Wednesday, November 14, 2007

All About the Benjamins

So yesterday I became a grown-up. I got an American Express card.

I know, it sounds totally ridiculous. My main motivation was so I could buy good tickets to see Wicked the musical – you need an American Express card to buy advance tickets, apparently, but it was also time to see if all the work toward repairing a couple bad years with credit in my early 20s had finally paid off. And apparently it has.

My husband and I had abysmal credit when we met. Lack of credit education and attending major state universities led to us both naively signing up for more credit cards than we needed and getting in over our heads. Luckily I was so bad at it that my debt topped out at about $2000, but the marks it left on my credit report were deep and dark, especially from the car I bought that I couldn’t afford. Someone somewhere put the idea in my head that if I paid each bill every other month (credit cards one month, the car the next), I could make it work. I’m still in awe that I could have been so dumb about it, but there it is, and I was unable to get even the tiniest credit card until about 4 years ago. Ditto with my husband.

Fast forward to today and in four years we’ve been able to clean up our credit. The days of being unable to get a credit card seem far off now that we have almost $20,000 in credit limits. Oh, the damage we could do with that kind of purchasing power...

But here’s the thing. We’ve made the mistake already. We corrected the mistake and learned from it. We never spend more than we can pay off in one, maybe two months, and we pay the cards off in full. When family members have learned that we have no debt, their response is almost inevitably: “Well, you don’t have kids.”

Don’t they see a problem with this? So many people think about “living within their means” and they include credit cards as a part of their means. Sure, the credit cards give us $20,000 that we could go out and spend on stuff. That doesn’t mean we can afford it.

But if we had kids we’d almost certainly be in a position to use those cards to get us by. The home in the good school district, the practical vehicle, the school supplies and clothes, the extracurricular activities—we couldn’t begin to afford that and still save for the future. Retirement? Hell no, not when there’s college tuition to think about! Traveling? Not when you have to pay for another person. And we do okay financially.

Shift focus to a couple we know who’ve just become pregnant. Husband is freaking out because he needs to get a better job. They do okay, but struggle a lot financially because they live in an expensive area and both work fairly low-paying customer service jobs--they never went to college and neither has a real trade. To think that they’d be able to stay in their area after the baby’s born, especially if Mom wants to stay home (or, if she wants to work, she has day care to think about)… it’s just not reasonable. Unless they rely on credit. They already complain about their credit card debt, so what are they going to do when they add this expense to the mix while neither of them are making any more money?

They’re smart people, but having a child right now just seems like such a foolish move for them. But she’s getting older (she’s 36), the window’s closing. They seem to follow the “God doesn’t give you more than you can handle” philosophy, but really, how can they expect to do this? It’s all so impractical that I just can’t wrap my head around it. I’m thrilled that they’re happy—I know they’ve wanted this for awhile but have been waiting for “the right time”, but how this translates into “the right time” is simply beyond me.


Neda said...

I'll be in Chicago just before Christmas and we're definitely seeing Wicked while we're there (a reward for my agreeing to freeze my ass off at Soldier Field in December). I hope you get your tickets soon! Who knows, we may cross paths.....

GottabeMe said...

I guess their definition of "the right time" has changed to mean "it's now or never". Funny how that happens.

Yeah, add more stress of a baby and even more debt on top of already strained finances - that's a recipe for disaster. Sad.