How can people get in debt?

When there is *not* an emergency involved like medical bills, I have seen what often happens to people. They're young, maybe just starting a family. The lure of buying what they *think* they "need" is strong and the mindset is "Wow, I'll get whatever we need/want on credit and just pay it off a little at a time... cool!"

A few years down the road they realize that for every $75 they send to the card company, only $32 actually pays down the principal and the rest is interest. The more time that goes by, the worse it gets. At that point it doesn't really matter if they're putting new charges on the card or not... the nightmare is renewed every month. (Just told my sister's story and glad to say they finally did claw their way out.)

I should say that this was like 30 years ago, so maybe there was enough competition and outrage that interest doesn't compound that drastically any longer... I don't have a credit card, so I don't know for sure if it's better now.
 

Two commercials that stand out.
“ Buy now, nothing down, no interest for 24 months.” Imagine the condition of the item, often furniture, after 24 months.
“Thank you for XYZ company for saving me from the debt I had accumulated.”
 
Just re-reading this thread, I found myself realising I have never bought furniture on credit...ever.....and only once in my life did I buy a car on credit.. Never again.. that was the longest 5 years of my life
 
Just stating the obvious but...
Covid and inflation came hard and fast. Many people were totally blindsided...especially the younger generation
Then broken promises hit them...like promising to pay off their college debt...then not.
Then the state of the economy...plummeting as we speak
Housing market...goes on and on
Special attention directed at the 7.7 million unauthorized illegal's needs (entering between 2019-2023)
 
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It’s amazing how quickly little purchases add up. While checking something else today, I was looking at my month end CC summary. Every little bit can become a lot. It’s not a problem, as it‘s paid automatically. When I was single, I watched every purchase.
 
debodun said:
How can credit card companies make any money if people pay their balances?
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Lots of people don’t.

Also, CC companies charge businesses for use of their cards. That’s not where the big money is for CC companies; it’s the interest folks pay.

Unless things have changed, CC companies charge you interest on unpaid amounts and the amount you paid too.

eg, you owe $1000 and pay $400 off. They charge the full month of interest on the $1000. Pretend that amount is $33 for $1000 and you don’t buy anything this month. You now owe $633 and the interest keeps growing. You have to pay the balance in full every month to beat the system. This is the kind of math they need to teach in high school.
 
It seems easy to get into really bad debt:

1. The use of credit cards and not paying off the balance each month
2. Watching too much advertising on TV
3. Being a sucker for the holidays and over spending on gifts.
4. A weak will
5. Not using your brain.
6. Trying to keep up with the "Jones."
7. Believing that he who dies with the most "toys" is the winner in life.
8. Keep trading your vehicle when you don't really have to
9. Going on those constant holidays

AND FINALLY THE MOST IMPORTANT FACTOR:
11. Living beyond your means.

As for me; I have been debt free for years and you know, I love it!
 
think of all the bills or auto payments for everything from gym memberships to streaming feeds etc that want people to put on CC if the do not go thru statements ........who knows what they are paying for ..... people actually have financial apps who look for subscriptions people are paying to cancel ....
look how many news sites want like a small reader subscription more then a few you are into money out each month you may not use enough to warrant signing up.
people sign up for free 30 or 60 day trials for items FORGET to cancel so then find they pay a monthly or yearly fee ........ until they cancel it

The Auto / online bills is many do not open it up and look and go through like we did when getting bill in mail .... wonder how many charges get paid before someone sees the item they thought they canceled was not canceled.......etc.
 
Fortunately I have always been a realistic practical person so live within my means. When I got divorced I didn’t even consider keeping the house because I knew I couldn’t afford it.

My ex being the opposite tried to get a loan to buy me out and keep it. Luckily he didn’t qualify because he’s bad with money and would have just lost the house.

I also knew that I couldn’t afford to rent so got busy and found a condo that I liked and could afford. It’s worked out great because I have made many friends in my building.
 
Quackers said:
Being in the UK - I couldn't imagine how that must feel, not being able to afford medical treatment and/or going into debt to get treatment.
Is there a system over there where those who can't afford medical treatment get it for free?
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It depends who you are and where you live. Before Obamacare, in the state I lived in if you were under 65, not considered disabled, or not the legal guardians of minor children, there was no aid available. I don't know if that has changed now, but they did refuse to expand medicaid under Obamacare.

I knew a couple of folks that were affected by that. Having a job doesn't mean you have adequate insurance. Both eventually filed bankruptcy, but that did effect some of their on going treatment options.

Where I live now, to the best of my understanding, that is not the case and some assistance is available.

My life long friend would love to retire, however because his medical coverage is so good through his job he can not. If he does, his wife (she's still in her '50's) who has a very serious condition wouldn't be able to get the level of care she currently receives. Some of that care has been live saving. He's told me a little bit of what some of this costs, and I really don't know many millions of dollars one would have to have if you were to self insure.
 
Flarbalard said:
It depends who you are and where you live. Before Obamacare, in the state I lived in if you were under 65, not considered disabled, or not the legal guardians of minor children, there was no aid available. I don't know if that has changed now, but they did refuse to expand medicaid under Obamacare.

I knew a couple of folks that were affected by that. Having a job doesn't mean you have adequate insurance. Both eventually filed bankruptcy, but that did effect some of their on going treatment options.

