Stupid Debt

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Purple

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How do people on a low income/ with low disposable income manage to run up credit card debts of €10’000 or even €20’000?
It’s such a stupid thing to do. Given that people are adults and presuming a basic level of intelligence how can they let this happen?
The reason I am posting is that the sister of a close friend is in the middle of a court case because of debts and moans about having no money but still has the big flat screen TV, the fancy kitchen etc and won’t downsize the 4X4 even though she only has two kids.
People who end up in that sort of a predicament don’t deserve any sympathy.
 
What strikes me is how low income have high credit limits on their cc's - or is that just down to the cc companies acting someway 'irresponsible'
 
ninsaga said:
What strikes me is how low income have high credit limits on their cc's - or is that just down to the cc companies acting someway 'irresponsible'
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Or how they blame the CC companies for giving them the high credit limits. That sort of excuse stopped washing in about second class in primary school.
If someone ends up in the crud with debt it’s nobodies fault but their own. I say this as someone with a very big mortgage; if things go pear shaped and the bank take the house I won’t blame them, the government or my parents. If I enter into an agreement and I break my end of that agreement then I have to suffer the consequences. It’s that simple.
 
I agree with you but as an attempt to explain (not excuse) this behaviour, I honestly think that a lot of these people are very unhappy, if not depressed. I think spending whether it's for the home, on a car, a holiday etc is probably a more common way of providing a quick fix for depression than we realise.

If your state of mind is is a little confused/unstable as it is, it's very easy to bury your head in the sand regarding mounting debts. It's illogical of course but unhappy people do it.
 
I have to say I would agree - if we want anything we save for it - we dont really have that much at the moment as we are doing a good bit of work to the house and so far have spent 20K in doing so - no loans - all money that was saved..
But also what is annoying is when some one posts in about having debts or a huge mortgage and advise is offered - and then rubbished.

When we started out we took in tenants and dis what ever we could - 2 jobs at one time to get the monies we needed to get the money together to do the house....

bewildering...
 
Purple said:
The reason I am posting is that the sister of a close friend is in the middle of a court case because of debts and moans about having no money but still has the big flat screen TV, the fancy kitchen etc and won’t downsize the 4X4 even though she only has two kids.
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Just out of interest, do the companies that are owed money have the right to seize these goods and sell them to cover debts? Or is that what the court case is about?
 
ninsaga said:
What strikes me is how low income have high credit limits on their cc's - or is that just down to the cc companies acting someway 'irresponsible'
Click to expand...

I think I read recently that cc companies cannot now give automatic increases in limits without asking you first. Unlike the situation before where you got a increase even without asking for it. THat may make some poeple more aware of their limits.
 
Purple said:
How do people on a low income/ with low disposable income manage to run up credit card debts of €10’000 or even €20’000?
It’s such a stupid thing to do. Given that people are adults and presuming a basic level of intelligence how can they let this happen?
The reason I am posting is that the sister of a close friend is in the middle of a court case because of debts and moans about having no money but still has the big flat screen TV, the fancy kitchen etc and won’t downsize the 4X4 even though she only has two kids.
People who end up in that sort of a predicament don’t deserve any sympathy.
Click to expand...
When Eddie Hobbs had his show on T.V. we had great fun spotting the widescreen T.V., new kitchen, shelves of DVD's, and expensive furniture, in the background as the poor souls wailed at their debt.
 
Purple said:
. . presuming a basic level of intelligence how can they let this happen?
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This may be why you are surprised or perplexed at such situations. I wouldn't make such a presumption but rather I apply an '85% Muppet' rule; in light of such a rule Stupid Debt is unsurprising.
 
My parents ran up a massive amount of debt (£100,000 stg) on credit cards, and this was after consolidating previous cc debt into their mortgage - overall debt £150,000. My father came clean about it all last year when he was forced to sell the family home to pay for it all. He managed to hide it from my mum for years, even whilst she was racking up a debt herself. I talked to him about it as he didn't actually have much to show from it - and it all came down to snowballing debts over years onto new credit cards, without closing old ones, and getting cash out on the cc's to put in his account to cover regular direct debits. Lots of holidays and restaurant meals accounted for a lot of it as well.

