How can people get in massive credit card debt?

[LoganW]

I've had a credit card for over a year and I am not in any form of debt. Not only that I work part time and I'm a college student.

I can certainly understand getting in debt when you don't have money for food or other needs. That entirely understandable.

But ABC recently ran a story about a couple that ran up $100,000 on nine cards. That's incredible and certainly not needs based spending. How in the world would people let themselves get in that kind of debt? I have a $3000 limit on my card, but that doesn't mean I'm going on a shopping spree when I know full well I wouldn't be able to pay it off and the interest would eat me alive.

That couple on ABC spoke as if the credit cards did something wrong.

The ONLY reason I got a credit card is because 1. I recognize there might be an emergency when I need it and 2. They give me 5% back on my food/gas purchases which helps a lot on my income. Not to go out and get a big screen TV, and not spend anything more than I can pay off before the grace period.

Just seems absurd to me.

[Tandalayo_Scheisskopf]

1. Because they are ninnys.

But I can just guess how they vote.

[Name removed]

35. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Tandalayo_Scheisskopf]

63. The people who spent $100,000 are ninnys. Not you.

Now, why don't you back off on the coffee.

[Media_Lies_Daily]

112. Why don't you back off on the personal insults?....

You don't have a clue as to what's going on, do you? When the bottom falls out, we'll ALL be on the bottom looking up. I guess you'll lose your condescending attitude then.

[Zhade]

92. Yeah, those idiots, running up all that medical debt due to no insurance!

What ninnys they are!

:eyes:

[expatriot]

2. Some people don't have self-control/long-term planning.

My wife and I have one credit card and we use it for our number one form of payment and we never put too much on it that we can't pay it off at the end of the month. We live very modestly and have a Personal Savings Rate of 40% (40% of what we make is put into savings) and this is with me being very much under-employed.

It's nothing to brag about, it is just priorities and how you were raised, I guess.

[BlueEyedSon]

5. Is that 40% of your before or after tax?

[Media_Lies_Daily]

113. Sounds like you've never had much in the way of a medical....

...emergency, or any other situation that caused you to have to come up with a lot of cash fast.

Just curious, but do you have any children? Or how about a parent or two that became so incapable of taking care of themselves that you had to either put them up in your house or put them in a nursing home?

What if you or your wife became ill...do you have Health Insurance?

I sincerely hope that you naver have to deal with any adversity...I'm not sure that you could handle it.

[BlueEyedSon]

3. Try having a normal adult life, like many did in the mid-late 90's.

Get married, assume a mortgage, have a car and a kid or 2. Then lose your job to outsourcing for 4 years. Where do you think the groceries and clothes come from?

That's not even considering a major medical condition, death or divorce.

Do you still live at home or what?

[LoganW]

7. I live with a friend

go to school, and jointly we pay all the bills. Probably a harder life than what you've got.

These people didn't have any such problems. They went on shopping sprees. Like I said, I can understand losing a job or something along those lines.

IMO if you lose your job it's not time to continue paying for the cars. (if you have more than one) Time to sell rather than going in deep debt.

[BlueEyedSon]

14. US Study: Medical Bills Main Culprit In Bankruptcies

US Study:
Medical Bills Main Culprit In Bankruptcies Americans are 'one illness away' from financial collapse
by Araminta Wordsworth

Ruinous health-care costs, not profligate spending, are the leading cause of personal bankruptcy among Americans, a new study has found.

"The American middle class is solid and secure and prosperous -- we are unlike anything ever known in history -- yet American families live just one illness or accident away from complete financial collapse," one of the study authors, Elizabeth Warren, said yesterday.

About 500,000 people sought bankruptcy protection in the United States last year because of the crushing burden of medical expenses, says the study, to be published next month in Norton's Bankruptcy Adviser, a specialty periodical for lawyers.

The number equals about half the one million Americans who filed for bankruptcy protection last year.

Prof. Warren, a professor of law at Harvard Law School, said the results are a direct consequence of the U.S. health system, which requires each family to deal individually with its health problems and pay the price.

The survey, carried out with Teresa Sullivan of the University of Texas and researcher Melissa Jacoby, looked at bankruptcies in eight federal judicial districts across the United States, from California to Pennsylvania.

Its findings are published as the U.S. Congress is considering legislation that would make it harder to sweep away credit card and other debts by seeking the shelter of bankruptcy.

Prof. Warren has studied bankruptcy for 20 years and was an advisor to the National Bankruptcy Review Commission, which was set up by Congress in the mid-1990s to consider bankruptcy reform.

She said her research painted a very different picture from the image presented by the credit card companies of lavish spenders trying to escape the consequences of their debts.

http://www.commondreams.org/headlines/042700-03.htm

[elehhhhna]

25. Shopping sprees? Like when I bought that shiny new transmission for ...

my just-out-of-waranty Dodge Decrepit (oops Intrepid)?

Oh yeah and my father-in-Laws' funeral in Wisconsin.

Good times...good times...

[SoCalDem]

103. or that "fancy" operation on your gall bladder

that you cannot afford because you lost your insurance along with your job??

[qazplm]

29. well, you kinda need a car

in many places to go to look for a job or go to it if you get one.

its not as easy as people think, i am lucky enough to be employed (unlucky enough to be in iraq) and i only have about 5K in credit card debt left, of which all will be paid off when i get back to the states, but there are a bunch of reasons why someone can rack up 5-10K in CC debt pretty easily or more if they get laid off and cant find new work.

Some of it is their fault for not living more frugally or planning ahead agreed but its not really a black/white thing for most.

[Career Prole]

32. "Probably a harder life than what you've got."

"I live with a friend, go to school, and jointly we pay all the bills. Probably a harder life than what you've got."

Oh yeah...sounds pretty touch and go. I wonder how you manage to stand up under the strain. /sarcasm off

[Wcross]

34. Yep, thats living on the edge!

I used to go sell my plasma for money at one point during the first Bush's term. I had to live in a shared house with four other people....
I could go on but you get the picture.

[SmokingJacket]

74. My boyfriend tried to sell his sperm so we could buy groceries once.

They rejected it -- we were devastated!

(But relieved that our children don't have a bunch of genetic half-siblings running around now...)

