I have been thinking about the wrong financial turns I have made and if it would have been different if I had had more knowledge. I have a friend who when her student loan came through, she bought drinks for all her friends for at least a weekend, not thinking that she was spending borrowed money that she would have to pay back with interest. I wonder a couple of decades later, has she paid it off yet?
In college is when most people get their first credit card. I think that they think of it as free money; never about interest rates or how long it will take to pay back the frivolous item they had to have.
I didn’t get my first credit card until I was in my early 20’s, was working and definitely not using it to fund my life. As I got older living in Manhattan and working in fashion, I started using my evil bit of plastic more and more, it was an accepted way of life. Everyone was doing it which is I guess why there are so many people in trouble now. Reflecting back, I wish someone would have explained the interest rate and illustrated it to me. If I bought something that would take me more than 30 days to pay off, how much it would cost in total. I am sure if an item is going to take you a year to clear the debt, which means it cost 14%(arbitrary guess) on top of the original price, I would be put off.
Growing up in the 1980’s, we thought there would always be more money to come. I used to do pretty well as a part time bartender, it seemed like the money just flowed into my hot little hands. When I was in college, I used to put things on Layaway. Even some fashion shops in NYC used to let you make a few payment to get those boots you were longing for, then you would work extra hours at your part time job to get them as soon as possible. These days Layaway is not as prevalent but it is apparently making a comeback. Giving your child a credit card was not the thing in those times and if your folks did give you one it was understood it was only for emergencies. Clothing was not an emergency.
Are people teaching their children about money in this recession? Should being financially responsible be taught in high school? I am sure my financial life would have been very different if I had known about the implications of credit cards and borrowing. What are your thoughts?