I have recently been dealing with creditors and the fair debt collection act. I am amazed at how little most people understand everyday economics and live way beyond their means. I can't get over it. I was brought up in a household where if you didn't have cash you didn't buy it.
Don't get me wrong, I understand there is good debt and bad debt. Mortgages are good debt. Owning a home is the major investment for most people, besides which you get a hefty deduction for interest paid on a mortgage. Student loans are usually good debt. Education can increase lifetime earning in addition to making you more marketable to employers. The real problem I have seen is credit cards.
I have no problem with credit cards per se. More with how people use them and the enormous balances they have. Two of my close friends have balances roughly equal to half a years salary for them. How does that happen? I hate to be paternalistic, but how do these companies justify giving people such great amounts of credit.
How do people expect to ever retire? I don't get it.
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1 comment:
Great post. I'll never understand why banks and the like, provide credit cards with huge limits either. I must admit, most banks here are pretty restrictive on how much credit they provide.
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