I was hanging out with some friends yesterday, and after eating ourselves into a food coma, we were lounging around and watching a movie on Comedy Central. During one of the commercial breaks, one of those debt management commercials came on. At some point during the commercial, they mentioned being able to help even if you were tens of thousands of dollars in credit card debt.
One of my friends snidely remarked, “How do you even get into that much debt?”
The comment got me thinking and wondering — why do people fall into credit card debt?
Despite being a frequent user of credit cards, I’ve never carried a balance on a credit card. In fact, I’ve never even come close to carrying a balance on a credit card. I’m guessing my friend who made the comment has a pretty similar track record.
However, I do know that some of my other friends have been or are currently in credit card debt. Some have had better reasons than others. Med school applications, a new computer, video games, furniture, and car repairs are just a few of the stories I’ve heard. I’m sure there are many more that remain untold.
So how about you? Have you fallen into credit card debt? How did it happen?
If you enjoyed this post, subscribe to my RSS feed or via email for free updates.
{ 2 trackbacks }
{ 14 comments… read them below or add one }
I go through cycles. I practice responsibile CC use for a few months and then I will have a abad month. My biggest problem is when I go out. Drinks/food always adds up. What has gotten me lately has been paying for group things on my card and not receiving the money for a while. Or someone will give me cash at a bad time and I will spend it. It always kills me! I have managed to keep the credit card manageable, which for me, is under $1k.
Personally, when I was in debt the biggest issue was believing the hype from books, programs, ebook, and anything I bought into that promised riches.
So I want from one to the next, searching for the easy road.
The first year I had my credit card, I was really good with it. I never went over my actual budget (I use my card for everything and pay the balance at month end). But in the last 7 months each month I dread looking at the bill. I’ve been inching closer to not being able to pay it off at the end of the month…usually by caving and using my savings to pay it off. Most of the expenses are because I moved in with my bf, and live closer to my friends. Going out for dinner, shopping together, and still needing my everyday expenses are getting the better of me.
Being a girl, and having issues with waiting for things I want, this could become a problem. If I didn’t have an utter fear of being poor all of the time, I wouldn’t make sure to watch my spending more….
We’ll see if I can cut back on my expenses and keep my card balance back to where it needs to be.
I think a lot of people go into debt when they are in college and/or first starting out. People don’t necessarily understand money or the cost of things when they are that young. They think they’ll graduate form college and have big jobs and not have to worry about money anymore. So, they charge books and alcohol and pizza, and all the other assorted things that a college student “needs”. Either that, or people buy their first apartment and need all sorts of furniture, kitchen items, etc. etc. and since they don’t have big salaries or savings yet, it all goes on a credit card.
A first salary out of college can seem like a lot of money to people, especially people who don’t understand how things like taxes, rent, utilities, insurance, etc. all add up to eat a huge chunk of that paycheck. So, they think they’ll just pay it all off.
And then, once they are started with credit cards, they are paying more for everything because of the interest, so they have to stretch their paycheck farther, and more thins end up going on the cards. It is a vicious cycle- once the credit card dependency starts, its very hard to stop!
I don’t entirely agree with that.
When I first graduated college I counted my pennies (literally) and didn’t waste any of it. When I moved out on my own, my roommate and I didn’t buy any furniture or excessive crap. We understand what it was like to not have money, therefore, continuing to not have a lot was easy. I think as a person lives with money, they tend to spend more because they forgot what it was like to be poor and to know you can’t afford things.
I was thinking after while, if at the end of the month you can either carry a small balance on your card because you spent too much, or is it better to take out of savings to pay for the extra charges? What do you think?
I racked up my credit card debt while in college but although I was “young” I knew exactly what I was doing. I was well aware I’d be facing big bills in the future and I completely understood money. I just didn’t have enough of it. A lot of the debt went towards wants, clothes, new stuff for my house, going out to eat. But a lot of it also went towards paying bills I wasn’t making enough to cover. I wasn’t living a lavish life by any means, college is just really expensive when you’re trying to work a crappy part time job on campus that barely pays above minimum wage. Actually, I got 3 jobs and still had to use my credit cards to help. I wish I hadn’t needed to use them but I am now gladly paying the balances down, one at a time. I got myself into this mess and I will get myself out.
It’s so easy to use, and so easy to pay the minimum thinking you are safe. People just need to be educated about credit cards more and how dangerous they can be when using them irresponsibly.
I go by the simple rule of- pay your bills first, and if you REALLY want something, save for it, but never leave yourself broke.
That said, I fell into credit card by paying for college. I am single. I am white. I am a girl- WITHOUT a kid, and my parents make a lot of money, but didn’t help with school- but did me the WONDERFUL favor of CLAIMING me come tax time (which they shouldn’t have because not only did they not help with school, I didn’t live with them either.)
