Anian

My wife once casually mentioned to some people she knew that we had no credit card debt, and they were aghast and said "Don't you want nice things?". It was as if they couldn't fathom why people didn't want to be up to their eyeballs in debt. These people lived in a much larger house with more expensive stuff, so now instead of assuming they get paid a lot more than me I assume they just spend a lot more. I know which one of us won't lose their house if they are unemployed for a few months.

I guess we just do things the old-fashioned backwards way - save up for it then buy it, not buy it and then pay it off with interest.

WEBlue

Someone I met here was startled that I only have one credit card. The husband has two--one mostly for his business, one for personal use. She told me she has 4 she uses 'regularly'.

Nutek

Mrs. N. controls our spending, which is why we are in good financial shape.

Nutmegger

[QUOTE=WEBlue] She told me she has 4 she uses 'regularly'. /[QUOTE]


So have I -- they fulfill different purposes (i.e. give me different benefits!) and are paid off every month. I don't use cash for anything.

(Sorry, I totally messed the quote up!!!)

Hotscot

I have a United card, we use it for practically everything and we pay it off monthly.

The points have given us a flight back home every summer for the past five years.
And, credit cards provide extra purchase protections and extended insurance on major purchases.

Apart from the mortgage, no debt.

dunroving

Don't most people use their credit cards regularly these days? I use mine for almost all of my purchases, but I don't go into debt.

I only have one CC too, but I have often thought I should get an additional one for Justin (Justin Casethefirstonedoesntwork).

I do recall a conversation with my (American) friend Joannie back in about 1994. I said I couldn't understand how Americans could afford such nice homes and nice cars and all that other stuff. She turned to me incredulously as if to say "You mean you REALLY don't get it?"

"Credit!!", she said.

I honestly hadn't even considered the possibility that so many people could be so much in debt, but of course time has demonstrated that yes, they are.

toopie28

Most of the people we know spend like there is no tomorrow.

Now granted they pay a bloody FORTUNE on their kids. I have one friend that is paying 50k for each kid for school. Another one is making about 200K a year and pays for each kid $70K a year for uni. What I see is that their kids do not have to earn anything - they pay for everything. Car, insurance, clothes and so on.

These people also eat out ALL the time. Drinks & food for 4-5 people really adds up.

They are always moaning about not having any money - and then the 70K a year for each kid acquaintance just bought a dog for 4 grand! WTF?!?!?!

We are very careful with that. I have 4 credit cards - pay them all off in full and do it mainly for the convenience and points. We save, save, save... of course the more you save, the more is taken away. Just like the more you make - the more is deducted (tax).

These same people love to comment on how we are loaded and should spend money since we can't take it with us.

So maybe we are doing it wrong...?

sir_eccles

It's easy to judge. Yes, I used to be very careful about credit, paying off in full every month. Then things happen sometimes not within your control and you need to dig deeper into your reserves than you intend. Complications following a birth or medical procedure or there's a government sequester and your pay drops for a bit. Once you stop paying off in full it takes time to claw it back.

Mortgage
Car payment (0%)
Credit card (slowly clawing this one back)

Hotscot

"the more you save, the more is taken away."

Unless you're saving it into a 401k, IRA or similar and then your taxable income goes down.

dunroving

Just to clarify, I wasn't judging people who end up in debt for reasons beyond their control. I think that falls under a different category than "living beyond your means".

Yorkieabroad

Shit can happen to anyone, and it would take extremely deep pockets to survive some of the calamities that can befall you here.

But from what I see, most of the folk that I know that are living outside their means aren't doing so because of the calamitous situation, they are doing it because they believe they "deserve" the toys...the boats, lake houses, jet skis, boob jobs, ATVs, the muscle car "because I'm 50 and I just had my second heart attack so I'm going to spend it before the doctors get it", whatever. And because they blow the savings and more on the toys, the calamitous event, if it comes, is even more devastating. And the threshold for defining a calamitous event is that much lower.......

I don't think it is limited to Americans...I know plenty of expats that fall into the same trap.

dunroving

What was that advert with the catch phrase ..."... because I DESERVE it ..."?

[ETA: Ooops, found it: L’Oreal Cosmetics: Because you are worth it]

Nutek

My American does a great job. She is far better with money than I am.

I am easily led. Oh look, SHINY!

toopie28

Yes, but WHEN you do withdraw it gets taxed. I think?

Medical costs will kill you one way or another. Another friend was doing fine - her husband got sick, 1.6 mill in medical bills - she's fighting it since he went in for a routine thing and ended up staying for 3 months - they caused it. 3 years and she still fighting.

Correct - and I'm not even going to start about my friends in Italy...

sir_eccles

Sorry, didn't mean to imply you were.

I think for some once you fall into the trap it becomes the new normal. I think it changes your attitude to credit and debt a bit and you almost end up saying "yeah, what's another 10k between friends" it then takes quite a conscious effort to go back to living more frugally and paying off in full.

Also there is the "0% transfer" where you say to yourself "the debt doesn't matter, I'll just transfer it to the other card..." never really reducing it.