that much at the end of the day.

I'm not disagreeing with you, but it doesn't make it any less free. Assuming you keep up with your payments properly, you are getting paid to spend money.

[Tinykong]

I'm not disagreeing with you, but it doesn't make it any less free. Assuming you keep up with your payments properly, you are getting paid to spend money.

If you have recurring bills that let you pay with a credit card, you can set it up to auto-pay the bill, and then auto-pay the credit card. I have a lot of bills set up this way, and they are all generating 2% cash back every time they charge. Doesn't seem like a lot, but 2% is 2%.

[smooshtheman]

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Then to be quite frank, your are incompetent when it comes to finance, and should seek help from a financial advisor or credit counselor. Nobody should EVER need more then one credit card. If you need more then 1 credit card for personal use, you are doing something wrong, and should really take a hard look at your spending habits.

If you NEED a credit card to live at all you have an issue no doubt. But if you actually care about your credit score you need to be aware that having one and only one credit card does a few bad things to your score, a) it keeps your total available credit low and subsequently your credit utilization high. for example if you have 1 card with a 5000 limit and lets just say 0% interest for 1 year, you put 500 on it and pay it off slowly - your utilization is 10% of your total limit. lets so you have 3 credit cards with 3000 limit on each. if you have one with 1000 balance that is less than 10% utilized. the better score would go to the person with more cards (up to a certain extent) and less utilization (down to 0%); b) total accounts open plays a role in your credit score, without enough sources your credit history is not very accurate and credit companies want you to have more verified accounts open to keep a more accurate summary of your habits and debt payment. for example one credit card only and maybe a car loan will get your credit up gradually, however 3 credit cards and a car loan will boost it faster if utilization is low and total limit is not crazy. based on what you make per year you can have a maximum total credit line with many credit cards before you start to get denied.


also, I myself have multiple cards, not because i need them but because one gives me 5% back on amazon, one gives me 1.5% back on anything, and another gives 5% back on different categories each quarter (shopping, food, gas, stuff like that). on top of this all the cards I own at the moment have 0% interest for 18 months. it is stupid to stick to one card with 1-2% when you can get so much more back by juggling

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between student loans, mortgages, car prices and loans, and a few other things everybody has now days how can some of you post that you odnt know how people are in such debt? get out from the rock you live under and look around. new 2017 cars are not less than 20,000$ and a home is cheap when it is 150,000 around here in florida. it makes sense to me how debt has been piled up. that and inflation coming to haunt us

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I'm not disagreeing with you, but it doesn't make it any less free. Assuming you keep up with your payments properly, you are getting paid to spend money.

1.5% per month isnt alot, but yearly it blows away those of you who use debit cards and cash and pay to use atms and such

[DoctorDoomkin]

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.....

I'm not the guy coming up with,

"Derp! You could get hit by a truck!"

or other hypothetical bullshit to try to raise yourself higher without adding to the conversation.

You fit in category 2. The short version is to not be retarded with money. Look into your situation and plan it out. If you can't do that, stay the fuck away from a credit card. Yes, bullshit happens. But that doesn't excuse you from planning for the worse.

[BourneWolf]

I'm not the guy coming up with,

"Derp! You could get hit by a truck!"

or other hypothetical bullshit to try to raise yourself higher without adding to the conversation.

You fit in category 2. The short version is to not be retarded with money. Look into your situation and plan it out. If you can't do that, stay the fuck away from a credit card. Yes, bullshit happens. But that doesn't excuse you from planning for the worse.

Ok smartarse.

Explain yourself out of this situation -

Your monthly income is 2000. Your monthly outgoings is budgeted at 1600.
There is a housing market crash and your mortgage goes up by 500.

Your income is now 2000 and your outgoings are 2100.

You have kids to feed and cloth.

Do you stop feeding your kids? Or
Do you stop paying bills, get into debt so your kids can eat?


The only retarded thing to believe is that external factors beyond your control cant affect your outgoings.

You believe that statement.

Which is retarded within itself.

[kamuimac]

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.

because people are idiots thats how,

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Ok smartarse.

Explain yourself out of this situation -

Your monthly income is 2000. Your monthly outgoings is budgeted at 1600.
There is a housing market crash and your mortgage goes up by 500.