[LoganW]

38. How much do you make a year?

We both have to work AND go to school full time. We've got a cheap apartment, next to no furniture, and we've got a single car. We have to either share it, walk, or bother friends to take us where we need to go. My friend makes 8.50/hr. I make less than that. It's a rare moment when we can buy something we don't need.

Somehow I have a feeling you make $50,000 a year.

[Career Prole]

57. LOLOL! I've hit the half-century mark in years only.

"Somehow I have a feeling you make $50,000 a year"

I live in a trailer, drive a 13 year-old car, and made $28,174 last year before taxes, and that was my best year since 1994.
In 1997 I had zero income, so average that in there too.

Somehow I have a feeling you are devoid of feeling. You might make a passable 'puglican one day if you're not careful.

[Wcross]

77. Your situation isn't permanent, is it?

I assume when you are out of school you will be making a couple of bucks more than you are now. BTW, I am making more than 50k a year but it took a long time to get here and a lot of work.

[Lorien]

82. Heheh..."paying your dues"

I taught college a few years ago, and was astonished by how many of my student believed that there shouldn't be ANY time spent "paying their dues".
No car, cold, cockroach infested apartments, multiple roommates, minimum wage, mac and cheese every night...it's a rite of passage from adolescence into adulthood. Wcross no doubt did it, as have most people on this board (myself included). Eight years out of college and I was making $150,000 a year, and yes, it was a HELL of a lot of work and long nights to get there. Last year I made $18,000 before taxes (thanks * economy! Thanks corrupt corporations that refuse to pay their contractors!) $18,000 a year would have gone far in my college days, but as an adult with a mortgage and a business to run, it doesn't cut it. Different life stage, different expectations and requirements.

[Left Is Write]

91. I remember the mac and cheese days.

Or, my favorite, milk and macaroni with a little Parmesan cheese sprinkled on top.

I was a single mother, working a full time job and then a night job too so I could save up money to finish school without taking out too much in student loans.

[Horse with no Name]

104. Ramen noodles

You can get those for 10/1.00 at Dollar General,lol.

I can make a mean casserole with those,lol.

[Renew Deal]

106. I was in the same condition when I made $8.50,

I had few expenses and felt like you did. Try having a wife, a kid, sudden unemployment, a natural disaster, health problem, sickness, or a combination of all. You're perspective will change.

[alarimer]

49. People need cars for work

That's why they have more than one. Get a clue.

[DS1]

80. Sounds like you're answering your own question, to me

[JDPriestly]

81. Mental illness can be one cause.

Many years ago, I worked as a service representative for the telephone company. Part of my job was collecting bills. Some of them were astronomically high. It was incredible. When I talked to the customers who ran up the bills, I found people who were practically addicted to making telephone calls. In several cases, the debtors were young women who talked non-stop long-distance to their mothers in other states. Their behavior was compulsive. They could not help themselves. The only cure was to disconnect their phones. Very puzzling. I'll bet very few of them ever got any help.

Here are some more scenarios that show how good people can find themselves owing a lot of money to credit card companies -- if you have the patience

Medical bills (about 50% of bankruptcies) account for a lot of the credit card debt. Just for an illustration -- someone runs up a big charge right before Christmas or while on a family vacation, has an accident or gets sick, ends up in the hospital and can't work for quite a while. The hospital bills add up, the insurance runs out, the medical bills accumulate, the kids need food, shoes, school supplies, summer camp, a visit to the dentist, then there's the rent or mortgage to pay. . . . There's no or not enough money coming in, and you pay the electricity bill first. Meanwhile the credit card interest rate is rising steadily, you no longer have a bank account, no reserves, and, when you are well enough to go back to work, someone else has your job. You've been unemployed for months, maybe longer, and no one wants to hire you. The only thing that keeps you going is your credit card company, which is of course quite happy to continue loaning you money.

There are other scenarios. Sometimes people decide to try to realize dreams like opening a business or buying a house/car/furniture they think they can afford but really can't. They are overly optimistic. Also, some people shop when they are overly pessimistic -- depressed, and they feel nothing makes any difference. Alcohol and drug abuse can also cause people to lose their inhibitions and start spending big.

Student loans are a huge trap. Getting a degree doesn't guarantee that you will get a job that pays enough to pay back the loans. And student loans have a stranglehold on you. If you don't have a job or a job that pays well enough to let you pay your loans and still live, you defer them -- the interest accrues rapidly and is capitalized -- so that you pay interest on the past interest. You end up owing a lot more than you borrowed, and, remember, you can never go bankrupt on the debt. Graduate studies are particularly dangerous. I know someone with all but the dissertation PhD. in a foreign language from a not so great school who is stuck with $80,000 in school loan debt. In his mid-40s, he earns around $30,000 a year at a podunk teaching job. Figure out the math, and you will see that does not calculate. He hasn't reached for the credit card -- yet, but then he has never had any children, doesn't own a house and drives a very old car. Not everyone has his self control.

A lot of young people think they should be able to live as well as their parents. Their weddings cost what their parents' house cost thirty years ago, and, when they have to rent or buy a place of their own, there's not much available in the price range they can afford. They figure things will get better, take a chance, pay the rent from their income and run up the credit cards for everything else and bingo! They've just lost the debt lottery big time.

And then there is "GAMING," an entire industry that makes its money off people whose lives are so meaningless that they get a thrill from risking financial disaster for a few edgy hours. And how do you think they pay for the hotel room in Vegas -- with their handy, dandy credit card.

Oh, and one more, I have a friend -- a lonely schoolmarm -- who ran up a colossal credit card bill on the internet several years ago. The internet was new, and she fell for every scam it offered. Bankruptcy was her only way out. How sad. But for the grace of God . . . .

[Blue_Tires]

101. "Student loans are a huge trap."

you got that right...i could write a novel about my experience

[Scout]

98. If I sell my car...

how do I get to work? Public transportation does not go to too many places in a lot of areas.

And even where they have it, the service is for shit ... just ask Detroiters.

