Breaking Credit Card Dependence
Christian Financial Network - Americans are credit card crazy. Despite a down turn in the U.S. economy, millions are still spending and using plastic to do it. New numbers from the Federal Reserve show Americans, young and old, running up a record $1.5 trillion in credit card debt.
Many Americans have amassed numerous cards just to accommodate their growing debt.
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“At one time we could probably count 18 total,” said Dan Rathbun. "Between VISA cards, MasterCards, store cards and gas cards… They were all maxed out."
For Dan and Pam Rathbun, the perils of plastic left them drowning in a sea of debt. But together, they are looking for ways to break free from their old spending habits. "The more we can pay them — that brings down the interest more," Dan said.
After 11 years of reckless spending, the Rathbun's piled up nearly $49,000 in credit card debts. "I often felt hopeless," said Pam.
Part of the problem was their old perspective on spending: "Spend now, pay later."
And that has gotten the Rathbun's and millions of Americans like them, into financial dire straits. Today, the typical American household has six to 12 credit cards and carries an average balance of nearly $8,000. Ten years ago, it was just under $3,000.
Travis Plunkett of the Consumer Federation of America said, "Unscrupulous lenders have targeted families based almost solely on those families willingness to get into a treadmill of debt, that is, they want people who can afford to pay at the minimum rate and not much more."
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Plunkett says debt is also smothering America's youth. "Too many young people especially, are taken by the status and ease of credit and get into a financial hole before they realize what happened," he said.
Ask many college students and they will testify to just how easy it is to get into a financial hole.
Graduate student Dauda Griffin has accumulated over $7,000 in credit card debt. But that is dwarfed in comparison with his student loan debts. “Right now it is a little over $100,000, including undergrad and medical school," Griffin said.
Surveys show that college students with credit cards increased from 67 percent to 78 percent in the last two years.
Medical student Mike Spader said, "Being a student and being on loans it is a lot easier for me, since I am cash poor, to use my credit card as my main source of purchasing."
The average credit card debt for students has also increased by $869 since 1998. In 1998, the average was $1,879, but by 2000 it had reached $2,748.
"Having a monthly loan repayment of about $1500 is pretty steep," Griffin said.
And for many, saving is not even an option.
"Any money that you do have saved up, you know that you have to use it to pay your credit card debts and pay your loans off," said medical student Celeste Palmer.
"As a nation, we are rotten savers, we have at this point a negative savings rate and in particular the younger age groups, the younger demographics are saving less," Plunkett said.
In fact, a vicious cycle has formed that is also forcing record numbers of young people to file for bankruptcy.
"Bankruptcies among the very young have increased four-fold in the last five years. Last year, about 150,000 people between the ages of 18 and 25 declared bankruptcy," Plunkett said.
And even those 35 and younger are also declaring bankruptcy in growing numbers. In 1991, 380,000 under 35-years-old filed for bankruptcy, but that number rose to 461,000 by 1999. For the Rathbun's, bankruptcy was not an option.
"It wasn't the creditors that got us into trouble, it was ourselves,” Pam said. “We were the ones who put everything on the charge cards, and I didn't feel that it was right for them to take a loss for something that was our foolishness."
With their faith in God and help from a Christian based financial counseling service, the Rathbun's are slowly digging their way out.
"The Bible tells us that God will meet our needs, it may not be our wants, which is how we got into this problem, we got our wants, but God is always going to meet our basic needs," Dan said.
In past two years, the Rathbun's have managed to pay off almost $9,000 of their debt.
"I am determined that in four years we are going to have this paid off," Pam said.
But until then, it's one day at a time.
“Well, you know, God is going to take care of us,” Dan said. “He never lets us down."
For related information, visit our content partner, Harbour Credit Counseling.
| Article Courtesy of CBN.com |
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