Your income is now 2000 and your outgoings are 2100.

You have kids to feed and cloth.

Do you stop feeding your kids? Or
Do you stop paying bills, get into debt so your kids can eat?


The only retarded thing to believe is that external factors beyond your control cant affect your outgoings.

You believe that statement.

Which is retarded within itself.

then i find 2nd job for 1/4 of usual time (aka 2 hours extra ) which would allow me to make enough for living (or i simply take overhours in my job which are payed 200 % of usual salary )

then on the other hand this would never happen to me because i know exackly how much i make and how much to save each month and how to invest those money to never be in that place. there is a reason why when i was buying apartment i bought one with 2 rooms + kitchen/bathroom instead house / 4 room apartment - because i simply cant afford latter at this stage of my life. and instead being an idiot im resonable enough to not be an idiot and take loan that could put me in financial trouble

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1.5% really isn't that much at the end of the day.

just for people who may be interested - do you know where real money lies that banks make ? in the 0,001 range thats where they make milions 1,5 % is still 1,5 % over the ocurse of 20-30 years its a lot of %

[tikcol]

People blaming the system should just stop.

STOP.

You didn't need to buy half the things you did. Stop convincing yourself you deserved to buy.

It's your fault.

[kamuimac]

That doesn't add up. People could rent. They don't have to buy a house. That is a choice, a reckless one in many cases.

yes people coudl rent - and pay X $$ each month to someone or to bank which in long run will make the property theirs - nobody sane rents if they can afford loan and buy their own place. the only ones who are forced to rent are poor people without possibility of tkaing loan in first place

[javen]

Despite being a lot better off, most of the credit is held by the baby boomer generation. They were raised to see debt as not a terribly bad thing. Millennials collectively hold WAY less consumer debt than the generations before them, so it's not them living above their means. The overwhelming majority of their debt is instead held as student loans.

[Captain N]

yes people coudl rent - and pay X $$ each month to someone or to bank which in long run will make the property theirs - nobody sane rents if they can afford loan and buy their own place. the only ones who are forced to rent are poor people without possibility of tkaing loan in first place

Meh...it depends on location as well.

In my neighborhood you can buy a house starting at $600,000 or you can rent starting from $1700 for a studio.

I'd definitely not consider someone renting on Chicago's North Side as poor.

[Gamdwelf]

Ok smartarse.

Explain yourself out of this situation -

Your monthly income is 2000. Your monthly outgoings is budgeted at 1600.
There is a housing market crash and your mortgage goes up by 500.

Your income is now 2000 and your outgoings are 2100.

You have kids to feed and cloth.

Do you stop feeding your kids? Or
Do you stop paying bills, get into debt so your kids can eat?


The only retarded thing to believe is that external factors beyond your control cant affect your outgoings.

You believe that statement.

Which is retarded within itself.

A housing market crash wouldn't cause your housing payments to go up unless you chose an ARM mortgage which were known bad choices.

[Lady Dragonheart]

People blaming the system should just stop.

STOP.

You didn't need to buy half the things you did. Stop convincing yourself you deserved to buy.

It's your fault.

The main issue that I've been seeing is that it isn't the actual debt, itself, that is the issue. It's the fact, that once you are in a lot of debt, it is harder to get up from it when compared to having money. If you have a lot of money, you can use credit and debt systems to make considerably more money without too much effort or intellect on the matter. Essentially, the system isn't balanced, it becomes easier to take advantage of credit and debt with more money to start with, creating circles that just feed you more and more money because of having the advantage of starting with money. In short, it's a system that ensures that the poor remain poor and the rich remain rich.

For example, these days if you choose to pay for your own college, you will likely be in heavy debt for a large portion of your life for accumulated forms of debt. This wasn't the case 30+ years ago where you could buy a house, a car, and afford college all at the same time without incurring such massive crippling debt by having a single job that you can literally work the starting unskilled wage at. I mean, when I graduated highschool in the 80s, I could afford school, a house in a decent neighborhood (not great, but decent), and a car payment (on a really good car, no less) all on a part-time pizza delivery girl's wage basic wage.

[Rezhial]

A housing market crash wouldn't cause your housing payments to go up unless you chose an ARM mortgage which were known bad choices.

This. Get a fixed mortgage. Be smart.