[conflictgirl]

116. Yeah, who needs a car to look for another job, right?

Everyone knows that managing finances in the world is just like it is when you're in college. :eyes:

Don't let some mainstream media report try to convince you that the average person filing bankruptcy went on big shopping sprees. Those people are noteworthy because they're the exception, not the rule, and the whole point the media is trying to pass along is that you don't need to feel bad about the new bankruptcy law because supposedly the only people filing are irresponsible anyway.

I hope your college is teaching you some critical thinking skills.

[conflictgirl]

117. I just saw your comment about "probably a harder life than what you've got

I can only hope you're being sarcastic. I'm married, taking 15 credit hours in college, have a part-time job AND three kids. Yes, your life surely sounds soooo much harder than mine. I don't know how you do it. :nopity:

[goodboy]

4. Two words: Predatory Lending (nt)

[elehhhhna]

8. 100K on9 cards? Must have a high income...

Also assuming this took some timem to run up so high.

[goodboy]

18. WHen I signed up for classes my freshman year at A&M, I got

a card with a 5K limit, and one with a 7.5K limit, and I didn't have a job even. So what's a poor college kid to do?


Abuse the SHIT outta them. I used them for everything and maxed the shit outta them within a year.


I'm 26 now, and I 'm still paying that shit off even though the accounts have been closed since 1999.

[elehhhhna]

20. Were you under-age at the time? Parents cosign?

Possibly illegal extension of credit to a minor, here.

[goodboy]

24. I was 18, no co-signer...I remember seeing a dateline about this

and it got so bad for a few of these students, they committed suicide...Then the creditors went after their parents. They would say, "It would be a tribute to your childs memory to pay off this debt"

[Blue_Tires]

102. i remember that Dateline VERY well

if only i saw it back when i was first starting college

and yes, at my lowest point (unemployed right out of grad school without the first job nibble in 10 months, and $47 grand owed in student loans/credit cards) i was going to kill myself...

Feb. 15 is my mini-'life day', since i planned to off myself on Feb. 15, 2002.

[oneighty]

6. People do game the system

They run up incredible debt then do the bankruptcy. Those that have 'Gamed' the system have led us to the new bankruptcy laws.

The 'Gamers' have ruined the bankruptcy path to a new beginning for all of us.

180

[elehhhhna]

11. Please show some stats on "gamers".

Sure they're out there, but the issuing card co's already have the right to dispute a bankruptcy. Most don't find it cost-effective.
Smller co's that offer credit (furniture stores, furriers, etc.) will show up and settle for $$ or the return of property. Gamers are not necessarily getting a free pass--unless it's on purpose from the card co's.

[oneighty]

23. I cannot elehhhhna

I am speaking from one personal case I am intimately aware of. Likely it is like mice, there are always more than one.

IMHO

180

[sandnsea]

16. NEVER met one, not in 47 years

I've never known anybody who did this and never heard anybody tell me about anybody who "gamed the system". Total financial dolts? Yes. Gaming the system? No.

Well, except corporations, they do it on a daily basis and it's no problem at all.

[elehhhhna]

28. I'm probaby a gamer if you think about it.

The same week I went over-limit on my last card I was in the Caribbean on vacation. (at a 200 dollar a week timeshare condo...got free flights from freq. flier miles...)

2 days later the Texas DOL Wage-claim division shot down my Husbands 15K claim for bonuses owed. Ignored all written docs and just blew it off.

Thus a spiral began...

[tsuki]

52. I wonder. TeeVee New$ seems so full of people that abuse their

cards, but print points out that medical bills and lay-offs seem to be the main culprit.

If you didn't use your cards for medical and died, would TeeVee New$ run your story 24/7? Would the Fundies march for you? </sarcasm off>

[elehhhhna]

99. Don't buy that emergency appendectomy if you can't pay cash.

[tsuki]

107. Everyone talks about the responsibility of the holder, but what

about the responsibility of the card company.

Every day, I make decisions about my business, and I have to live with them. I, as a small business owner, take the chance.

Now we have a business whose practice border on total irresponsibility. Credit card companies extend credit to those who have no business with cards.

If you go bankrupt, you are deluged with credit card offers. I was amazed when one of the people that I know who went bankrupt told me that. Why are they offering cards to people who they know are bad credit risks?

Where is their personal responsibility to make sound business decisions?

[elehhhhna]

108. You get card offers becasue you can't file again for 7 years.

[Media_Lies_Daily]

115. Bull. The incredible greed of the credit card companies has gotten....

...us all into this mess, and they insist on squeezing the last drop of blood out of every single turnip. And thanks to Herr Busch and the ruling fascist rightwing elite, the credit card companies have been given even greater leeway to beat us all over the head.

Yeah...the "Gamers" really beat the system...they lose their good credit which they took them decades to build up, and then face ridicule from holier-than-thou types like yourself.

[LisaL]

9. Very easily. You spend more than you can pay.

[mattclearing]

10. They are the people that they hold up to make the system less fair.

Just like the welfare moms that they held up to justify welfare reform.

You can't legislate based on worst case scenarios. People will always try to game the system.

If they really thought this was a problem, they would make it illegal to have that many credit cards without substantial financial reserves to back them up.

They just want to fuel peoples' outrage to jack up rates and make more money for the credit companies.

[elehhhhna]

15. Recent gamers: Donald Trump, Halliburton's Dresser Industries,

various airlines, and soon the US Government.

[mattclearing]

17. Word. n/t

[BurtWorm]

12. Get back to us when you are no longer a college student

and have had your card for longer than one year. Spend a little time in the plastic society and you'll see.

You got a card for the reason most people get cards, including those who wind up with massive debt.

I hardly ever use my card. I only use it when I know where the money is coming from to pay back any purchase I make on it. But I'm still paying back for debt I incurred ten years ago when my credit card was the often the only means I had to buy necessities.

Conservative fiscal values don't come naturally to people who have no money.

[SemiCharmedQuark]

72. Thank you.

It's amazing how obnoxious some can be about this. Ever hear of being laid off? One minute you are fine and the next you're struggling to make ends meet? I didn't "splurge" I paid the damn rent when I had no other options.

[Igel]

13. College kids and others that haven't learned self control

get themselves in deep trouble with credit cards. Buy now, buy now, buy now ... oops? I have to pay it off? At 14% interest? With my allowance?

