Pay the Cred Cards or Send Kids to Camp?

mandksima

Thu, Mar 18 2010, 5:11 pm

prettyone wrote:

mandksima wrote:

Wow, I can't believe people even consider luxuries they can't afford. If you owe someone money, don't you even have a halachic responsibilty to pay it back before spending elsewhere? You're not talking paying back credit cards vs. buying food or paying utility bills.

What did kids do before camp? Go back to the basics and get out of debt. If you are considering such a luxury as a necessity then I assume you're spending a lot of money elsewhere that you think your kids also really need like matching outfits or expensive dinners or pizzas or whatever. I would go over your budget and see where you can skim to maybe afford a few extras for the summer so the kids won't miss camp.

the OP asked a sincere question and everyone else here was able to respond nicely and civilly but you have to go and make all sorts of assumtions about her without even knowing anything.

FYI- credit card companies are not gemachs. They make tons of money from pple who pay their debt out slowly. There is nothing irresponsible about that. The OP said she would like to pay it much faster. she never said she wasnt going to pay. There is no halacha that says when you have to pay off debt so dont make things up.

and to the OP- I think you should pay the credit cards and forego camp this year as well. Youll be alot less stressed the rest of the year.

I sincerely didn't mean to sound nasty, just honest. I can't fathom those that would consider not paying debt back before spending on extras. My assumption was based on the ability to ask the question, that's all. Maybe many people think this is perfectly normal, I guess I run in different circles. Sorry if it sounded mean.

I never said she wasn't going to ever pay and I never said that WAS the halacha, it was a question I asked. I just asked my brother sitting here and he says there's no halacha but it is irresponsible IMO. I guess I was reading too much into it as there seems to be so many posts here lately that talk about credit card debt getting out of hand. I could understand mothers wanting their kids occupied during the day as I'd go nuts with mine home all day as well but if I owed money that was accruing interest...whatever, you're right, I don't wish to judge anyone else. Sorry, OP.

Tova

Thu, Mar 18 2010, 5:17 pm

Tamiri wrote:

Because being in debt 10000 dollars (count the zeros) is a TERRIBLE thing. There are interest, fees etc. and the amount can easily spiral out of control. We are living in a time (well, at least those in the U.S. are) where families need to relearn the meaning of debt, debt load, repayment and restraint. I believe that our OP, as a mother, owes more to her children about being fiscally responsible and not getting into debt than she owes them a camp experience.
I think that someone with the mind-set of "not being fair by denying the children a camp experience", who has such massive debt which is not a mortgage has a problem with priorities and that will trickle down to the kids who will think the "deserve" luxuries like summer camp.

I know I posted my profession a million times here but I am a CPA and nearly certified as a CFP (certifid financial planner; I passed the exam but need to get my education hours which is hard when I am so busy in the tax department that I don't have a lot of time to devote to our financial services department). I am not fiscally naive. Personally I am debt adverse myself. I don't have any debt aside from our mortgage (which I also limited to a much smaller percentage of our gross income than the recommended norms, by buying a small house).

That being said, no, I don't think $10K is a huge number or a "TERRIBLE" thing nor would I call it "massive debt" by any stretch of the imagination. I could understand your reaction better if it was $100K. But as I said, $10K for someone WHO IS WORKING ON PAYING IT DOWN (and presumably avoiding getting into the debt again) is not such a big deal.

I don't think it's such a slam dunk.

For small kids - for sure keep them home and occupied with activities.

For bigger kids perhaps I would evaluate differently if I was ever in the situation.

Tova

Thu, Mar 18 2010, 5:24 pm

mandksima, I think as follows. If someone was displaying an irresponsible attitude or naive-ty towards financial matters, I would totally advocate paying down debt and limiting unecessary spending.

But someone who is responsibly paying down (what is in my opinion and objectively) a small amount of debt does not have to allocate every penny that's not used for absolute necessities towards that goal.

I work during the day and my husband is in kollel (and learns also bein hazmanim) so for me it would be no question about sending to camp. If I didn't work I would do a ton of research on fun exciting different activities and things to do (many of which I am sure are free) and set up a structured schedule and plan a fun summer. But if a kid had a real social need to be w/ his/her friends, I would consider sending to camp (assuming day camp here).

