How is credit used or viewed in your neck of the woods?
A false sense of secuirty beyond the credit card
In the USA, credit is used as a form of income at time, as a form of building trust, as a way to borrow more.
Before credit, people paid and lived off what they made and could afford. Then trust was established and borrowing with a promise was born. Before my time, probably before my parents time, people had parties to celebrate paying off their homes. People actually paid off their mortgage. People typically lived debt free. They didn't have car payments, they did have overpriced items, but only the stuff they could afford.
Only the stuff they could afford. What does that word, afford, mean to you? Does it mean what can you pay each month? What you can pay off eventually? What you can buy with the cash in your wallet, with the rest of cash in your bank account, or with the crypto you can exchange?
Lunch room talk. What would you advise?
My coworker is original from another country and unfortunately waited to long to purchase flight tickets and the prices have doubled. Flying home for the winter holidays are always expenses, but we get paid every other Friday. She mentioned her flight situation to us and said she is dreading waiting any longer, but can't afford to buy the tickets before payday.
One coworker recommended she put it on a credit card. She said she would, but she maxed it out again. Thus began the credit card discussion. Most people at the table agreed that his advise was terrible, but his point was once she learned to manage her money having multiple credit cards was beneficial to building credit. We then took a poll and everyone at the table expect for me has a credit card.
Anyone can argue the pros and cons, but my question to you is about the behavior.
Let's agree on the following: Some people manage their money with or without a budget without over drafting, without maxing their credit card, and most people are indent in some way. Either with student loans, car loans, cell phones, or mortgages. Most of the people sitting at the table live paycheck to paycheck. Most of the people at that table are younger than thirty, fresh out of college, and grew up believing borrowing money is a way of life.
If you were sitting at that table, what would you advise her to do? Take out another credit card? Which by the way she attempted to do and was dined. Would you recommended she borrow it from a friend, her boyfriend, or family? Would you tell her to get on a written budget or use an app?
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Love always,
Jeremiah 29:11 New International Version (NIV)
For I know the plans I have for you,” declares the Lord, “plans to prosper you and not to harm you, plans to give you hope and a future.
I remember when I was young, still going to high school and dad got his first credit card.
Go out for a meal and it was like a status symbol - I'll pay with credit!.
'of course sir' said the pub counter meal attendant..
I think he had like a $1K and the interest was like 20% but it was the 'status' thing. We were not well off, but suddenly we were up with the Jones's.
It was like 'woow!' one day I'll grow up and have 'credit'; pretty dumb :)
@kubbyelizabeth
I had a bad experience with a credit card, I unconsciously spent 20 dollars I didn't have, next week I had a debt of 200 dollars, I think the debt would have grown to 2000 dollars if I waited one more week, I guess I got a really bad deal... But after that I never asked for a credit card again...
/FF
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I prefer to go without instead of paying extra to get it today. The only exceptions is dire emergences where I simple have no other option or if I was taking advantage of an offer/convenience that I was able to fully pay off early if needed that month
The thing about building credit is not to extend beyond your own means that is often a trap people seem to fall for. Oh if I ever want own a house one day I need to build credit today by buying something I cant afford. Some just seem bad at managing money and the less access they have to credit the best till they learn in my opinion. If they are learning as they go with a massive limit that one expensive life lesson.
Companies always seem to willing to increase or try to get people to increase their limits. I have a feeling with how willing they are to increase it all you would have to do was call and ask.
I've seen some distant family members try and live the life of using credit and acting like they where more successful then they where. A lesson some of them are still paying for instead of being retired/enjoying life.
She needs to go on a budget and debt repayment plan. Then begin a savings/investment plan- not until all debt is gone(except morgtage). And absolutly live well within her means...
Perhaps this winter she should take on a few extra hours to get ahead and save up for next years trip.
I'd tell her to ask family. Always borrow from family before you resort to friends, and especially before credit. I guess that feels awkward for some. Be an adult and pay it back. Keep the money in the family rather than involving banks.
But anyway... do most people actually not pay off their mortgages these days? I guess I have never bothered to actually read on averages. My folks paid off theirs. Here in Japan I am well on my way to paying mine off.
Hmmm.
Credit card habits in Japan are much much less than the States, but they are growing. A decade ago almost no stores accepted them and people who used them were looked down upon, but now... everywhere accepts them, everyone has at least one, and usage is very common. A lot can change in a decade. One interesting difference is when you buy something with a credit card here, you have to then and there tell the cashier how many credit card payments you want to divide the bill into. Most people say 1, perhaps partially due to embarrassment of others looking down on them if they say more than 1.
But debt is a growing problem here. I think people in Japan have even less financial sense than Americans.
I would recommend her to go to https://www.mrmoneymustache.com and get a few face punches for being a consumer sucka.
If you can't pay for something, you can't pay. Putting it on a credit card where you pay more (when you already can't) is super stupid.
The only thing a credit (not card) is good is to get a house - instead of paying rent paying the mortgage. And that of course only if know what you are doing. A house might be even more expensive in the end, in various possibilites.
All people are different and some can shrewdly play the credit game. Not me though. I know myself and avoid credit. I would estimate that since she has a card maxed out, she is no better at finances than I am. I would suggest better ways to save on her flight even if it meant that she contact the companies with planes flying to her destination that day and seeing about cancellations or standby. I can think of a number of ways to get a cheaper flight, but you have to be proactive.
Credit of some variety has been around longer than most of us think. Its the new form of indentured servitude. It is only smart for those who have a plan. Rather, most get cards and don't play the system. Those are the ones that get caught up. If youre not great at budgeting, youre likely to get yourself in trouble.
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