It was a crying shame and they still haven't learnt from it. I discovered, when I was last there, that he had opened another cc. They still have a small sum left over from the sale of the house that is rapidly disappearing as they suddenly decide that they need to fill their new rented place full of new furniture and a new TV. I despair for them really - my wife and I work hard to stay clear of debt. We put off replacing our 14" portable telly for 5 years until we felt sure we could afford it.
 
Although the banks are somewhat responsible for offering credit far too easily to people with not enough income, the ultimate responsibility lies with the individual.

But unfortunately in this day and age, people seem to be addicted to buying things. We are more materialistic than ever before, and people feel they need to have things that they don't actually need. If they get themselves into silly debt then they really have no-one to blame but themselves.

But I remember when I got my first credit card many moons ago, it was very hard procedure to get your limit increased. And you would usually start at around £800 or £1000 max. Now they increase your limit willy-nilly, and they often offer starting limits at £10K. I suppose they want you to spend on it.

I have seen a few TV progs recently highlighting this issue of personal debt. One on a few weeks ago showed a woman who had approx 22 cc's, with £102,000 on them. Their monthly household income was £3k per month, yet their minimum payments were £2k !! This is just crazy, but the woman seemed to be addicted to it all. But when she lined out the cc's, she had 6 Visa's, 7 Mastercards etc. Surely these companies are giving out cc's too easily if an idiot like this can get so many.
 
Purple said:
Or how they blame the CC companies for giving them the high credit limits. That sort of excuse stopped washing in about second class in primary school.
If someone ends up in the crud with debt it’s nobodies fault but their own. I say this as someone with a very big mortgage; if things go pear shaped and the bank take the house I won’t blame them, the government or my parents. If I enter into an agreement and I break my end of that agreement then I have to suffer the consequences. It’s that simple.
Click to expand...

Don't get me wrong - I don't blame cc companies for people spending - its more in line with why do cc cos even allow such high limits for people with low incomes.
 
BOXtheFOX said:
When Eddie Hobbs had his show on T.V. we had great fun spotting the widescreen T.V., new kitchen, shelves of DVD's, and expensive furniture, in the background as the poor souls wailed at their debt.
Click to expand...

I have always maintained that buying DVDs is one of the silliest things you could do with your money.

I used to do it and have around 40 or 50, but have not bought a DVD to own for quite a few years. Why? Because it dawned on me that I never watched them. Again it was the whole 'I must own that great film'. But after you buy them they lie doing nothing. I realised that if I ever wanted to watch it (usually happens about once every five years if most people are honest) then I could nip along to Xtravision and rent it. So the buying stopped.

I frequent a Home Cinema forum and it shocks me how much money people have spent on DVDs. Many actually seem to take pride in telling you that they own 1500 or 2000, and that many are unopened. Whats the point? Again I think its the whole materialistic thing. Its like a one uppance over others. Recently I posted a question on the site asking if people think that their DVD collection was a waste. About 95% said yes. Some because they came to their senses, others because they had started to buy HD DVDs and realised that they would have to buy ALL the SAME discs AGAIN !!
 
I don't see why the credit card companies should be blamed (or the banks). If people blame them for their troubles then they are admitting that they are too stupid to run their own lives. Should the state then put then into care and take their name off the electoral register? Is god****e a legal term? If not then should it be?
 
How do people on a low income/ with low disposable income manage to run up credit card debts of €10’000 or even €20’000?
It’s such a stupid thing to do. Given that people are adults and presuming a basic level of intelligence how can they let this happen?
Click to expand...

One of the reasons these people have low income i.e. poor jobs could be because they dont have much common sense.

I think I read recently that cc companies cannot now give automatic increases in limits without asking you first.
Click to expand...

These people are generally very quick in asking for increases in limits. They regard the limit as a target and once they reach it, they need a higher target. I dont think it ever occurs to them that they have to pay it all back some day.