Tamiri

Thu, Mar 18 2010, 5:37 pm

Tova, I respect your credentials but need to defend my own position. When you have a bunch of children who need tution paid for them, maybe braces, perhaps special services plus bar/bat mitzvas/weddings etc. coming up - $10K is a huge amount of debt. A person gets into the kind of debt buying things he can't afford (duh). If the person was fiscally responsible and living within his means, he would not be there. No siree. He'd have savings, not debt.
Now, when you factor children into the picture, it gets even more complicated. Usually, children mean more and not less expenses. That would mean that the disposable income may be eaten up faster by the family and it would be harder to pay down the debt. "Meaning" to pay down debt, is not the same as doing it. And putting it off makes it harder and harder to do.
Scenario: A family has $10K in debt. They are paying it off slowly but decide that instead of making the debt go away faster by using extra income at their disposal during the summer months, the children will go to camp.
Now, I assume that family with $10K in debt can't pay outright for the camp. So they put it on the card OR pay in 6 easy check installments.
Things are going along just great until one day something happens, such as the car dying. They need instant $ to buy a clunker just to get around. Or they lease something, adding to their burden.
And so on.
Do you see why I think $10K is a huge amount of debt to carry?

Tova

Thu, Mar 18 2010, 5:46 pm

I respect your position too, Tamiri, and maybe would agree more on camp being out of the question if I had more info. You seem to be making the assumption that camp means adding to the debt. I assumed, based on what the OP said, that camp would mean some of their disposable income not going to lower the debt. Big difference.

She said that summers are easier financially because no tuition. It seems they are able to meet their tuition payments (otherwise they'd need all 12 months of income to pay it). So whatever they spend on tuition per month is now available for let's say 2 months or so. I can't imagine (day) camp is more $ than tuition so they'd still be paying down debt over the summer, so I read the post as - should every penny of our tuition savings go to the debt or not.

See how I'm reading it? They seem to be doing OK financially, making responsible decisions, looking forward to debt-free living. It seems this $10K was a one-time thing (either necessity - like medical - or bad financial decisions which they are learning from now).

You don't have to agree with me, but it seems we are reading two different pictures into the OP and that's coloring our responses.

Tamiri

Thu, Mar 18 2010, 6:00 pm

Tova yes, I understand what you are saying. My thinking is that if you have money to pay down credit card debt (aka evil debt, as opposed to student loans, mortgage etc.) then just do it and get it over with because it can spiral out of control.
Debt can happen, for sure. But I still maintain that 10 GRAND is a heck of a lot of debt to be in. We don't know it's source. Nor do I. You are assuming that it's okay to use the plastic when an "incident" occurs but that is new-age thinking. Once upon a time you saved for "incidents" and if all else failed, you went for a legal loan/made a payment plan. You did NOT run to the easy plastic money tree.
What irked me was the way it was put, as "denying" the poor kinderlach something, and thus justifying putting off what needs to be gone. That was meant to appeal to our motherly hearts and it did. But I personally feel more angst reading about the kinderlach's parents who owe the cc than reading about them staying home.
So the next question would be (assuming they aren't adding to debt): at what price OP's sanity. And leave the kids out of the equation.

Tova

Thu, Mar 18 2010, 6:37 pm

Just a small clarification, thought - I do not think it is OK to go into (unhealthy) debt initially. I was not addressing that part because it already happened. I was not advocating going into further cc debt at all, nor was I condoning that it happened to begin with.

I am far from new-age thinking. I am quite old-fashioned and conservative, actually. LOL

Tamiri wrote:

You are assuming that it's okay to use the plastic when an "incident" occurs but that is new-age thinking.

I use a credit card for convenience (and to earn gift cards or money back!) but never as a "use of credit." I always pay timely and monthly. If I can't pay it, I don't charge it.

My payment due date, though, used to be a couple of days before my mid-month payroll came in and once we had unusually high expenses and I needed that pay check to cover it. I stupidly paid the balance due two days late and the next month was sacked with a $40 late charge PLUS interest for the entire balance NOT JUST for the two days, but for 32 days! as apparently the cc contract says the interest is charged until the NEXT month payment is paid if you didn't pay anything the previous month. So my mistake cost me $40 in late fees + like $150 in interest! I should have paid the minimum payment or even most of the payment (which I was able to do) and then no late fee and 2 days of interest. Most responsibly, I should have moved the funds temporarily from a savings account to pay the cc.

Very annoying but I learned my lesson. I really had never known exactly what the CC contract lets the companies do. [And I since was able to change my billing cycle so my CC bill is due a few days after my pay date.]

Then I realized that there are people who are being charged this interest on top of interest, etc. etc. and it was terrifying to think about.

Liba

Thu, Mar 18 2010, 6:57 pm

amother wrote:

I feel like we will always have money struggles

Tova, this part of the OP made me think that this was debt caused by a chronic issue, not a one time emergency.

With that in mind I think it is especially important to pay off the credit cards and free some of the cash that would otherwise be used for credit card bills. Whether they have to use it for daily expenses or could save for future emergencies or expenses like camp depends on how much they are struggling on a day to day basis.

Camp is not something that should be priority when someone has a large amount of debt and constant money struggles.

