Is Credit Leading to the Downfall of Society

Have you ever walked onto a university campus or into the mall and see the booths? The ones offering a free gift for applying for their credit card? Yes! Those are the ones. I constantly wonder why credit card companies are giving credit to students in the first place. More often than not, they have no means of paying their balances and see a credit card as a sort of windfall or free money to buy the hottest iPod or to pay for a round of drinks at the campus pub. Too many students are leaving college and university with a degree, student loan payments and credit card debt. God forbid if these young adults can’t get work right away and live completely from their credit facilities.

Johnny has started a great career, his student loan debt is well paid down and things are looking great except for that pesky $2,000 balance on the Visa he’s carried through college. Today, he goes car shopping. Well, everyone else is driving a fancy Jetta so why not Johnny too? He finances a new car and drives to the nearest restaurant to celebrate with his friends, putting a few rounds of drinks on the Visa.

A few years later Johnny decides to propose to his long term girlfriend. At the jewelers, they talk him into a bigger diamond in a platinum setting. Johnny knows he can’t afford this, but alas, he is directed to the jewelers in-store finance department! Johnny and his fiance throw a wedding with close to two hundred guest and take out a line of credit to cover the wedding costs and the honeymoon.

The newlyweds then decide to keep up with the Joneses’ and purchase a house, however, they don’t have a down payment. Most of Johnny’s impressive income has been serving his debt and interest on the credit cards, car and line of credit. So they set up a meeting at the bank where they are pre-approved for a $450,000 mortgage. Sweet! They find a beautiful house in a good neighborhood, take the forty year mortgage with zero down and use the credit cards and line of credit to furnish it. Wow! They are proud new home owners…wait a minute, they don’t own a red cent of that home but whatever, they are homeowners!

Johnny’s wife declares that because she is pregnant with their first baby that it’s time to trade in her old beater Honda for a safe minivan. Off to the dealership they go and walk out with a fully loaded 2007 Dodge Grand Caravan! All with 0% financing, how could you not jump on that offer?

Well, Johnny and his wife have a few more children over the years and she becomes a stay at home mom as it’s too expensive to have three kids in daycare all day. As the children grow the expenses grow and Johnny is finding it tough to keep up on a cash basis. For a few years now he’s been charging the soccer cleats, hockey registration and the yearly vacation to Hawaii or slapping it onto the “line”. Darling wife always puts the gas, groceries and that trip to The Gap on a card.

One day darling wife comes home to find Johnny has committed suicide and an envelope lays beside him bulging with credit card and bank statements. You see, Johnny had been given a pink slip two months ago and failed to inform his wife. He couldn’t live with the shame of not being able to provide for his family the lifestyle they were used to. Johnny is dead and his wife has assumed hundreds of thousands of dollars worth of debt which she’ll never afford to pay in her life time.

This is not someone else. This could be your neighbor with that big white pearly Escalade, your co-worker who spends Christmas in a cabin at Tahoe. This could quite possibly be you.

Credit is not leading to the downfall of society. So many people are in way over their heads because as a famous financial figure likes to preach FICO FICO FICO, having available credit is all that matters!

Having credit does not mean you have money, but society is lead to believe that if you buy it with your credit card or you were approved for it, that it’s yours. It is this mentality, not credit alone, that is leading to the downfall of society.