| How much credit card debt is acceptable for you?
Posted: 8/29/2007 1:11:14 PM | I was not born and raised in this county and my perception about credit card debt may be very lame. I have observed in the last several years that people are more comfortable to discuss their sex life/dating experiences versus credit card debt. Europe (where I am from ) is much more conservative in terms of credit card debt.
How much do you Americans will find appropriate for a person you may be willing to settle down?
In Europe (on most cases either zero or current-- that means your pay it in full when you statement arrives at the end of a month). But I am not sure here in the US.
P.S the post in NOT about morgage, car loans or student loans it is about credit card debt. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 1:16:35 PM | I don't ask people for a balance statement, but zero is what is what I accept for myself.
Edit for poster below me:
He is talking about credit card debt, not home or auto loans. Two different animals. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 1:20:07 PM | | How do you have a zero debt amount if you own a home? WHO pays that amount upfront ever? I don't see how that can be as there are banks for that lending purpose. I feel people have things that happen in life, from dental or medical that insurance doesn't cover or they have no insurance, etc. I also feel that there are other unexpected things like auto repairs not under warranty . What about a car loan that isn't paid off but one needs to get to and from work, etc. with that vehicle reliably? I feel the key is not to be negligent in the amount of debt, to make at least minimal monthly payments on time. It is when someone ignores or avoids bills they are irresponsible then financially I feel. BUT that is just my opinion. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 1:28:08 PM | Credit card debt? None. I don't have any, I refuse to use them and I don't want saddled in the future with someone else who is credit card riddled. For me, I'd rather have someone in my life who lives simply ~ rather than otherwise, but with plastic. JMO  | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 1:29:00 PM | | As far as I am concerned, they can have as much credit card debt as they want. I am not going to help pay for it, so whatever debt they bring with them they will have to pay for. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 1:32:44 PM | Message 3 ...
How do you have a zero debt amount if you own a home? The "zero" balance was in reference to "Credit Card debt" ... not total debt.
I don't know anyone who buys a house on their "Credit Card" ... well perhaps Donald Trump or Rockefeller, but they'd probably pay cash. Unless you pay off the credit card each month you would be shoving astronomical amounts of interest down the bank's throat, so while I already do that with regards to my house payment, I really do not want to add to it with "Credit Card Debt".
I pay off my credit cards every month and do not charge more than I believe I can comfortably pay off each month. I use credit cards in lieu of having to carry cash or a check book around with me.
I don't ask any perspective partner about finances until things start to get serious. If he is carrying a large amount of debt on his credit cards, I'd probably pull back as I do not believe that reflects good financial planning and that's not an issue I want to deal with in a partner. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 1:39:40 PM | Cotter: you took the words right out of my mouth. I wish people would read and attempt to understand the words before they waste everyone's time.
You and I are alike in our approach. I use my credit card liberally - pay it off in full every month - download the info from the bank so I have all the details I want about my purchases and collect my points along the way.
I have not paid a cent in credit card interest in years. Funnily enough, people like that who do not carry balances month to month are known as deadbeats by the card companies. Meaning unprofitable to them.
Thank goodness for the saps that do let the balances ride. Their high interest payments pay for the benefits that we deadbeats enjoy. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 1:40:16 PM | Appropiate debt for Americans should be none.
Appropiate debt for the Banks... is the national average of balance with interests for 30 000. For average consumer is like a year salary.
I've never get used to accept the concept of credit card debts and understand how to be out of debts or not having credit card is worst than bad credit.
I have a friend that after two years of paying his credit card balance in full every single time of statement recieved... his interest rate went up. Some kind of 'penalty' because the bank don't get money from him.
If you can keep balance as zero or current you are in the right track for a debt free life. Minimum payment is the worst you can do because the acrued interest compound.
If you want to keep a good credit score, never keep more than two credit card, never spend more than one third of the credit limit of the card.
Mortage loan and car loan are acceptable debts. Personally, mortgage loan is the only debt I get into for fixer uppers, flipping over, selling and starting over again. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 2:37:28 PM | | Credit cards can be useful tools if used wisely. I wouldn't look so much as their credit card debt but rather their attitude towards money and finances in general. I usually pay off my credit card every month. But over the years I have had unexpected emergencies where they covered my buns and I paid if off over several months. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 2:44:10 PM | Credit card debt is a bad idea...
As low as possible... preferrably the card gets paid off 100% every month.
If you carry $4000 on an average credit card... just making the minimum payments and not charging any more purchases it can take 40 year to pay off and you can end up paing a total of over $12,000.
The "Average American Household" now has appx $15,000 in credit card debt... its a trap. That $15,000 in debt is costing them $150 to $350 a month. The credit card companies are laughing at how stupid these people are.
WAKE UP! You are throwing enough money down the toilet to buy a new car every 5 years!
I charge just about everything... but thats for the conveniece of not hving to bother with cash. I pay the card off completely every month. And... the card has a cash-back program which pays me to do this. (no annual fee for me either) So I come out $200 or so a year ahead vs going with cash.
**************
I hve a car... no car loan
I have a house... I paid CASH. (Realtor's jaw dropped looking at my income and then I said CASH...) | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 2:54:47 PM | I keep hearing about this horrible credit card debt that Americans have. I pay my credit cards off 100% every month. The only exclusion to that is if I buy a larger item that offers interest free financing if the loan is paid off in 3 months, 6 months, a year, etc. And I always pay those off before any interest is charged.
