Wednesday, November 26, 2008

Killer Kredit or Creditucation

Credit can make a break you. Many people are learning the hard way but who is to blame? My first instinct is to blame the parents for not teaching their children the basics of money management and credit building. Unfortunately they aren't educated on the issues themselves so can we really place the blame squarely on the shoulders of these parents who were never taught either?

Instead of making Geometry and Algebra II mandatory, I think we should build on classes like Economics. I was given only half a year of Economics my senior year and it was worthless. Sure it was funny playing "stock market" but I didn't learn anything that I would be able to use in daily life.

I feel classes like advanced Math, Chemistry, and Biology should be optional for students who intend to pursue a college education in those subjects. A mandatory class should include real life topics. How many times haven't you heard students argue, or argued yourself, that what is being learned in school isn't something they would ever use in life? I know I made that argument myself when in Geometry and you know what? I was right. I didn't know what I was going to do for a living but I knew I hated the subject. I did fine in the class, it was actually very easy, but it was a waste of an entire year for me.

Money management would have been something I know many of my peers would have benefited from.

As a child, I watched my father pay is bills and control his credit every single day. I learned early on that it was OK to get as many cards as I like. As long as I find one that doesn't charge annual fee's and I paid them off completely every month. Every, single, month.

I have over 700 credit now. I have never spent more than what I had in the bank to pay off completely and only used to credit cards to build credit. I didn't view those cards as mini-loans. I saw them as tools for a purpose. Compressed cash so to speak. If I didn't have the cash in the bank right now and a really good deal at Best Buy would be gone tomorrow, so be it.

Be wary of the suffering that comes from wanting nice things.

My credit is great because of it. Sure I didn't always have the nicest shoes and fancy clothes or cars like my friends did but now I have a home that is all mine, clothes that I can afford, a new car in the garage and they still live at home with their parents looking sadly at pictures of their beloved SUV that just got repo-ed.

So this Friday, be careful. Even if you see that T.V. that you really want at the lowest price you have ever seen it, if you don't have that amount and more already in the bank specifically reserved for the purchase of that television, DO NOT BUY IT. Rebuilding the countries economy starts with rebuilding your own. The credit companies wouldn't be in trouble if we didn't try to live beyond our means. As much as we want to put the blame on greedy corporations, it is really us who are to blame.

If we had been responsible with our own money, we would not be in trouble.


Sarah Jane said...

I couldn't agree more with this entire blog. One, high school classes are so out of touch with what we really need to learn before we go out into adulthood on our own. Two, each of us need to be personally responsible for rebuilding our own credit before we start looking to someone else to fix it for us.
My credit score was 780 when we bought our house. I, too, paid my bills on time ever since I started getting bills. Owning my house and having a lot of equity I thought would set me up with a safety net in the future. Then we refinanced into the WORST loan ever. And then the market took a dive and then another and another. My credit is shit now. I will not even look at it, I might puke.
Oh and about parents teaching their kids how to manage money, that would be good but I do think it should be required teaching in high school. My parents were HORRIBLE role models in money management, to say the least. In economics I "learned" about supply and demand, GNP, and a buncha stuff that I NEVER needed to know. Now that you bring it up, something does need to change.

Dawnie said...

I agree also. I know for our credit problems-it was our own poor choices. You read my credit card grief this morning.

I dont carry huge debt on my cards at all and could pay them off if I choose. I felt because of our poor history, I needed to show longevity in being to pay on time and keep accounts in good standing. So i dont pay off monthly.

My credit score isnt to bad but I need to get it up another 100 points to be where I want to be.

I dont buy on impulse--(to often).

We do mostly cash at Christmas time so we are ok there.

What I'm trying to do is get to a point where IF i want a home again-I can..I'm still not sure I even want one. I dont want to put these outrageous prices nor have hefty mortgage payments each month.

I dont know the perfect answer anymore but I do know that sometimes in life--you have to use credit and you cant pay off I'm real careful in telling that to people. We went thru something personally about a year ago that if we didnt have credit to use--we would have been forced to make a painful decision that neither of us wanted to make. And we couldnt pay the debt in a month--it will take us 2 years but again--it allowed us to make a choice we both felt we wanted to make.

Iris said...

I have one credit card that I am working on paying off slowly. Guess what? The balance is like $150 :S LOL
I but the thing is that I have been putting ALL of my money away in the bank for a big project I am going to be working on soon. So, I am extremely "broke" I have not had any money for myself in months. It's been really tough, but seeing my savings build has been gratifying.

I am especially sorry that I will not be able to afford "decent" Christmas gifts this year.

I will have to give away small gifts to everyone I love :(

But it's all for the best and I know that next year, things will be different :)

Anyway, I totally agree with you. I think schools should take some time to teach students about real-life situations.
But they may feel like it's not their responsibility. After all, it should be the parents. BUT if they taught today's children, they would be teaching tomorrow's parents and so on...

Dawnie said...

thats one of the reasons I didnt go to college..I just couldnt see having huge debt for classes that didnt pertain to what I wanted to do.

At the age of 50 I still toss going to school to get "coveted" degree.. but then again debt scares me and still--I dont want to take classes that will never ever be used in what I do. I found a way to be near to what i want to do--make good money and do it without a degree.

Overall debt scares me big time.i think think losing our home was the biggest lesson in life for me.

HektikLyfe said...

>Sarah: I think those little registers and plastic toy credit cards for kids are the perfect way to train our kids. Allowances. We can provide loans.

Every time we go shopping we see kids dragging themselves across the mall, screaming at their parents. A perfect opportunity to learn this lesson. "You want this? Then your little training diaper wearing butt is going to work it off." I'm joking but not really.

>Dawnie: If you have the cash, put it on credit and pay it off. That is a great way to build credit. College: Everyone knows about the animosity I hold against the entire industry. Unfortunately in order to obtain the career I strive for, the one that pays, I need that stupid worthless piece of paper that proves I know how to do a job I learned how to do on the job. Moronic isn't it? Losing my home is one of my nightmares. It causes many nights of restless sleep. It is a fear that never goes away. We are well off and I am always concerned about that.

>Iris: Great point. Its a lesson that only needs to be taught every few generations and one that is relatively easy to understand. Don't spend what you don't have. A credit card is not a magic cash machine.