This & That: Smell the Coffee Edition
Posted by Gail | Filed under This & That
Sarah wrote: I was wondering how it works with credit card companies and their responsibilities to a client, (me) in regards to my credit limit. I have a $6100 limit on my credit card, and my boyfriend took me away on a vacation to Chicago for 4 days. I went knowing that I was fairly close to my limit with roughly $600 under it, (I’m working on my debts, and I hadn’t used my credit card in months). I was expecting to spend some money and that if I went over my limit that I would be told by the credit card company. I was never told, I ended up getting somewhat out of control with my spending and came home at $1700 over. I realize that it is my job to monitor my accounts, but at what point does the credit card company have responsibility since they deemed my credit maximum of $6100 knowing that over that was over my financial limits. How can they not deem me credible enough to raise my credit limit, but can allow me to spend much more than what that credit limit is? Why didn’t they stop transactions since they set the limit? I was relying on them somewhat as math is clearly not my strong suit, and I needed them to follow-through on their promises to also monitor my account and prevent excessive spending. How did they know I didn’t have my card stolen and someone was on a spending spree? I never even got a phone call inquiring as to my (excessive) purchases.
I am taking responsibility but I really don’t believe this is entirely MY fault. I could understand $200 dollars over, but $1700??? Why did I even have a limit in the first place? I feel completely taken advantage of where I have 22% interest on an amount over what the agreed upon credit limit was, and $35 over limit fees every month. I am not able to financially pay the whole thing off, and can meet just over the minimum payments – which they would have known because my credit limit is not allowed to be raised. What do I do? I feel entirely screwed over and trapped by my credit card company and I would never have been this badly off if they had done what we had agreed upon with the terms of my credit card contract – a limit of $6100. Am I wrong, is this entirely on me, or do they have any responsibility whatsoever? I feel they just do whatever they want, and I pay for it. Please help.
Gail says: You say you are “taking responsibility” and then you say you don’t believe this is entirely your fault. Hmm. I’m questioning your commitment to taking take of your problem. You’re talking the talk, girl, but you are not walking the walk.
Credit card companies don’t have any responsibility to stop you shopping. In fact, if you go over your limit, many credit card companies charge you an “over limit fee”, thus making even more money from your lack of self-control.
If you are counting on the credit card company — which, by the way, makes money off your inability to take control of your spending — to call and warn you, you’re nuts. They’re happy when you rush off and scratch your consumer itch because they’ve got you right where they want you paying loads of interest and, perhaps now, even fees.
If you’re screwed it’s because you’ve screwed yourself. And if you’re trying to blame the credit card company because you have no self-control, then it’s time to wake up and smell the coffee.
I am in total awe of your disconnect with your own personal responsibility for the mess you’ve made.
Stop being angry at the credit card company for digging you this hole. You dug the hole. Now it’s time to get yourself out.
Turn your anger into positive action. Make a plan to get out of debt by doing whatever it takes, and then tell the credit card company to take a long walk off a short pier… that’s the best revenge. It’s time for you to take control of your money and your life.
K wrote: I’m 24 years old and have approx $60,000 in debt. The majority of that debt is due to a home I co-signed on that foreclosed leaving a $35,000 shortfall. The signer filed for bankruptcy and now my wages are being garnished bi-weekly at $250. I have a student loan ($11,547 balance) but have only been out of school for 3yrs and have a car loan that I pay $504 monthly for a 66-month lease to own vehicle ($10,225 balance), I am in my 3rd of my lease, I have one department store credit card that is closed and I’m currently paying off. I work for the TDSB and make a fairly good income for someone my age but admit I made foolish mistakes financially. I am trying to decide whether to do a proposal or a bankruptcy…. I have spoken to someone and they feel I should do a bankruptcy because of my student loan because if I did a proposal I would still be charged the interest while in the proposal time of 4yrs. I’m concerned with how lenders view a applicant who has taken this path to resolving debts and what is the best way to dig myself from this hole? Please help!!!
Gail says: Whatever possessed you to co-sign a loan for someone else? No matter how much you may love a body, co-signing for them is a bad idea since you can NEVER predict how another person is going to end up behaving. And if a body can’t qualify for credit on their own, they probably shouldn’t have it.
As for whether you should file for bankruptcy or go with a consumer proposal, you need to know that your student loans will NOT be discharged under a bankruptcy filing because you haven’t been out of school long enough yet. The new rules that came into effect in September 2009 reduced the time you have to wait from 10 years to 7, but you still have a way to go to hit that mark.
Also know that debts that are secured cannot be discharged, so your car loan, which is secured by the car itself won’t be eliminated as part of the bankruptcy.
As for the long-term impact, declaring bankruptcy (or even doing a consumer proposal) will ruin your credit history, wipe out your credit score, and leave a black mark against your credit name for up to seven years. That being said, if you can’t manage your current debt load and keep a roof over your head, then bankruptcy may be your best option.
G wrote: I have a money issue that is pressing and I know you have the answer. My daughter is 28, a pharmacist and she earns about 80,000.00 before taxes. She could have finished school with no debt as her father and I paid her tuition and basic expenses, but she chose to take a “line of credit” with Scotiabank that she used in her last two years to finance meals out, pricier accommodations etc. so she has left herself with about 45,000.00 personal debt and now has a 250,000.00 condo mortgage. But these are not the real issue. The burning issue I have is that when she was growing up she was indulged with a horse and riding lessons (the usual girlhood fascination with ponies) but now she has, in order to feel less bored or fulfilled or whatever, resumed riding to the tune of, conservatively, 900.00 a month! She cannot afford this and is constantly worried about money but it seems like an addiction, and addiction that is fed of course by the stable owner who makes her own living off feeding the fancies of these girls. How do I get her to defer her riding addiction until such time as she has retired her consumer debt and could maybe “afford” it? It is driving a wedge in between us because I want to be able to see her free of debt and even help her get ahead but I refuse to help her financially while she “wastes” over 900.00 a month.
Gail says: If there were a time you should have been all over her, it was when you were working to keep her out of debt by paying for her schooling while she was going into debt for meals out and pricier accommodations. She is now a woman with a life of her own, and she has to be responsible for her own decisions. You can’t make her see the light. You can’t make anyone see the light. Believe me because I’m the Queen of Light Shining! They have to want things to be different to MAKE things different. As for the stable-owner playing into her fantasy, that’s a little harsh. The stable owner is doing what stable-owners (and horsy people in general) do… living a life. If your daughter can’t make the distinction between a need and a want, that’s hardly the stable-owner’s fault.
If your daughter’s behaviour is driving a wedge between you, you have to ask yourself why. Does she have to live by your rules to receive your approval and love? Or can you be happy for her joy, even as you bite your tongue on her horse addiction. I totally agree that you should not “help” her. The girl makes $80K a year… why in heaven’s name would she need help. If you give her money it is you who is playing into her fantasy that she can have whatever she wants whenever she wants. You, mommy, must keep your hand out of your purse, even if it all comes crashing down and she comes crying for help. She’s a big girl. Treat her like the responsible adult you want her to be. But you should go to the stable and brush that horse! You’ll be amazed at how it’ll calm your nerves. And sharing this passion with your daughter, while you speak sensibly and consistently about life, personal responsibility and your own financial challenges will go a lot further in reach her. And it’ll do wonders for strengthening your bond.