Others have a valid reason: medical emergency, unemployment. A lot of those *could* avoid the debt by disposing of assets and lowering their living standards, but don't. It's tough to never eat out, have a boring but healthy diet, not have cable, etc.

A lot of people can't avoid the debt: insufficient assets. And many of those really, really minimize their lifestyle.

[Blue_Tires]

19. read here:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x1343758

couple of stories there...(granted, i never had 100 grand; but there was a story in the providence journal a couple months ago about a middle-class family that ran up $60,000 trying to keep up with the joneses (and the wife was an assistant bank manager, lol)...

many people: 1. don't think about the consequences of running up debt until it is too late, 2. absolutely HAVE to live in a lifestyle which they can show off to friends/neighbors, 3. are just THAT bad in making financial decisions

[nytemare]

21. I think a lot of it has to do with incomes not supporting families

When I was younger and got out of the Army, I was making 7 bucks an hour. I only had 20 dollars every two weeks to buy food with. The rest I was paying to credit cards that I used to buy my clothing and furniture. After I changed jobs and was making a bit more money, I went to consumer credit, with a grand debt total of something like 2500 dollars.

I have no idea how people with kids and lower paying jobs make it, and I can see how they can rack up some credit card debt to buy the necessities. The 100,000 dollars seems very excessive to me, though.

Credit has become a monster in a society where 30 years ago or so, one income earner could support a family with three kids. If the Clinton economy kept up for a while, I could see us getting back to that point, but we all know what is happening now.

[oldlady]

22. it's a consumerist society

$100,000 could be just furnishing a house, paying for a septic tank repair, fixing a roof-- who knows.

However, I recently became a grandma and watching my daughter and her new family has flooded me with memories of her childhood. There's so much pressure through advertising and other media to "do right" by your family/children-- and that usually means buying shit. I admit it-- the TV commercials really guilted me out at times-- why were all those kids playing in their private yards, dirtying their clothes, while the mom looked on and laughed from the sunny, screened in porch, then carried the laundry in a beautiful wicker basket through a spotless gleaming appliance kitchen to a large laundry room where the best detergent shone from an organized shelf of supplies. I'd look at my cramped little HUD housing apartment, with a twenty year old refrigerator and a stove we lit by hand, as my kids played on gray institutional tile from the 40s, and all my funiture had been pulled from the dumpster and our toys and books were all checked out from the public library (yes, our library had toys for check out). And I would just want to cry. I felt like such a failure. These were temporary moments, to be sure, but I remember them well. I warn my daughter to ignore them. They don't matter in the end. My kids don't even remember that the toys they had were borrowed. They swear the best Christmas was the one where I made a set of Little House on the Prairie dolls (true story) out of clothes and other stuff I pulled from the dumpsters. (I even made a covered wagon out of an old dresser drawer, wire hangers, cloth and embroidery hoop wheels).

If I'd had credit cards....I'd have gone shopping that Christmas, I know I would have.

peace

[mattclearing]

27. Thanks for that.

Your story illustrates perfectly the injustice of a society in which corporations dictate what is and is not a successful lifestyle.

[Career Prole]

39. You rock...I hope you know that!

You are an exemplary Mom!
:yourock:

[Lorien]

83. I second that!

:yourock: :yourock:

[SmokingJacket]

86. Great post.

It's nice to be reassured that kids don't remember hardship and temporary privation as the personal failure of their parents...

[Warpy]

26. Life gets a lot tougher down the road

but if kids in their teens and twenties knew that, few would survive to find it out firsthand.

Some of the credit card debt represents real abuse of the system, people who charged up lifestyles of the rich and famous without having the means to pay it back, not ever.

However, more and more, people with the worst debt loads are people who used those cards for absolute necessities like health care or daily living expenses while they were trying to start a business or were out of work through no fault of their own. Wages have simply not kept pace with inflation and have dropped drastically in real purchasing power since the early 1970s. People, especially those with children, have been forced to find other ways of making inadequate pay checks stretch to cover everything they need, and that means credit card debt in too many cases.

The problem with the bankruptcy bill the GOP blessed the credit card people with is that it doesn't distinguish between medical debt, or debt incurred to feed one's children during a period of unemployment and the real abuse of the system by stupid and heartless people.

[KharmaTrain]

30. Emergencies

Yes, there are many who go nuts with their cards...buying today and "I'll figure out how to pay for it tomorrow". I have several friends who dug themselves into bankruptcy that way...lured by "better rates" and ever increasing credit limits.

About 15 years ago, I got into trouble, but for a different reason. I had just lost a job and was in a legal dispute over how it was going to be resolved. This meant I couldn't find a fulltime job for nearly 7 months as this thing played out and had a wife and two small children to watch over and an ever-growing pile of bills.

The crunch became tighter and we decided we had to move back to Chicago (we were in Iowa at the time) so I could find some quick work and be back with family and friends. To do this, I maxed out my two cards to rent the trucks and get ourselves settled in a new townhouse. This put us in a $2,000 hole...which seemed insurmountable...especially when interest kept putting back what we were trying to pay off.

It took nearly 7 years to finally pay off that nut and the problems I had with the credit card companies is fodder for another string, but I can see how people, especially in a medical situation could be forced to do the same thing.

Today, those grim and agonizing days seem very distant, and I have cards that I use and pay immediately (I only use them when a debit card isn't accepted)...and pay cash and check for most expenses...living by that axiom "don't spend what you don't have".

Credit Cards do help when you're setting up a credit history...to get a loan, thus have some benefits if it's used wisely.

[Wcross]

31. Let me tell you about my friend.....

He is a recovering alcoholic and seems to have replaced his drinking binges with spending.
It started small after he bought a modest house. Someone convinced him he needed a card "just in case". He used it to purchase a few items for the home. He then started getting "0% card offers" and thats when he just lost it. A number of times he was bragging about his credit limits. He aqquired 6 cards with 10,000 dollar limits on them. He makes 25,000 a year and these companies are willing to loan him over twice his yearly gross income on installments!
Now, reality has set in. He can only afford to make his minimum payments. He has used all the home equity he can (125%), and if he misses one payment or is even late those wonderful 0% cards will probably shoot up to 20-30%. He can no longer buy things he wants let alone meet an unexpected expense. I figure that he will be able to pay it off if he sends in 500 a month for the next ten years.
I warned him early on that he was headed for trouble, I tried to point out that the money will have to be repaid. He scoffed at me for only buying with cash. Now, as any good friend would do- I am waiting to tell him "I told you so".

