Wednesday, June 14, 2006

Death By Plastic

My friend Tony Lewis, who is the father of the cutest child born in 2004, has created a new blog, "Death By Plastic."

He's using this blog to discuss the perils of today's easy-credit, instant gratification society, in an easy to read and follow format. Speaking as one who has fought plenty of credit battles in her life, and who (with the help of some common sense, a good marriage, and a little bit of Paxil there for a while) has emerged on the other side sane, whole, and debt-free, let me encourage you to read what Tony has to say and take it to heart.

Debt and credit are probably among the most important issues facing American society today.

Well, sure, there's the war, and drugs, and environmental decay,and a few other issues...but economically speaking, personal debt affects every single citizen every single day. I see this in so many ways.

Fortunately, my friends are the smart ones who know how to act with credit. I don't think any of my really good friends are careless with credit. Hopefully, they've listened to enough of my cautionary tales to make a difference in what they do. But there are so many others...

People I see who live above their means, then apply for yet another credit card to try to keep the whole house of cards standing, to hold on the SUV, or the country club membership, or the HOUSE, for another month. The ones who are regulars at the check-cashing stores, or the payday loan companies, or the pawn shops to try to hold it all together. The ones who go out of town to file bankruptcy so it doesn't show up on the Lamar County Court Recorder.

We check credit on everyone who wants to live in one of our rent houses. What an eye-opener. MUCH of what we see is medical debt...but my feelings on health care in America are for another post. But we also see plenty of collections or judgements from places like Friedman's Jewelers...Household Finance...various auto financers...Sears...JC Penney...shoot, if Dollar General had a private credit card, we'd probably see collections from them too. We don't disqualify someone simply because of bad credit, but we do look at time since their more recent problems, how extensive the problems are, and things like that, before we trust them with one of our houses.

And when someone applies for a Quiznos franchise, their credit is checked. If their FICO score is below 670, they aren't qualified. That means, if they really want a franchise, there will be some pretty substantial hoops through which they must jump. They could - and in many cases, do - have a half million dollars in the bank, but if their credit score is low, we make 'em prove how much they want to work with us. It is always surprising to see the number of people who meet all the other financial qualifications - $250,000 net worth, $70,000 cash to invest - and yet their FICO score is in the weeds.

And if they've ever declared bankruptcy? Forget it. They will not be awarded a Quiznos franchise.

Donald Trump? Not qualified, sorry.

I honestly believe that consumer finance ought to be a required course in every high school in the United States. No kid should graduate from high school without knowing how to create a useable budget, keep a check register, balance a checkbook, how and when to apply for credit, and to use that credit wisely.

I think that's one of the most valuable tools we can pass on to our children.


Dee said...

As someone who took many years to come out from under - I totally agree. I think that we should be teaching not only our kids but should have free classes for adults!
We had some years where when the kids were small and we just needed stuff that we used credit. We have kicked that habit and have nearly all of it paid off. I felt like a 2 ton gorilla had leapt off my back.

Denise said...

And just when you think you might be getting your head above water, the college days arrive! Luckily one of our darlings will make it through school (at least I hope he makes it!) debt free. The daughter, on the other hand, will send herself and her parents to debtors prison if we're not careful. I have no issues with her choice of school, but jimminy, that tuition and room and board is expensive! Let's just say that we'll have to limit spending around here for a while. Death to plastic - I totally agree. Try saving enough for two college educations on two teachers' salaries!!!