I agree with you but as an attempt to explain (not excuse) this behaviour, I honestly think that a lot of these people are very unhappy, if not depressed. I think spending whether it's for the home, on a car, a holiday etc is probably a more common way of providing a quick fix for depression than we realise.
Click to expand...

I would agree that a lot of these people are very unhappy - wouldnt you be if you were stuck in a low paid dead end job with no prospects. These people have very little to look forward to in their day to day lives.

One behaviour that I've noticed is that low income people live in 2 x 6 month cycles. They spend 6 months of the year preparing for and talking about their summer holiday - usually some cheap resort in Spain etc. and the other 6 months of the year preparing for and talking about Christmas. Their lives are so bad that all they have to look forward to is these two annual events. They are the types who book their holidays in January and start chrismas shopping in September. They spend 6 months of the year in "holiday clubs" and the other 6 months in "christmas clubs".
 
I think its easy to judge others, a lot of people in incredible debt actually have good jobs and have prospects and a lot of people with lower paying jobs actually have an abundance of common sense and no debt. There is no generalization debt (stupid or otherwise) effects all types of people. While the debt is stupid more often than not the person isnt.

While I dont think credit card companies are to be blamed that doesnt make them blameless.

I can see 2 types of people (anyone can fall into debt but in Ireland today these 2 categories that seem to be very prevalent) that are prone to falling into debt and therefore more prone to the stupid debt. There is the young professional, everyone around him and her are buying houses, cars, xboxs, latest fashions, 2 holidays a year most of the peers have high CC debt. Unless they hang out on AAM or have a parent or friend who explicitly points out the danger they are in they find themselves owing a lot of money.

The second type are young families, creche fees, cars, kids, pressure to keep up with jones, not wanting to let your kids down at christmas time, Mortgage etc. slowly and surely bills consume all the salary and living is off the CC. This group are more savvy than the first but are caught in a debt trap of types.

Getting out of debt is like dieting - every new year you swear you'll lose it this year. You read testimonials, you follow books perhaps but there has to be a click inside you to make you want to lose the debt to make that ultimate step.
 
I have a friend who while he didn't quite snigger or sneer, definitely thought that I was a penny pincher when it came to betting. . When I stuck a £5 on a horse on the tote he bet at least £100 and usually more with the bookies. more than once he placed bets of £250 'to get out' as he phrased it himself. He just couldn't understand how anyone could enjoy a small fun bet. In the end he too had to sell his house and downsize. To be fair he now won't go to a dog track/racecourse and avoids bookies like the plague. So he doesn't bet at all anymore. It's an addiction and with internet betting its very easy to get into debt. Personally I still get as much craic out of a €2.50 football trixie (cost €10) as ever and if I win so much the better but I also know its a mugs game and you just won't make money gambling, but stand to lose a lot if you get sucked in. Imo internet gambling is going to cause serious debt and I don't know how it can be monitored.
 
At the end of the day, I believe the individual has the ultimate responsibilty for their debt but there are a couple of things that do make it difficult, especially with the first type of debt casiopea described.

Ireland is a very materialistic place, where materialism is encouraged at every turn and I would go so far as to say that if people woke up all of sudden the economy would be in bother. Every time you turn on the TV, browse a portal website, go to the cinema, stand in a bus queue, watch sport, even in the doctor's waiting room there are constant ads for 'stuff' and experiences/lifestyles are only ever threatened for space by ads from banks on how to finance the stuff. We even had a delivery at work of a stash of car magazines sponsored by PTSB! No car got anything other than 4 or 5 stars out of 5 - fancy that :). I reckon it suits a lot of big business, banks and the government to have everyone hemmed into jobs that they must hold down to keep their materialistic tastes and debt serviced.

If I can see that, then lots of others should too but many people don't question what they do or what they are told overly closely. I don't think that independent thinking was ever properly taught to people around my age (30); some people just stumble on it or mature into it. And lots of people don't have time to stand back and figure it out what with all the running and racing to and from work and gyms and constant entertainment merry-gorounds and buying stuff. I just don't think they realise that they are not leading their lives but it is leading them instead.
 
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