"Getting by" part 2

Another note about the Pew Survey I blogged about this weekend:

On the list titled "biggest problem facing you and your family," the responses included what you'd expect: Not enough money/bills, taxes, cost of living, unemployment, recession, fuel prices, health care costs, health problems, etc.

Thing is, they don't suggest debt as a separate issue for people. Obviously they aren't suggesting debt isn't a problem families are facing; I'm sure people's debts are rolled up in the "paying bills" category.

That's a problem.

Your debt payments are not like your utility and phone bills. When I help people with budgets, I never lump those things together. Most of what we think of as "bills" are a given. You're going to have electricity, gas, phone service, etc. But you don't need to have credit card debt. When you start thinking of credit card bills in the same way you think of your utility bills, you're in dangerous territory. Your goal should be to pay those debts off and be done with them. That's a very different outlook than you'd have with a perpetual expense like the electic and phone bills.

Ditto car payments-many people assume that they'll always have a car payment, so they go car shopping as soon as they pay off their auto loan. Don't be one of them. Once you've paid off your car, own it for a while, live without car payments being due every month. Give yourself a break from debt.

Comments

[Steve "The Debt Settlement Man" B]

Great advice Jeff. Many people just associate the monthly bills with their credit card debt bills. But in reality they need to be separted so the individual can identify the debt problem and attack and eliminate it accordingly. Nice post

[Drew Johnson]

I understand your point: credit card debt is a tangential expense that should be avoided at all costs. I will also comment that 90 percent of the responsibility lies squarely on the consumer's shoulders for reckless spending. But shouldn't advertisers/credit card companies be held responsible for encouraging that spending? I know people who've had to enlist the help of companies like creditsolutions.com to reduce their overall debt. I can't say I blame them for looking for an easy way out.

[Nick]

I had horrible credit since I was 18, I didn't understandhow it worked. I stumbled up on http://www.GetGoodCreditToday.com and followed the steps of their e-book starting with a secured credit card that they offer on their site. After abour 3 months I was able to get approved for a regular credit card. I am keeping all of my balances low and soon I'll be able to buy a condo at a good interest rate.

[Alex]

Nick,

How soon are you thinking that you're going to be able to "buy a condo at a good rate"? Maybe I'm wrong, but in my experience buying a house is just about the easiest credit to get, if you're being reasonable about your expectations based on your income. If improving your credit score from a risky investment to a great investment, from the mortgage lender's viewpoint, by simply getting a secured credit card then graduating to an unsecured credit card is so easy I do fear for the mortgage industry and the housing market in general.

Not to take away from you 'living the American dream' by becoming landed gentry, but maybe you ought to look more closely into how exactly credit cards impact your credit score and all of the mortgage options out there for you.

Alex