Now, the New York Times is not exactly my favorite newspaper. In fact, I wouldn’t normally even use it to line a litter box for a cat. However, there is an article that illustrates my point that I made in “Obama’s Credit Adventure.”
But Eddie Ward, 32 and jobless, may be one reason that rule of thumb no longer holds. For many lenders, losses are now starting to outpace layoffs.
Mr. Ward, of Arkansas, lost his job at a retail warehouse in April and so far has managed to make minimum payments on his credit card debt, which he estimates at $15,000 to $20,000. Asked whether he thinks he will be able to pay off his balance, he said, “Not unless I win the lottery.”
In the meantime, he said, “I’m just doing what I can.”
I am truly sorry that Mr. Ward lost his job. Many Americans are going through that right now. However, there are two points I’d like to make about his situation.
1.) He ESTIMATES his debt – People, unless you are absolutely destitute and have no home address at all, you should know EXACTLY what your credit card debt is. There should be no reason at all to have to estimate anything regarding your debt. My father taught me that if I had to use credit at all, that I should be able to pay what I owe at one time. That’s it. Know what you owe and when you owe it.
2.) Debt between $15,000 to $20,000. This is the lack of consumer responsibility I mentioned in the earlier post. Why in the world would you run up that much debt just on credit cards when you know it will come due. Oh, that’s right, let the banks just write it off. Please. A responsible consumer would use the credit cards at a minimum and even then would pay off every red cent that was due. I’m sorry, but if you don’t have enough foresight to understand that job loss could happen to you, you deserve what you get. Should Mr. Ward continue to pay the minimum payments, he’ll be paying on that debt the rest of his life. The problem is not a lack of disclosures, but irresponsible consumers. Sometimes, the customer is NOT always right.