Growing Up With Credit

As a young adult, there are a few key moments in your life when you feel truly grown up. Graduating from high school, getting your first car, moving out on your own—these are the classics. But in the past few decades, another more dangerous (financially, at least) rite of passage has emerged—the credit card.

I got my first Visa at the end of senior year, which shouldn’t be surprising considering the card offers started rolling in as soon as I graduated junior high (nowadays, my friends say the offers start arriving for the kids when they’re still in diapers). Problem was, no one ever explained to me how credit worked. I remember my jaw dropping when I opened my first bill and found, to my delight, that I only owed $10—the minimum payment. I knew I had dropped at least a few hundred bucks on textbooks (and CDs and clothes and so on), but I only had to pay a measly ten! I felt like I had won the lottery…or at least stumbled upon the secret to living the good life.

Until a few years down the road, of course, when I left college with a degree—and more than $10,000 in debt. I had always thought of debt as something that only happened to wild spenders, the kind of people who buy a new, larger big-screen TV every Christmas. But now I know it can happen to anyone. I don’t think we’re in a credit meltdown because Americans are over-the-top greedy or materialistic. I think it’s because no one ever told us how to make good credit choices (or we were too stubborn to listen when they did).

Back when my parents were in high school, they had to take home economics. We poke fun at home ec today (between the sewing, cooking, and cleaning, it’s so 1950s homemaker), but those classes taught young adults how to survive in that time period. When I graduated, I couldn’t cook a meal to save my life, had to take my jeans to the tailor for hemming (which I still do), and didn’t really know what debt was.

We need to do more to help our kids handle today’s obstacles. And until the public school system picks up on the idea, it’s up to us to teach them—and ourselves—how to spend wisely.

If you swipe your cards in front of your little ones, they probably think you’re paying with magic—not money. Make sure they understand everything that goes on the card also goes on the bill—and that real money comes out of your checking account to pay that balance. With older kids, it’s even more important. You probably tell them money doesn’t grow on trees, but if you treat your credit card like a money tree, they won’t believe you—and they’re likely to make the same mistakes.

You can’t really preach what you don’t follow, which means you might need to re-educate yourself. If you’re carrying credit card debt, stop. Don’t apply for any new cards or loans. Quit spending more than you earn. Can’t figure out how? That means it’s time to make a budget and identify places to cut back.

Pay your credit card off in full each month, or at the very least, make more than the minimum payment. Maybe you signed up for the low promotional rate when you got your card, but most credit companies hike that rate up to 18-40 percent after the first few months. Ask yourself, would you pay $300 for something that was marked $100 in the store? Of course not! But that’s what you’re doing in the long run when you only make minimum payments—which barely cover interest. Credit card companies aren’t giving you a break—they know that the less you pay each month, the longer you will have to keep paying, giving them more money in the process. Wouldn’t you rather keep that cash for your family?

All it takes to change your credit habits is a little motivation. Changing your past is not so easy. If you’re struggling with debt you’ve already incurred, don’t feel bad about seeking help. Call or email DebtStoppers to meet with one of our debt relief attorneys. We’ll help you get your finances in order and prevent foreclosure on your home. Maybe you never passed Credit Card 101, but it’s never too late to learn.

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