Tamiri

Fri, Mar 19 2010, 1:40 am

Tova wrote:

My payment due date, though, used to be a couple of days before my mid-month payroll came in and once we had unusually high expenses and I needed that pay check to cover it. I stupidly paid the balance due two days late and the next month was sacked with a $40 late charge PLUS interest for the entire balance NOT JUST for the two days, but for 32 days! as apparently the cc contract says the interest is charged until the NEXT month payment is paid if you didn't pay anything the previous month. So my mistake cost me $40 in late fees + like $150 in interest! I should have paid the minimum payment or even most of the payment (which I was able to do) and then no late fee and 2 days of interest. Most responsibly, I should have moved the funds temporarily from a savings account to pay the cc.Then I realized that there are people who are being charged this interest on top of interest, etc. etc. and it was terrifying to think about.

And what in the world do you think is happening with the $10 GRAND the OP owes? The CC is paying HER?????

And so, dear CPA, if it happened to you, what do you think can happen to the plebes out there? Do you think that most of the population who is carrying $10K in debt is immune to what happened to you? Now, in Israel, the credit card charge (really a debit card) comes straight out of your bank account (they are linked) on the due date, so you can never forget. But, in the U.S., we all know how it works. What if the bill doesn't arrive and the bill payer doesn't notice? What if the bill payer is busy with yomtov or something and paying the bill slips her mind? I am going to take a leap of faith here, not being a CPA and state: her charges will be more than yours were (you never carried a balance) and could cost her a week's worth of groceries, wouldn't you agree? Now, the lower the amount owed, the lower those charges will be.
I have absolutely no experience with credit card expenses (they work for me, not the opposite) besides once having to pay $35 due to forgetfulness back in 1990, and that was just on the current month's balance, which is all we every carried. For much of the balance-carrying population, that $35 is just a drop in the bucket. They don't notice $35, $75 or $150 because they don't really look at their bills.
People need to be re-educated about staying away from borrowing. If you can't afford it, don't buy it. That's really the best advice anyone can live by. And when a CPA doesn't agree with that, it seems to me it's like an unmarried shrink giving marriage counselling LOL

. Preach what you stated you live by: no money = don't buy!!!!!!
**BTW darling CPA, those charges that you make on the card should show up on your daily financial records (which you surely keep) as cash purchases, and the balance in your bank account should be depleted as you spend, even if you haven't paid for the expenditures yet. This way, you don't get into "trouble" and don't have to change payments dates on the credit card. You are basically spending what you have, and not relying on pay checks in the future. If you get what I am saying...

Tova

Fri, Mar 19 2010, 8:34 am

Tamiri, absolutely no time to answer you now, but I am finding your most recent post quite condescending and insulting. I never would have shared personally if that was the case. You probrably mean well, but sometimes it is the way something is worded. Re-read from my perspective and maybe you will see what I mean.

And in fact, re-read ALL my posts on this thread if you think I EVER advocated going into debt.

[And you have no knowledge of my expenses that I needed to charge that month in question, nor do you have any idea of the amount I usually charge on my CC relative to my monthly income.]

Tova

Fri, Mar 19 2010, 8:38 am

[quote="Tamiri"]

Tova wrote:

**BTW darling CPA, those charges that you make on the card should show up on your daily financial records (which you surely keep) as cash purchases, and the balance in your bank account should be depleted as you spend, even if you haven't paid for the expenditures yet. This way, you don't get into "trouble" and don't have to change payments dates on the credit card. You are basically spending what you have, and not relying on pay checks in the future. If you get what I am saying...

There was absolutey no trouble I got into. Moving my payment date from the 13th to the 17th of the month is absolutely no big deal.

Tamiri

Fri, Mar 19 2010, 9:07 am

Tova, nothing I wrote should have come across negatively to you and I am sorry if it did. The only negative thing that I reacted to was in your second posting:

"That being said, no, I don't think $10K is a huge number or a "TERRIBLE" thing nor would I call it "massive debt" by any stretch of the imagination. I could understand your reaction better if it was $100K. But as I said, $10K for someone WHO IS WORKING ON PAYING IT DOWN (and presumably avoiding getting into the debt again) is not such a big deal. "

I was thinking about this. We earned a nice amount when we lived in the U.S. A semi decent 6 figure salary (I was a SAHM). But with our expenses such as feeding a family of 6, tuitions, mortgage and what have you, a $10K debt would have sat heavily upon us.
I am going to take the liberty of assuming that the family of the OP, which in her words "will always be struggling" (please correct me if I am wrong) doesn't earn in the 6 figures and if they do, it's not enough. Therefore I will also assume that a debt load of $10K would be pretty massive for them. And it's a bad thing to carry while you are trying to raise a family. You noted your impressive credentials, and then went ahead and sort of gave a stamp of approval on that debt, even though you are not an advocate of debt. I don't get it. Why is it okay to have that debt if you are struggling? I may have misunderstood that particular comment of yours. If so, please can you enlighten me? Thank you and again no offense was intended in any of my posts.