The more I think about this.. the more it freaks me out..
I'm starting to hear stories about more and more people who have gotten themselves into serious trouble with the whole credit is "free money" attitude.
My ex boyfriend managed to rack up about $13k of personal debt in a six month period, (he's 22), and for whatever reason the banks are STILL increasing his credit limit. He earns what I would consider a lowish income (around $40k) - and he has no way of supplimenting that income without working a second job. He has no plans to pay off this debt, (because he couldn't!) - and I just can't understand why the banks keep sending him credit cards.
I have spoken to my sister, and she has friends who are now turning 20, got their first CC at 18, maxed it out, and now owe anywhere between $4-$7k on credit because they just keep getting more increases. When you are a uni student, to earn $4k quickly is a pipedream - so the interest goes up, so do the repayments.. and really they'll never pay it off..
Another guy I know has $30k of personal debt at age 26 - he managed to cash in some stocks for $50k - but rather than paying off the debt, he purchased a new car with $10k deposit and now pays a $2k a month lease (ARGH!) - and has spent another chunk of it travelling for a few months.
These are just a few stories I know about..
I recently applied for a CC with citibank (with the 6.9% transfer rate to pay off my $4k on my card) - and they gave me a card with a 10k limit! I cut it up as soon as I recieved it in the mail, because the last thing I need is a 10k debt on top of my old 4k one!
Even though I only earn about $40k a year, I now have access to $15k in credit. Where is the logic in that?
It just seems SO wrong - I consider myself lucky because I can do heaps of freelance work to pay down my $4k relatively quickly (which I'm doing so I can get my next IP) - but what about the rest of the population that can't do that?
There must be some serious long term consequences of stuff like this - and the funny thing is that when I speak to people about credit - the attitude is "it's free money" - well its not because they are charging you to have it - but it just seems like most people aren't aware of this. Or perhaps they just don't really care.
What will be the consequences of this attitude? I think its especially prevalent amongst my generation (Yers) - because we expect everything NOW. No such thing as saving when you can buy it on credit and never really have to pay it back..
Long term consequences? A very poor generation Y? We'll have the coolest clothes, coolest gadgets and coolest cars but I wonder what happens when we start having babies and hitting 50.
Any thoughts?
I'm starting to hear stories about more and more people who have gotten themselves into serious trouble with the whole credit is "free money" attitude.
My ex boyfriend managed to rack up about $13k of personal debt in a six month period, (he's 22), and for whatever reason the banks are STILL increasing his credit limit. He earns what I would consider a lowish income (around $40k) - and he has no way of supplimenting that income without working a second job. He has no plans to pay off this debt, (because he couldn't!) - and I just can't understand why the banks keep sending him credit cards.
I have spoken to my sister, and she has friends who are now turning 20, got their first CC at 18, maxed it out, and now owe anywhere between $4-$7k on credit because they just keep getting more increases. When you are a uni student, to earn $4k quickly is a pipedream - so the interest goes up, so do the repayments.. and really they'll never pay it off..
Another guy I know has $30k of personal debt at age 26 - he managed to cash in some stocks for $50k - but rather than paying off the debt, he purchased a new car with $10k deposit and now pays a $2k a month lease (ARGH!) - and has spent another chunk of it travelling for a few months.
These are just a few stories I know about..
I recently applied for a CC with citibank (with the 6.9% transfer rate to pay off my $4k on my card) - and they gave me a card with a 10k limit! I cut it up as soon as I recieved it in the mail, because the last thing I need is a 10k debt on top of my old 4k one!
Even though I only earn about $40k a year, I now have access to $15k in credit. Where is the logic in that?
It just seems SO wrong - I consider myself lucky because I can do heaps of freelance work to pay down my $4k relatively quickly (which I'm doing so I can get my next IP) - but what about the rest of the population that can't do that?
There must be some serious long term consequences of stuff like this - and the funny thing is that when I speak to people about credit - the attitude is "it's free money" - well its not because they are charging you to have it - but it just seems like most people aren't aware of this. Or perhaps they just don't really care.
What will be the consequences of this attitude? I think its especially prevalent amongst my generation (Yers) - because we expect everything NOW. No such thing as saving when you can buy it on credit and never really have to pay it back..
Long term consequences? A very poor generation Y? We'll have the coolest clothes, coolest gadgets and coolest cars but I wonder what happens when we start having babies and hitting 50.
Any thoughts?
