Of course it is! With compound interest, the longer someone carries a debt, the more they eventually pay to the company. It’s a good idea for the same reason that starting to contribute to saving for retirement early is good.
Now, whether it’s a good thing to do, ethically speaking, is another question…
Sadly, the endgame will be when she gets in too far (she may be there already) and just declares bankruptcy. The girl has no sense of consequence. Why not just declare bankruptcy. Whee!! No more debt!!!
The world is too full of spineless parents who don’t have the guts to stop enabling their spawn. It’s incredibly destructive to the kids in the long run and not so great for society either.
Girl needs to get a job and live within her means.
Reading that “money management” plan was almost physically painful. I can’t imagine how much interest is accruing, particularly on cash advances.
I have a friend like this as well. She and her hubby, actually. Neither was working and they were just sittign around watching thier bills pile up. Then, because she was depressed, she got a puppy.
He moved to Alberta to get a job but only stayed a few months. She was so depressed over all of the calls from the bill collectors that she told him she wanted him to come home because she was suicidal.
Now he is back home and neither is working. They are four months behind on mortgage, their car was repossessed.
It boggles the mind. It really does.
It’s good to see that the Google ads are doing their best to increase indebtedness:
Quick & Easy Cash
Need Cash Fast?
Cash Advance?
I will, however, put some of the blame on the credit card companies.
A few years ago, I applied for a line of credit, I was initially turned down because I have two credit cards and my combined available credit was more than 40% of my income. I barely used the cards at all and always pay them off right away, so my outstanding balance was zero, and I had no debt.
However, the bank didn’t want to see that if I ever suffered from severe brain damage and ran off to a casino, I could theoretically wrack up an enormous debt that I clearly couldn’t cover. I was reasonably declined by my bank for the line of credit.
And I agreed with them. My one credit card had upped my limit to an obscene level. It was absolutely responsible: my one limit was well beyond half my income (if ever I lost my mind and maxed out that card, I’d never pay it off!). I have since called both companies and told them to please lower my credit limit to something reasonable – this I also see as being good for security, in case a card is lost or stolen, no one can go buy a Hummer before I report it.
Two months later I got the “Congratulations! We have raised your limit to not-quite-as-obscene!” So I had to call them back, and now they won’t raise my limit without my permission first. It amazes me though that they would keep raising my limit, without any regards to my ability to pay it back. I’m fiscally conservative, but a lot of people aren’t so restrained. They have irresponsible lending practices, IMHO.
Yeah, the one’s I’m seeing are “Cut credit card payments NOW! Homeowners apply here”. So, you’re having difficulties with your non-secured cc loan. The worst thing that can happen is a screwed credit record for six years. These companies want to “help” you out by putting your house at risk!
Yeah, the one’s I’m seeing are “Cut credit card payments NOW! Homeowners apply here”. So, you’re having difficulties with your non-secured cc loan. The worst thing that can happen is a screwed credit record for six years. These companies want to “help” you out by putting your house at risk!
I firmly believe we need to have some sort of money management courses in schools. Will it help people like the OP’s cousin? Prolly not, but it would have helped Mindfield, and Exgineer - and me, who also made some mistakes.
My parents used money as a tool to keep me in check, so of course I never had any money of my own, was not allowed to work, etc. So I never learned to balance a checkbook, to not use credit cards, abotu debt, or bank accounts, or anything. I really wish there had been just a basic course in finance or something in high school.
Why don’t we, do you guys think?
Hmm, that’s funny. It worked exactly the opposite for me. The overall theme of my upbringing is “Is there shit in the store you want? Well, tough, because since you have no money, you can’t have it.” and “Got money? don’t spend it all at once, because if you do, you won’t have any left! That sucks!”. 
I have credit cards with every single credit card company in the country (except American Express. Those bastards! :mad: ) and gleefully ask for more credit whenever possible, but I’ve never paid a cent of interest in my life that was higher than prime + 2% and tax deductable. Always better to have and not need, I say. So I’m very thankful for the availability of easy credit. Believe me, life in a country without a developed system of credit records isn’t very pleasant.
Ahh, but if they do that, then you can’t go out and buy a Hummer on impulse using your credit card.
AIUI if your credit card were stolen and used to buy a Hummer, the credit card company would refuse to pay the car dealer. The dealer, not the credit card company, would be held responsible for getting the Hummer back or eating the cost. So the risk you’re avoiding isn’t the credit card company’s.
The credit card companies don’t want you to pay off your card, at least not all at once. They want you to keep a balance from month to month, so they can charge you lots of interest, which means profits for them. That may not be the socially responsible thing to do, but companies usually put profits above social responsibility unless there are laws or clear consumer preferences mandating that they not do so.