In addition, all of my friends except one, feel the same way. And one of them charges way more than she can afford and complains non-stop about how "abusive" the people are who are calling to collect because she doesn't always make all her payments. Well, she charged it and it's their money. Pay up and shut up is my thought.
I understand that major things do happen...education, medical, divorce, etc. that put some people in a tremendous bind with credit cards. But beyond that...I don't get it. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 2:57:32 PM | | I don't think the amount of credit card debt is as important as how you are managing it. Those who don't pay at least the minimum amount every month and just keep using their credit cards are asking for trouble. Credit card companies get you with those high interest rates so a good rule of thumb is to never charge what you can't pay off in a few months. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 3:02:35 PM | What others do with credit cards is none of my business.
If "she" has $1.53 on credit cards that is $1.53 more than I do. All of my credit cards went bye bye over 15 years ago.
I have a debit card that I use. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 3:06:23 PM | | I am very sensible when it comes to credit cards and the debts it can pile up. I have one mcc and know when to stop using it and when to use it. I never take a card for less than 7% and of course the best offers do seem to have some hidden messages in them also, so beware, they didnt write all that info for nothing. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 3:12:13 PM | each person should be judged on their own responsibility.
credit card debt is ok if it is routinely paid off and used only occassionally. If you ask about an ongoing balance I'd say anything over a hundred dollars is a bad idea.
I personally would not want to marry someone who could not manage their finances very well. However if we were not married it would make no difference to me as long as her debt had no impact on our relationship. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 3:16:18 PM | OP, it is interesting that you say in Europe people do not use credit the same way that they do in the U.S.
My family visits Europe often, and have told me, that since credit is relatively new in the former Eastern Block countries, many are falling for the credit scam, even worse then the Americans, who have in many cases tasted the bitter sweet rewards of compound interest rates.
To answer your original question, my answer is zero. Absolutely no indebtedness is acceptable to me personally, unless it was due to a real emergency, or an investment, such as real-estate, that is expected to bring a profit.
If I can’t afford it totally and one hundred percent paid for, I don’t get it. If I really need it, I save up for it.
I rather drive a crappy looking car (and I do), rather then be enslaved into making monthly payments on it, only to depreciate to a near zero value, even when it’s not paid for yet.
It’s a liberating feeling when money comes in, and one can chose to hold on to it, instead of running to a pile of bills trying to figure out which ones to pay this month. Been there, done that, never again.
It’s better to be free, and look like a beggar, then to look like a king, and be owned by a financial institution for years, or even for life.
This way, I am not owned by my job either. If I get really tired of it, I can quit, perhaps tighten the belt for a awhile, and move on. Or save up, and take an extended vacation, without having to consider if my employer (master) will approve my vacation request.
If they don’t, I just quit, and do as I please. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 3:17:10 PM | msg 10
fredhh
Everything you stated is correct. What you might want to add is usually you have a month before your balance on your credit card is due. You have a month that your cash is drawing interest. One thing you said though I don't do...You said you paid "cash" for your house. Why do that? Mortgage rate is currently around 6%. Put your cash in a mutual fund which averages 10-12% and diversify in stocks...That is what I did. That "cash" is doubling what you would make instead of paying off your house along with a yearly tax break for the mortgage! | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 3:22:56 PM | It is interesting to see how many are posting that zero credit card debt is acceptable or that is what they have. This is certainly not typical in the U.S. where the country is buried under massive credit card debt.
I use my credit card as a tool. If they want to float me a no interest loan for a month, then that's fine by me. Plus there are extended warranties and other benefits from using a credit card. I pay off my balance each month and so I am considered by the credit card companies to be a "deadbeat". What a turnabout of terms. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 3:25:31 PM | | I would say as long as cc's are being paid off as the bills come in, it really isn't any of my business anyway..but as long as a dent is being put into the balance owed, that works for me..have been in the situation where creditors could either help a person or not, finally all of mine are paid off, most of my purchases come from my debit card. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 3:58:05 PM | Zero, I use a debit card myself.
They're bad news. 18 percent compounded monthly is really 31% a year and at that rate the money/debt doubles in about two years.
Getting involved with some one who cant handle money is not a good idea if you're looking for a long term relationship. | |
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| How much credit card debt is acceptable for you?
Posted: 8/29/2007 4:03:54 PM |
paid "cash" for your house. Why do that? Mortgage rate is currently around 6%. Put your cash in a mutual fund which averages 10-12% and diversify in stocks...That is what I did. That "cash" is doubling what you would make instead of paying off your house along with a yearly tax break for the mortgage!
1) Inadequate income to qualify for the loan. (Strange... I had the cash and couldn't get a loan?  but true. )
2) the income tax break isn't as great a deal as you may think. The interest you paid comes off of your taxable income. It therefore only reduces your income tax by a maximum of 38% of what you paid in interest. (usually not that much...)
3) The real estate appreciates. You get to live in it and later you get to sell it for more than you paid for it. You have to make a very bad choice in a house to lose money on it.
4) Stocks and Mutual funds have much higher risk than real estate. When Enron collapsed taking the stock market down a tremendous amount with it... it wiped out the investments of several hundred thousand people. My mother lost $250,000 overnight. (fortunately she had other investments... mostly real estate... that were not affected)
Note that even with a low income... I manage money well and thus live way above what would be expected for my income level... because I'm debt free. You'll ALWAYS do better if you have no debt.
I'm the one who's retired at 47 years old.... | |
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