[elehhhhna]

42. He should- probably file Bankruptcy asap.

[gizmo1979]

33. If you lose your job

if you have catastrophic medical bills.When I lost my job I had 6000 in the bank and almost zero on my credit cards it doesn't take long.

[Orangepeel]

36. some bad luck, some poor planning, some lack of control

there's no one reason

For example, a family could be going along, doing everything right, and then have several unplanned unfortunate events (e.g., the roof collapses, a lay off) and a catastrophic health care event. Other people live way beyond their means -- buying their kids too many video games, going out to eat all the time, etc.

[SmokingJacket]

37. Please lay off the superior attitude.

You can be smug when you actually have a life (but it will still irritate people).

People have lots of reasons to get into debt, but that doesn't mean the cc companies have the right to exploit the hell out of them.

Right now I have $65 on my cc, but that's because I'm lucky: my family has no major health issues and our house is holding up and my car is solid. Life gets complicated once you get out in the world, and you never know what's going to hit you. Turns out my kid needs major speech therapy -- not covered by insurance. If I didn't happen to have the money for that, YOU BET I'd go into debt to cover it.

Judge not, kiddo.

[Career Prole]

40. Well said, friend.

Well said indeed. :thumbsup:

[LoganW]

41. Oh gee

You've got a house and "solid car". You've really got it rough compared to me.

[Left Is Write]

47. It also sounds like he has a good deal more

to be responsible for than you do.

Is this a pissing contest over who has it rougher? Let me clue you in to something - people do not generally like to be given advice on how to live their lives the "right" way by someone who has a good deal less life experience than they do.

That's not to say a younger person's opinions are not important or valid, but the superior attitude is what is putting people off.

[LoganW]

50. Where did I give advice?

What superior attitude? I just don't see how you can run massive credit card debt with out some emergency situation. My first post I acknowledged there are of course valid reasons. I'm talking about the people that just decide to go out and buy a big screen TV and every accessory they can find. Not the person that got in a car wreck.

No it's not a contest. But the original poster wants to accuse me of having it easy when it's clearly just the other way around.

[Left Is Write]

51. He did? He "accused" you of having it easy?

No. He asked you not to judge others.

[LoganW]

53. Really?

"Do you still live at home or what?"

That's pretty much insinuating it with the top poster.

And then this one down here "You can be smug when you actually have a life "

Again, same thing.

[Left Is Write]

54. Someone else said that, not the poster you were responding to here.

[LoganW]

55. Please see the edit

nt

[Left Is Write]

58. Perhaps it isn't worded in the best way, but

I believe his point is that when you have more life experience, you may be better able to put yourself into someone else's shoes before you choose to judge them.

[LostinVA]

87. MOST people don't go into debt because they buy a big screen TV

Most people go into debt because they lose their job and health insurance, and do everything they can to keep their house and take care of their family. Maybe you have to pay for a funeral. Just gonna let your mother be buried in a pauper's grave by the state? Maybe you have a father who has $700 worth of meds every month and you help out. Maybe your kid need something not covered by your health insurance -- hearing aids, wheelchairs, speech therapy. Maybe your home insurance won't pay for that hole in your roof the storm caused. Maybe you had to get a transmission in your car -- $1800 for a rebuilt -- just six months after your cooling system went. Maybe your cat you've had for ten years needs an operation or she's going to die, and she's like family to you. Maybe your kid get an academic scholarship to college, but he needs $500 for textbooks. Maybe you had to default on your student loan because you had to have your appendix taken out/ Maybe maybe maybe.

Respect those of us who have lived your life, Logan, and are aware that what seems rough to you know will seem like Utopia in ten years. After college I worked two jobs, lived in a horrible basement apartment, made $6.50/hour average, and literally LIVED on mac/cheese made with only water, eggs, and oodles of noodles. I didn't even have a car, got my furniture and clothes from the St. Vincent DE Paul Society at church, didn't have cable, and didn't have a phone for a year. Am I trying to "out piss" you? Hell no. You just need to understand and learn that nothing catastrophic needs to happen to get you into debt -- you just a thousand nibbles of Life.

[Lorien]

62. Most of us have already done the poor college student

thing. college life was a welcome relief to me; the year before I entered my freshman year I was living with my boyfriend in the ghetto area of town (yes, bona fide ghetto-gangs, shootings, heartbreaking poverty, etc.) in the basement of a family's tiny post war home. My boyfriend and I were the only white people for miles, so I couldn't walk alone to the bus stop (no car for either of us) because there were racial tensions in that area. We lived on Ramen noodles and the occasional trip to McDonalds. To me, moving in with five roommates freshmen year-in a place with windows and LAMPS (no bare bulb in the concrete ceiling)-was like living at the Ritz. The food at the cafeteria was amazingly good compared to what I had become accustomed to. Plus, no one was beating me when they had a bad day!

It's all relative. Nobody should assume that just because someone has a mortgage and a working vehicle that they "can't relate". Besides, ask a single parent how "easy" it is having those things, and they'll tell you that college is fondly remembered as a time without serious concerns or fears.

[SmokingJacket]

64. Did I say I had it hard?

I don't -- I've been lucky and haven't accumulated any debt. But not everyone has it so easy. My sister's husband had a mental breakdown and started beating her. He ran up credit cards and quit showering. He wrecked the car. They divorced. He wouldn't pay for his half the mortgage on their little house, so she had to declare bankruptcy. That's how things happen. It could happen to you! So: don't be so judgemental.

(Incidentally: poverty can be a ball when you're young and free and healthy. I once lived in a house with no kitchen: I scrabbled at my job washing dishes for leftovers in order to eat. I used to live on $75 a week (in the early 90's -- sharing a dump with a bunch of insane people) and felt pretty rich because my share of the rent was only $150 a month. I finally got my own car when I was 25, because a boyfriend dumped me and left it as a consolation prize... it was about 15 years old, and I paid the mechanic with six packs of beer...