What the hell…? It kind of made me laugh, actually.
I dont’ disagree with you at all about the ease of credit. I just think kids should be taught simple things like - the credit card companies aren’t really trying to help.
A dose of cynicism, in other words.
Actually, I could. Because my request to have my credit limit lowered was voluntary. They said I had to contact them to ask for it to be raised back to the previous level. They said they would review things to make sure I hadn’t suddenly become irresponsible, but that otherwise my previous obscene limit would be easily restored. They only warned me that it could take some time, so if I wanted to rush out right away to buy that Hummer, I might have to wait for a week.
With my income, buying a Hummer would definitely call for a “cooling off period” so I ahve no qualms with my impulse Hummer purchase being thwarted for a few days.
True, but when you read in the media that “credit card theft is so serious…” and “costs of diong business is impacted by credit card fraud” etc. etc., you’d think that it would be in everyone’s best interest for credit card companies to encourage spending but not to the point of absolute ridiculousness. If I file for bankruptcy because I actually maxed out my card and couldn’t pay it back, how would that be good for the credit card company?
Sure, let me spend enough to get a nuisance balance to carry so they get a tidy profit, but when my credit limit approaches my total earnings for the year… that’s nuts.
There’s a poster here who is in the middle of a painful break-up with his wife over money issues (he makes it, she spends it). Sorry, I can’t think of the name. I’m sure he would tell you what he thinks of this potential “plan” of hers.
StarvingButStrong, your family needs to stop enabling your cousin. She has no motivation to make any changes; she’s living the way she wants, consequence-free. Why should she change? She no doubt will dig herself into a hole too deep to get out of, and just declare bankruptcy. Hell, if all she has is unsecured credit card debt, why not play the system (except for the obvious reasons - morality, etc.)? That’s the system that the banks, government, and credit card companies have set up, and someone like your cousin with no scruples is playing it just fine. Just make sure she doesn’t take any one else down with her (co-signing for loans or something).
Although it wouldn’t have convinced me to get a credit card, I think it’s probably a good idea. I can’t presently save money if my life depended on it, and I’ve never once balanced a checkbook. To this day I don’t even know what it means to do so – unless it involves my checkbook, my head, and a solid equilibrium. Then I got it covered.
My father used to give me an allowance every weekend, but it wasn’t for actually doing anything like chores. It was more like he gave it to me because that’s what parents were supposed to do. There were no life lessons attached, just a couple of bus tickets so I could go wherever I wanted to spend it. (Times were a little different in the 80s.) Given my attitudes in school though, I doubt I would have paid much attention in any kind of grade-school finance class. I had enough trouble paying attention in school. (Non-existent self esteem + bullying/teasing for being a “brainer/nerd” + unchallenging curriculum = a kid who wanted to be anywhere but there) Still, in general it would probably be a very helpful course in junior high or high school, especially at a time when kids are getting their first jobs (read: McDonald’s) earning and spending their own money and before they start getting inundated with offers for what to a kid amounts to free money. Granted, parents should teach their kids about stuff like that, but not all parents are good with money, either. Better to have it taught in a more formal setting where the fundamentals are covered and kids have a chance to see what they’re in for when they’re out of grade school and striking out on their own.
Hey, problem solved!
Seriously, it’s the only thing you can do, and the best thing for her.
She might end up in jail. This is her choice.
You can’t help.
Tris
I think the only thing you can possibly do to help her is be there if she does decide to change her ways, and not say “I told you so” if she does. She doesn’t seem to want to change, which makes it very unlikely that she will do so now.
I’m thinking, with a financial strategy like that, she has a future in politics.
I don’t agree with that. Of course the credit card companies ARE trying to help, otherwise why would anyone use them? Certainly my family has benefitted tremendously, my mother made part of the down payment on her first house using the reward program on one of her credit cards, and I probably will too, since I’m still using the same card and still accruing the rewards. Having a credit card is very convenient compared to cash which I never carry, I can buy porn…er, stuff on the internet, I got travel insurance, all without paying a dime(well, I paid for the insurance). They’ve been a great help.
People complain about the interest rate. I don’t think it’s unreasonable, considering that it’s completely unsecured consumer debt that the CC company has no recourse to recover should you declare bankrupcy, I’d say it’s a pretty reasonable reward for the risk that thye are taking. No one’s forcing you to pay it. With all due respect to the OP, saying CC companies are evil is like saying cars are evil because some people are bad drivers.
I absolutely agree with that 100%. I think it should be a requirement in every school to take some sort of personal finance course.