Thursday, October 14, 2010

Credit cards

I got my credit card bill in the mail today, and was kind of surprised. I forget how fast everything adds up. We put a lot of stuff for the new house on there, and wow.

I won't get into exact numbers, but let's say that this month's bill is over $2000. I looked at the handy dandy thing on the side, that tells you how long it will take to pay off that bill, paying only the minimum. It says 21 years. What? How do people get by, making only minimum payments? I could not imagine paying off my washer and dryer for 21 years, as well as the new shades in the house. In all honesty, I probably won't even own them in 21 years. So I would be continuing to pay on things I no longer own.

I try to be financially responsible, as well as a stay-at-home mom with a credit card can be. I may be a little ignorant when it comes to finances, I admit that. I have never really had any bills of my own to take care of. My husband handles all of the bills that we have. He has a lot of them go straight to him, so I don't even know what we really pay on all of it.

Not knowing where money is going out (or rather, how much is going in and out of our account) is kind of frustrating. You never learn about finances if you don't get put in charge of them, at least in my opinion. Before I met my husband I had a pre-paid cell phone, and lived with my father. I had the credit card, but knew not to rack up more than I made at my part-time job. I vaguely know the importance of credit cards, they're a great way to build your credit, in case you ever need a loan.

I don't know, it's just frustrating when I see on the news about credit cards charging above 30% interest. I know that's how they make their money, but a lot of young adults are falling into the trap of getting credit cards and overusing them. I know people who were $10,000 or more in debt, just through credit cards. They got in the cycle of spending just a little bit more than they are taking in, hoping that this would be the last time they did it. Add in the interest and things spiral out of control quickly.

On the opposite side, you have people who don't have any credit. They are financially responsible enough to not find credit cards attractive, and maybe have various bills in somebody else's name. Not that they are committing identity fraud, but more like people who have their parents paying for things like their cell phone and car. So they go through life and don't build up any credit to speak of. When it comes time to settle down and buy a home, they don't have the credit to get a good loan, even though they would be able to make the payments that go with it. I even know a guy who paid for a house in cash because he had the money to do so and couldn't get approved for a mortgage to pay the house off over time.

I sort of forgot where I was going with this post. I started out talking about my credit card and am now discussing other people's credit. Overall, I think they should teach finances as a mandatory class in high school, rather than a small section throughout different math classes. New parents and newlyweds should also have to take a financing course, as those two events are a great time to re-evaluate your credit and finance knowledge. I know that, when I had my son, money was flying out faster than it was coming in. Diapers, wipes, clothing, furniture, and everything that went along with having a baby. Not to mention hospital bills that would have to come out. I was lucky that we had help, and that I was able to utilize Medicaid to pay for hospital costs. I know that other people do not have those options and end up paying a lot of money out of pocket, or using the credit card to pay things off over time.

While I think credit cards are great tools to have, especially in case of emergency, I also think they are very easy to obtain and misuse. Have any good credit card tips, or stories about misusing one? Feel free to add a comment and tell us about it.

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