Ah, nostalgia!)

[Left Is Write]

65. And my apologies for calling you a "he."

I should have checked your profile first. ;)

[SmokingJacket]

69. No prob... I like being genderless!

At least in cyberspace.

;-)

I feel sorry for ragging so hard on the poor kid, actually. I felt pretty righteously anti-consumerist too at that age, and still do.

But now that I've grown up, I see more people in trouble because of things outside their control. I actually know no one in debt because of greed and laziness... though I'm sure they exist.

[SmokingJacket]

90. You deserve credit for not falling into the consumerist trap.

So I apologize for implying that you have no life. Of course you do -- I'm sorry. :toast:

But it's unpleasant to be lectured on the subject of financial responsibility by a college kid.

:crazy:

[VOX]

88. A-bleeping-men, SmokingJacket!

Beautifully stated. :toast:

[ramapo]

43. Irresponsibility often, rarely need

It's pretty easy actually...our consumer society says you need to buy lots of stuff in order to be successful. Credit cards make it sooooo easy and you only have to pay off a small amount each month. Of course that is your undoing because you quickly find yourself in an untenable position...Interest accumulates quicker than you can pay it off (especially at 25%+).

My dad got himself in this position many years ago and his life was miserable as he worked to stay one step ahead. I ended up having to pay off some of his debts late in his life just so he could relax a bit.

I learned a valuable lesson from him...if you can't pay for it then don't buy it. There are few things that we really "need" that badly.

[LoganW]

45. I don't get this though

"society says you need to buy lots of stuff in order to be successful"

You mean commercials on TV or something?

[ramapo]

79. Commercials, TV, magazines, et. al.

The old keeping-up-with-the-Joneses syndrome. Gotta have a bigger house, better car, shop at the 'best' stores and so on.

If you don't, some will brand you a "loser", so charge your way to success.

[Terran]

97. You don't get that?

Do you live under a rock, or what? Do you watch any tv, read magazines, use the Internet, have any interaction at all with the outside world?

Oh wait, I forgot how insulated college kids can be. :eyes:

[Lorien]

44. Crappy health insurance

an accident and several other serious health issues put me into debt. My health insurance was said to be "highly rated" (I pay for it myself because I'm self employed) but it has yet to cover a damn thing. I once had $80,000 in savings-in my early thirties, no less-now I'm down to a few grand. Medical costs are un-freaking-believable these days. God forbid you should ever need to take a trip to the emergency room!

That said, I think the pressure in this country to consume and keep up with the Joneses ruins a good number of families. A good book to read on avoiding the pitfalls of consumerism is "your money or your life" (can't recall the authors offhand). Our corporate owned government and their RW radio shills are only making things worse by insisting that NOTHING has value unless it can make you rich. Studies have shown that personal relationships, time enjoying nature and personal creativity are what brings "happiness" to most human beings. Our culture promotes long work hours and TV viewing instead of time with family and friends, our government doesn't want to leave any nature behind for us to enjoy, and our culture sneers at nearly every art form as pretentious and pointless (unless it makes a person rich, of course). People consume because of advertising and the desire to fill their empty lives and time with SOMETHING. It's a habit that will eventually destroy us.

[alarimer]

46. medical bills

And probably some people use personal cards to keep businesses running. You cannot just play the "personal responsibility" card- until you have been in that situation you rally shouldn't judge.

[Tansy_Gold]

48. One example does not a trend make

1. Friend's ex-wife has good-paying job, two kids to support. She lives beyond even her comfortable means. At the time of their divorce, he arranged to get her finances squared away so she could live comfortably and provide for the kids (only one of which was his, by the way). In six months, she had run up credit card debt, wiped out all her equity in her home with second mortgage AND refi, bought a new car -- and filed for bankruptcy and wiped out $68,000 in credit card debt, virtually all of which had been spent on toys, eating out, new shoes, etc. In other words, NO essentials. She still makes $75,000 and is going right back into debt.

2. Brother was in the middle of ugly divorce in which his soon-to-be-ex dumped two young children on him. Older daughter fell at school and broke her arm; school insurance company said not covered. He didn't have $ for lawyer to fight the claim, went into $40K credit card debt with orthopedic surgery, therapy, etc. Time off work to care for young children cost him his job, was suckered into self-employment franchise scam to tune of another $40K. Escaped from scam with only $5000 lost, but had run up another $30K in cc debt to live on. Bankruptcy.

3. Cousin abandoned by husband and left with his $100,000 gambling debts on credit cards. She had a good job and got intimidated into paying it ALL off, yep, every penny. But when she lost her job and was diagnosed with cancer, she had no options to survive but to run up bills on those same cards all over again.

4. Young couple, friends of my daughter, just out of college with student loans to pay off. Both obtained good jobs that required "entertaining." Purchased nice house with 0 down-payment, credit card debt for furniture, etc. Then her father was killed in a car accident and her invalid mother moved in with them. Young wife nearly has nervous breakdown from stress, chooses to change jobs to have better hours at home to take care of mother. New job goes belly-up, loss of income, massive debt now looming. Husband is now in danger of losing HIS job because unable to "entertain" at home.

three out of four admittedly anecdotal examples have nothing to do with poor planning, poor spending habits but rather with circumstances beyond control.

Don't get suckered in by the right wing propaganda -- not about how YOU should use credit or about how OTHERS already have.

[tsuki]

66. Three bankruptcies that I am personally aware of:

1. Husband no longer able to work because of prostate cancer and MS. Wife works at a lower paying job. Husband cannot drive to works so she must take time off. Medical insurance is PPO. Pays 80% unless doctor is not in network, then it pays 60%. No oncologists in the network. Filed for bankruptcy.

2. Husband carpenter. Lives in a trailer, frugally. Wife works. Has medical insurance. He is diagnosed with rheumatoid arthritis and cannot work. Same story.

3. Contractor runs up bills on one of his companies, construction. Files bankruptcy on his construction corporation. Keeps large house, cars, land speculations with no disruption to his lifestyle.

So who are the main abusers? I don't know. But if you cherry pick one example without looking into the entire problem, you are not getting a true picture.

