Monday, May 5, 2008

My History with Credit: An Alternative View

Growing up, neither of my parents had any type of credit card. To my knowledge, my father never had a credit card during his 70+ years of life. In fact, I'd be pretty surprised if my father ever had a credit account of any kind [for anything other than a short-term installment payment for something like medical or dental bills]. My mother only opened credit accounts well after I'd finished high school and started living on my own. My father was a saver: when I wanted to play the flute and kept on pushing the issue, he actually bought me a flute, instead of renting one.

I got my first credit card when I was 21 or so. I don't remember exactly what age I was or what I bought, but I remember the circumstances: I was in a department store with a male friend. I saw something I wanted, presumably didn't have the money for it, and he convinced me to open a store account. The limit was only $100, and what I bought was far less than that, but that was my entree to credit cards. I'd been amazed it was so easy to get credit, and I felt like I'd entered some new level of society. I felt special.

The point of this is: I didn't grow up thinking credit was an option. If the money didn't exist, xyz didn't happen. Period. I thought only rich people had credit cards. It wouldn't have made sense to me to have a credit card if you lived paycheck-to-paycheck like my mother and I did. It's only the last few decades that credit has been so heavily pushed as the "solution" to buying things that you can't afford.

We need to get back to the way things used to be: living explictly on our earnings. Period.

Imagining what it must be like for a college kid now is shudder-inducing. Having so much consumerism constantly paraded in your face, in tandem with "Can't afford it? Then apply for our credit card (at a low! 21.9% APR!)!" This generation is being bombarded with offers of easy credit, instead of being taught how to manage their money. They are not being taught how to manage what they have. They are almost certainly, also, seeing their parents with significant debt. Maybe not bankruptcy-level debt, but neverending credit card debt. Children emulate their parents.

I don't think ease of obtaining credit is the problem. The problem is people are not financially educated when they're young. They should be taught that living within their means should be the goal and a credit card should be a tool. The myth of the quick fix of credit should be debunked.

1 comment:

Andy said...

Bravo. Education and changing the spending culture are the only long term solutions. They should make passing a finanical literacy/common sense course mandatory before graduating.