I was on my own, renting a room from someone, working one full time job, one part time job, and going to school full time. Because of all of those things, I wasn’t eligiable for much financial aid ($500 at most)- AND I went to school in Washington State (which is now named one of the most expensive places to go to a University in the country.)
I ended up having to put tuition on my credit cards, and gnaw on my arm when I got hungry. Fortunately, I did graduate at the top of my class, and was able to get a GREAT job just out of school- which allowed me to dig myself out immediately.
I didn’t stop living like a student though- and still haven’t.
I was $15,000 in debt 8 months ago, and now I am only $8,000 in debt. 7,500 of which is a student loan, and the rest is a credit card balance.
I suspect in a year I’ll not only be debt free, but dancing around with great credit, a good job, and hopefully, some strong savings.
It wasn’t easy though. Its hard working in a professional environment, being surrounded by people who have ‘arrived,’ so to speak, and then going home to my closet sized room, and eating ramen. I actually shouldn’t speak in past tense here- Its still happening.
I think many people who have never fallen, and I do mean fallen, into credit card debt see everyone who has as irresponsible. I never used a credit card when I was in college. I had student loans to pay for my living and tuition expenses and a part-time job while in school. I had seen a lot of reckless use of credit cards (and credit card companies setting up tables on campus?!?! Talk about the REAL recklessness! “No job? That’s okay…you’re still a dependent, right??”) and my father had educated me financial by having me pay all the family bills and balance the accounts for my $5 a week allowance.
My credit card debt came after college. I had a full-time, hourly job that I did my best to support myself with in a city with a high cost of living compared to the average wages paid. Two things did me in: car repairs and family issues.
I had meager savings from my job after paying bills and such every month and there was just no possible way for me to come up with $700 at the drop of a hat for car repairs. And, of course, I needed the car in order to work. The amount of time spent fixing car or waiting for car to be fixed meant not being paid if I wasn’t at work…have this happen a couple of times, and there’s some of the debt.
The family problems didn’t put me in a situation where I had to make any additional contributions to my family, but mostly it made me have to take time off of work. Bills and the need to eat didn’t stop during this time, although my paycheck did. Also, although this wasn’t a part of my case, I’ve see lots, lots, lots of people who had medical bills/prescriptions that were necessary, uninsured (even if they had medical insurance) and had to go on credit cards.
I made a mistake once and paid my bill twice in a billing cycle and then “missed” a payment the next month. No sympathy from the credit card company on that one. My interest rate went from around 10% to 29% and my min monthly payment doubled while my tight income and budget stayed the same.
It took a swift kick and some major life changes to get me to finally pay off this debt, and in order to do it, I had to rely on the incredible generosity of a friend letting me live with her for free for several months. I don’t think I could’ve done it otherwise. I carried credit card debt for about 6 years before I did this.
Anyway, I personally think credit cards companies are evil. I live a really low-key, low-consumption lifestyle these days and just tell myself that there is very little I “need” helps keep my finances in check. My anger at the way the credit card companies are run and how they are able to freely ruin peoples lives with very little regulation is enough to make me want to stay away from them also.
I’m on disability. My husband came into the relationship with defaulted student loans and needing some money-intensive oral surgery (as in: all his teeth out, dentures in, to the tune of about $7k). He was working mostly part-time, since he also has health problems. Between health care costs and unexpected costs — like new clothes when all the steroids caused him to gain 20 lbs — we got into debt. We’re done with the student loans (that is, until we discovered there was one more, which had been misclassified under someone else’s name/SSN) and are down to under $8,000 on the credit card debt. Not bad, considering hubby’s been on unemployment since last April, and I’m working only a few hours on contract. It’s slow going, but we’re getting there.
And, of course, there are some charges we could have avoided. But the majority of our debt was created out of necessity. I guess it’s just another perk of being sick in this society.
In college it happened because I thought $15 a month? I can pay that, even more! Then I got about 4 credit cards, and I bought a lot of crap and maxed them all out, then I was paying $100 a month, that I already couldn’t afford and I got buried. Thankfully I finally dug myself out.
Lack of information is what causes people to fall into debt. By not having the proper understanding most people abuse their credit cards and find themselves in a hole. More often than not they are unable to dig themselves out of it.
There should be a credit card or how to manage debt course in college. Some parents don’t even know enough about it to really help!
I recently graduated from college with probably over $6,000 in credit card debt. Let me tell you, those people that ask how can it happen don’t know how easy it is. When you’re that young and someone sends you an application for a card that you can charge pretty much anything on ie alcohol, food, apartment supplies, spring break trips, etc, things that you would usually have to ask your parents for, it’s like you’ve won the small lottery. I don’t know about other people but when I was charging that new top or groceries for the next two months, I was definitely not thinking about high interest rates and having to pay back the amount. It’s easier than it looks to fall into credit card debt, especially at that age when you’re on your own.