[KayLaw]

56. I read someone's story on another site

The usual thing, an illness coupled with a job loss. But this couple went to a "counseling service" that arranged for lower payments on their cards. While going through the process, the couple couldn't use their cards but couldn't close the accounts either and they were hit by "inactivity fees!" I don't think they can ever pay off that sort of debt.

I do see a lot of pressure out there to spend and I hear people who post on a Disney site say they really can't afford their expensive vacations but feel taking their kids to Disneyworld is part of being a good parent.

Thank goodness my mother left me a little money when she died. My son has autism and we spend thousands each year on his medical expenses, even though we have excellent health insurance with Aetna.

[Left Is Write]

61. Inactivity fees? And that's legal?

I have cards that go for months - longer in one case - with no use at all (and no balances), and I have never been charged an "inactivity" fee.

[KayLaw]

73. I just did a Google search

I typed in "inactivity fees credit cards" and got over 100,000 hits. I know it seems hard to believe--and quite evil--but it seems to be true.

[NNguyenMD]

59. unexpected loss of employment, medical bills, or tragic death of a

bread winner can drive a family into conusmer debt if the hard income is lost or going to paying medical bill, and the family needs to make car, mortgage, and tuition payments with something. That something is often a credit card.

[Boomer]

60. Can you spell "temptation"?

As you stated -- and other posters have consistently ignored in their indignant replies -- one can understand getting into debt for basics when you're facing a crisis like unemployment or hospitalization.

But the puzzle is the people who get into massive debt for luxury items. Of the three friends of mine who are carrying ruinous credit card debt, this has been the root cause regardless of income level.

Family #1 - parents and two kids, probably qualifies as poor based on income for a family of four. But over the last few years they've bought a large screen TV, a new living room suite (old one was just fine), a computer system, and endless bikes, drum sets, skates, balls, you name the toy for their two sons. If the kids break a toy, they get a new one.

Family #2 - wife and husband, both working at professional level jobs, no kids. Ran up credit card debt on entertaining friends, eating out, vacations overseas, designer clothes AND educational debt for returning to graduate school. If not for an inheritance that finally bailed them out, they would have continued to spiral into bankruptcy. Claim they've learned their lesson. Hope so.

Family #3 - single professional woman making 3-figure salary. Has run up $40,000+ in credit card debt buying the best quality of anything she wants, whether its face cream or a computer. Her high salary maintains the debt... for now.

The one thing these diverse individuals have in common is that no matter how little or how much their income, they spend more. And they spend it on non-essentials, items that make life pleasant but are far from necessary to basic survival.

I can't claim the high ground on that attitude. Although I always stayed out of credit card debt, I spent my income down to every last penny. My luxury items were too many pets and a cable TV suscription. Not exactly high living, but still, more than I SHOULD have had based on my income.

It's difficult to avoid the temptations of a consumer-based society that is constantly dangling very pretty little toys in front of us. It's hard not to feel deprived when so many other people are enjoying themselves with things, things, things.

[mr blur]

67. Of course, if your country had a national health service,

People wouldn't have to worry about suddenly having to pay for emergency treatment, drugs etc. And if we didn't live in such "Buy! Buy! Buy!" societies. There was an ad. on British TV a while ago: "Are you embarrassed by your mobile phone?" WTF?! I don't even have a mobile phone but if I did I wouldn't be desperate to find the money for a new one because some clown told me it was "embarrassingly" out of date.

[Dark]

68. There are people who are stupid enough to do this. Look at Bush.

NO ONE OWES MORE THAN THE FEDERAL GOVERNMENT. But Bush is given a long leash by his 'mandate' and suddenly the US goes from trillion dollar surplus to trillion dollar debt.

Make no mistake, most bankruptcies are not because of binge spending.

But they certainly do exist.

There are people out there so stupid they think that the money just appears out of no where.

[neebob]

70. Okay, so you're responsible.

Did your parents teach you that? If so, congratulations! Let's hope you never find out how the rest of us manage to rack up credit card debt.

Number one among all the reasons that I'm pretty sure have been covered already is this rule the credit card companies have: THE LESS MONEY YOU HAVE, THE MORE YOU HAVE TO PAY. It's not just the credit card companies who have that rule; they're just especially predatory about it.

Again, I hope you never find out.

[SheilaT]

71. Even though there are often

common themes, such as job loss or medical expenses, each story is different as several others have posted.

The credit card companies are, in my opinion, highly responsible for their irresponsible credit granting practices.

When our oldest started college four years ago in another city, we helped him open a local checking account but had him turn down the credit card offer. He already had a credit card, his name on an account of mine that he was the only user of. But he did get a debit card, and since the debit card allowed him to make purchases even if there was no money in the account, contrary to how we thought that kind of card worked, he wound up overdrawing his account several times and paying several hundred dollars in overdraft fees.

It's all too easy to condemn others' buying habits. But we live in a world in which we're surrounded by images of consumerism. On TV even working class people are shown as living with most of the material possessions anyone could want. There are no realistic images of struggling, or what happens when a job is lost or uncovered medical expenses pile up. Nope. All we ever see are people living in clean, new, well-kept homes. Never a disabled child, or a chronic medical condition that requires hundreds or even thousands of dollars of medicine, therapy, or equipment each month.

But you're actually making an excellent start. It is useful to have a credit card for emergencies, and not spend more than you can pay off before the grace period. Just understand that not all who get overwhelmed by debt are irresponsible spendthrifts.

[SemiCharmedQuark]

75. Oh what a load of crap!

Try running a household! Do you have health insurance? Are you sick? What if you get laid off? Oh right...you have a friend to catch you if you fall. Rent is usually around 1000 dollars per month in the cities and at least 500 per month in the burbs. A few months of rent on the credit cards while looking for work and voila. Debt. And it builds and builds and builds.


There are a lot of good people in THAT kind of debt. There are some that splurge, yeah, but I haven't met any. Only people struggling to make ends meet.

[SOS]

76. Answer to original question

"How can people get in massive credit card debt?"

1. job loss
2. medical bills
3. death of spouse
4. divorce

These four reasons account for 87% of all filings.

