Well Alrighty, then!
So, when my car needs a $700 repair, and I can’t pay cash for it, what exactly is your suggestion for how I get out of work for the two or three months it would take me to save up that much money?
I can’t speak to your situation: only to my own.
I do not buy anything that I can’t afford to pay cash for, and that is after all bills are paid (and we consider our savings and investment plans – aside from what we already pay into employer-sponsored pension and 401(K) plans – to be bills). We earn sufficiently that we could easily afford the monthly payments on luxury vehicles and a nicer home. But I don’t use monthly payments for a litmus test on what I can afford, nor do I allow an enthusiastic salesperson inform me on what that may be. Hubby and I aggressively save around 30% of our annual income because that us what we are comortable with. So when we do have an unanticipated expense, we can draw from savings and have multiple other options if it is a life event, such as losing a job (the one mistake we probably make is not setting enough aside into accounts that have no penalty for withdrawal, but we reason that inasmuch as one can anticipate such things, our employment is secure).
So my general response would be to plan and live below one’s means, no matter how modest those means may be. Most people claim that they aren’t able to do this, but what they really mean is that they aren’t willing. It sucks to rent a dump and drive a 20-year-old car when credit is so readily available. It takes willpower to deny self (or kids) a night out at a restaurant instead of planning a menu within budget and cooking at home. I’d love to be shopping for an upscale SUV with all the bells and whistles instead of driving my paid-off 13-year-old Jeep. I make choices based on my own life experiences and set of priorities. It frightens me to think of ending up as my parents did. And while there is no gaurantee for any of us, I prefer to play odds that are heavily in my favor.
Then stop speaking to Soylent Juicy’s situation. Not everyone has the luxuries you have. Some of us have emergencies we have to deal with when they come up, because we can’t afford to save up for things we can’t foresee.
First, taking a vacation when already $30K in credit card debt, AND stiffing the credit card company in order to do so, is not an unforseen emergency. Although it probably will be an altogether predictable financial mess down the road.
Second, it is easy to throw out the “you have luxuries I don’t have” card when comparing self to others and critically examining the choices that one makes. You didn’t really get what I was saying, which is that my CAREFUL lifestyle allows me extra options and choices, one of which is that I’ll never whine on a message board about having to use a 29% interest bearing credit card to pay fir a vehicle repair or replacement water heater.
After many years of paying my dues and climbing up the promotional ladder, I am able to live a comfortable lifestyle which also happens to be quite modestly middle-class. But the choices that I make would be no different even if my income was half or a third of what it currently is. Just that, instead of living in a small 30-year-old home in a middle class neighborhood, I’d be living in an even smaller fixer-upper in a safe working class neighborhood (home ownership being the preferable choice over financing a landlord’s mortgage) and instead of a gas-guzzling SUV it would be an old but reliable Honda Civic. I’d live where my mortgage (or rent) didn’t exceed 20% of my net income if at all possible, I wouldn’t own a ginormous flat-screen TV and pay $200/mo for cable, and I damn sure wouldn’t use a credit card to finance any luxury item. Those choices would allow me to save, especially if my housing cost is far less than 35-40% of gross (what a lender will typically tell someone they can ‘afford’). Anyone who cimplains of not being able to save, while also living in a home or apartment that they cannot reasonably afford, said premise filled with financed furniture and high-tech gadgets, credit card bills chock full o’ $65 purchases at Applebee’s and $500 plane tickets to the latest Travelocity weekend getaway deal, still paying off the $800 charged at Wal-mart for kid’s 2012 Christmas … is not being realistic about the choices they make.
This information is interesting. I have never heard of a CC company willing to be so flexible unless the debt was practically in receivership. I made a similar request of my main CC company many years go after being hit with a big IRS tax bill out of left field. The answer was essentially “we make no provision for that” ie “forget it”. My credit was (and is) golden at the time so it’s not like I was late or any sort of deadbeat to that point, but there was no flexibility at all.
Did they specify what “placed a note in my file” actually means in terms of what they are willing to allow?
What they are willing to allow would be for her to short pay for a limited period of time, while considering said short payment to be a LATE payment, and reserving the right to:
*interest-only payments that don’t even touch the principle, meaning all profit to them while even more interest piles onto the principle
*tacking on a late payment fee of anything from $25-70 for every month that she short pays
*A report to the credit bureau that she failed to make timely payments
*raising interest rate to max allowable by law
Yeah, a no-loss to them; nay, even a great big huge win. All legally tucked into the not-so-fine print of the contractual agreement signed by the card holder.
I’ll just add: If you are unable to save up enough money to cover an unexpected expense like that, how are you able to pay off an expense like that, after putting it on your credit card?
I, in the hypothetical example, didn’t say I was unable to save up the money, but that it would take me several months to save it up. I’m paying for those several months when I use my revolving credit account to pay off an unexpected expense.
You’re paying for those several months AND paying substantial interest rates as well. Whereas if you saved it before you needed it (i.e. had a nest egg) you wouldn’t be paying the substantial interest rates, and might even get some miniscule interest on that money you have socked away. There are very few circumstances (note I said “very few”, I didn’t say “none”) where given sensible planning ahead you need to maintain a non-zero credit card balance even if you have “unexpected expenses”.
Thanks, Mom.
Meanwhile, here in the real world, some of us just have to do the best we can. And occasionally that means that the unexpected expenses deplete and then exceed our savings.