Where I live now, to the best of my understanding, that is not the case and some assistance is available.

My life long friend would love to retire, however because his medical coverage is so good through his job he can not. If he does, his wife (she's still in her '50's) who has a very serious condition wouldn't be able to get the level of care she currently receives. Some of that care has been live saving. He's told me a little bit of what some of this costs, and I really don't know many millions of dollars one would have to have if you were to self insure.
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This seems to be the most unfair.. because the time when most of us need healthcare more than ever is as we become older . I wonder if the US could implement a law whereby everyone be required to have some level of medical insurance under retirement age, and from then on.. be entitled to socialised care ..
 
hollydolly said:
This seems to be the most unfair.. because the time when most of us need healthcare more than ever is as we become older . I wonder if the US could implement a law whereby everyone be required to have some level of medical insurance under retirement age, and from then on.. be entitled to socialised care ..
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I know we're not supposed to talk politics on here. However, the fact is that the Republican Party will never allow social medicine in this country. As I write this, they are actively working to reduce any and all social benefits. As an example, here in Florida, we used to have a program that provided free lunch to children who could not afford school lunch. Our governor just recently cancelled this program. In the U.S., you can work your whole life, and if things go well, create a nice nest egg for retirement. However, if you don't have healthcare and you get cancer or any other issue that requires long-term, expensive care, you will end up bankrupt.
 
Rich said:
I know we're not supposed to talk politics on here. However, the fact is that the Republican Party will never allow social medicine in this country. As I write this, they are actively working to reduce any and all social benefits. As an example, here in Florida, we used to have a program that provided free lunch to children who could not afford school lunch. Our governor just recently cancelled this program. In the U.S., you can work your whole life, and if things go well, create a nice nest egg for retirement. However, if you don't have healthcare and you get cancer or any other issue that requires long-term, expensive care, you will end up bankrupt.
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In this country.. all children in years 1 & 2 get free meals... after that... children will receive free school meals if their parents are receiving any one of a number of benefits..

Whether your child is eligible for free school meals depends on their age, where you live and your income. Your child may be eligible if you are claiming any of the following benefits:

  • Income support
  • Income-based jobseeker’s allowance ( unemployment benefit)
  • The guaranteed element of pension credit
  • Income-related employment and support allowance
  • Working tax credit run-on – paid for four weeks after stopping work
  • Support under Part VI of the Immigration and Asylum Act 1999
  • Child tax credit, as long as you don’t also receive working tax credit and earn no more than £16,190 (£17,005 in Scotland). In Scotland, you can get free meals if you get child tax credit and working tax credit, but you have to be earning less than £7,920
  • Universal credit, if someone applied since April 2018 and their income is less than £7,400 a year (after tax and not including benefits). If someone applied for UC before then, there is no income threshold. In Scotland, your monthly earned income on UC must be lower than £660. In Northern Ireland, the threshold is almost twice that of England and Scotland at £14,000.
Children who receive any of these benefits themselves are also eligible for school lunches. If they are 16 to 18 and in receipt of any of the benefits in their own right, they can claim free meals.
 
Words and promises and assurances are reversible. No-one necessarily owes us medical care. No-one even owes us food. At present, the world is sympathetic with the needy, but that may be temporary.
 
hollydolly said:
This seems to be the most unfair.. because the time when most of us need healthcare more than ever is as we become older . I wonder if the US could implement a law whereby everyone be required to have some level of medical insurance under retirement age, and from then on.. be entitled to socialised care ..
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Actually our set up here wastes enormous sums of money on end-of-life care, when in reality if those $ were spent on regular preventative health care throughout life, we would be healthier overall and increase the avg lifespan.
 
helenbacque said:
Simple answer … failure to live within your income.

Mistaking a ‘want’ for a ‘need’.
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yes that's one way, and very often the way most people get into debt ... but sometimes if people are living in negative equity, that their rent is more than they earn.. they have little choice to pay utility bills using a credit card.. and even recently I've learned of people using them to buy food..
 
hollydolly said:
yes that's one way, and very often the way most people get into debt ... but sometimes if people are living in negative equity, that their rent is more than they earn.. they have little choice to pay utility bills using a credit card.. and even recently I've learned of people using them to buy food..
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i remember when credit was not accepted in grocery/ fast food and everything in between ..... it is a slippery slope when people plan to temporary cover a gap and those who just think it is a fact of life........

i have worked in many industries and pay levels............. i saw people in lower income jobs who could stretch a dollar and live well and i saw people making 6 figures who had NOTHING in a bank or even knew where their money went.
personal finance and responsibility are taboo anymore . if people have it it was LUCK according to so many ...
society tells people to have it all just charge it ......pay later .....
we know it does not always work out and crushes some ........ but the CC comapnies who tell you do it are profiting off it......

CC companies worked their way into everything cause they get money % from merchants and interest.... who cares if a large group of people cannot handle them correctly.
I have a friend who had no credit cards ... i asked why and she said "had one we did not handle it well and debt adds up quickly when we paid off we told ourselves no more "
I have great respect for her to not only know it but was honest to say it out loud ......... many who in over their heads will never admit it is on them .... instead it is their job not paying enough. the economy ... or whom ever they can place the responsibility
 

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