[alcibiades_mystery]

78. Why did the CC companies continue to extend credit after, say $50,000?

Don't the companies have some responsibility in the matter? Shouldn't they be responsible for evaluating risk? If a responsible lender took a look at this family and said "They are not responsible borrowers, already having racked up $20,000, or $30,000, or $40,000 - with little capacity to pay it off, long or short-term," then these people, irresponsible as they are, wouldn't be in their position.

So, why were the companies so irresponsible to continue to extend credit to obvious deadbeats? If I buy debt secirities on the market, I am informed in advance, by law, that there are a number of risk factors involved, and that I may lose some or all of my initial investment: this includes purchase of US Treasuries, which, while backed by the full faith and credit of the US treasury, continue to imply some risk. So, as a lender (for that is what a purchaser of debt securities is), I am asked to assume some risk. I am asked to make a reasonable evaluation of risk based on the information I have about the capacity of the borrower to repay. Can you explain why credit card companies - whose very business is debt and risk evaluation - are somehow exempted from this basic operation of assuming some risk in return for the interest they accrue? Somehow, the $100,000 is the sole responsibility of the irresponsible borrowers, but not at all the responsibility of professional risk assessors who continued to extend credit to deadbeats? That makes zero sense to me.

[Princess Turandot]

84. Who pays for your tuition & health insurance?..nt

[Logansquare]

85. I know a couple who got into $100,000 of cc debt

I don't know about the couple you saw on TV, but the people I know had the *gall* to have a disabled child who needed intensive therapy and her mom quit her job because it was cheaper than hiring a full-time caregiver. Then the STUPIDITY of these people--he got fired!!! He was over 50, so they scraped by on COBRA after he lost his insurance, even tho it didn't cover all of their child's care, and then he couldn't find another job for over a year. When he did find another job, it paid half of his previous one, and offered fewer health benefits. In the meantime, they had second mortgaged their home, and run up cc debt just trying to pay for doctors and medication, etc. What a bunch of IDIOTS, HUH?
Since you're a sophisticated college student, you probably understand sarcasm, right?

[Hippo_Tron]

89. Medical Bills

But hey that's not my problem. The same people who are in deep debt because of these medical bills and now will probably not be allowed to declare bankruptcy because of the new law that just passed are overwhelmingly the same people who voted Republican last November because they are more worried about the queers getting married. They get what they deserve.

BTW, my deepest condolences to those who are struggling financially and voted for Kerry this November.

[tammywammy]

93. Medical bills, loss of a job, etc

I've seen people incur debt because they lost their job, and couldn't get one for quite awhile. Credit cards put food on the table.

But I've only seen 1 person that incured massive credit card debt, because "she had to have it." She goes shopping each week, has been evicted from an apartment, had to have that $200 digital camera, had to have that laptop, is constantly late on her car payment, etc. She could have chosen to live a little farter away from work in an apartment that was only $450/month (but still a safe area), but no, she had to live in a more upitity area at $700/month. Her parents used to "help" her out, but they've cut her off. Now, she scams money off her grandparents. She's the kind of girl that's looking to marry rich.

But that's only one person, I've also personally known more people rack up the debt because they've lost their job/medical bills.

[Tactical Progressive]

94. Who is paying for your college?

It sounds like you're getting little more than minimum wage. That's enought to split rent and such, but it doesn't sound like enough to pay tuition and books etc.

The question was asked earlier and not answered.

[Terran]

95. I hope this thread has opened your eyes

I guess it hardly needs to be said again, but all of this stuff has happened to me:

1. loss of job
2. uninsured medical expenses
3. uninsured damage to home
4. unavoidable travel costs (my father's death and my partner's mother's death, both 2000 miles away)
5. and of course, repairs to that essential tool, my 1991 Pontiac Grand Am (the only car this household owns).

And every bit of that was paid for with credit, because I make barely enough to make ends meet (and that's working a second part-time job).

In real life, shit happens. It will happen to you eventually and then I hope you'll have more understanding.

[Name removed]

96. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Bridget Burke]

100. What about your college loans? That's pretty significant debt.

Are you able to pay your way through college working only part time?

Or are your parents taking up the slack?

[leftofthedial]

105. you are just so cool

[Cleita]

109. With inadequate health insurance it's easy to run up

that kind of debt if you have a medical crisis in your family. Other emergencies will eat away at your credit too, like having to take time off work to take care of elderly parents in an emergency or a child. Believe me, it's not hard. There are people who are irresponsible too, but I don't think they are in the majority.

[Media_Lies_Daily]

110. I just love cocky young posters that have never had much in the way of...

...any responsibilities such as a house, family, kids, medical bills, business costs, college bills, to name but a few, and then want to lecture those of us that have lived in the real world for thirty or more years.

You think you have all of the answers now. I can't wait to see what you have to say after you've experienced the real world for a while.

The only thing absurd in this thread is your original post.

[Dastard Stepchild]

111. Well howdy... I have massive debt!

:hi:

Wouldn't be my first choice, but shit happens. Life has a way of making the unpleasant seem palatable when faced with limited options. Food or credit card debt? Why... I believe I'll choose food. Death or surgery during period of illness? I'll take the surgery.
I gather these would fall squarely under the "emergency" category. As I grow older, and as I become more of the independent adult, I am shocked to find how more and more things can easily become an emergency as one tries to make their way in the world.

[WinterStorm]

114. Men or women?

After your job is outsourced and your unemployment runs out you can live on them. You take one credit card and pay another one with it after the limit is run up you go on to the next one. Your building your credit as you go along so they keep sending you more cards. Sooner or later it comes to an end.

[Liberty Belle]

118. 1/2 of all bankruptcies are due to medical debts.

Most of those people HAD health insurance.


You're no doubt young and healthy. But what happens when you have an emergency medical crisis and can't pay the hospital bills any other way?

Or you own a house, and you have damage that your insurance policy won't cover--like a mudslide or flooding? (Unless you live in a designated flood plane, you generally can't buy flood insurance.)

Or the transmission goes out in your car, the same month you have to pay the college application fees for your teenager?

Or you've just bought new furniture, and then you find out your job's been outsourced to India?

Sure, there are some people who are foolish and simply buy too much stuff that they can't afford. But many cases of serious debt are due to circumstances beyond people's control.