Tuesday, January 3, 2012

Intractable Credit Card Debt, Part II

How do you get into a credit card debt crises?  Nearly everyone I talk to admits do doing it, although some folks, you have to get a couple of martinis into them before they 'fess up to it.

It is not hard to do.   Fun game - anyone can play.  You just lose your shirt.

It works like this:

1.  You get a credit card with some bonus feature - cash back, gas discount, frequent flyer miles - whatever.  The main thing is, you got snookered into taking out a 22.5% loan based on some tokens they throw at you.  They throw pennies at us, hoping we spend dollars.

2.  At first, it all works out well, and you congratulate yourself on your financial acumen for saving $10 a month by using this credit card deal, after hassling a lot with it.

3.  One day, you find you don't have enough cash to pay the minimum balance.  No sweat, you'll pay it off next month!

4.  Next month never comes.  You end up spending $100 a more a month than you make.  Not a lot of money -  a take-out pizza here, a restaurant meal there, a trip to the mall,  Cable TV or a cell phone plan (billed to the credit card for your convenience!).

5.  $100 a month comes out to $1200 a year.

6.  $1200 a year comes out to $12,000 over a decade.  A decade flies by fast, trust me.

7.  $12,000 in credit card debt, at 22.5% interest morphs into $20-30 grand in debt, rather quickly.

8.  Welcome to your own, personalized, credit card debt crises!  How the fuck did I get here?

Play with the numbers all you want - the interest rates, how much you spend - whatever.  The net result is the same.   The poor man gets into $5000 in debt and thinks it is a lot of money.  The rich man gets into $50,000 in credit card debt and can't get out.  Either way, they are proper fucked, and big time, as it is more than they can pay off, on the onerous terms offered.

That's how the game is played, my friends.  Your only option is not to play.

Never, ever think you can outsmart a bank. 

You are only deluding yourself.

They have been at this game far longer than you have, and they are a lot smarter than you are.  They have armies of marketers, psychologists, and lawyers on their side.

Whaddya you got?  You?

Get real!

Just don't play their game, period.  You will lose.  It is a given fact.