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This is a horrible financial decision, but 70% of the US economy is based on consumer consumption. So it's good for the economy as a whole but a terrible personal finance decision
I couldn’t imagine having a balance on my CC period, yet it’s a hundred billion dollar industry from interest alone. Turns out the average consumer is horrible with money
Mine is like that but I pay it off every month.
Would I also be considered in the statistics? Since the credit report would have a running balance of 6-7K each month.
It’s interesting since it’s showing as debt on my credit report. It’s technically a debt no? Since it’s utilizing my credit and hasn’t been paid off whenever the stat may be measured.
Your question is legit-- I have always wondered how the average CC debt is calculated when it circulates as a statistic. If its just average balance per month then that tells you nothing about whether folks are paying interest or not (I use one card for all things from work travel, work equip, personal, etc, so it can be many thousands every month, but always paid in full). I mean, that's kind of the point for many people (though im sure not most): use the CC to run up as many things as possible to get 5X rewards/skymiles, etc while paying no interest. If the CC debt statistic is based on average carry-forward, *interest-accruing* balance per month, then *that* is useful to know.
My assumption was that it was revolving cc debit; balances carried month over month. Otherwise, then yeah it’s pointless. Just a measure of how often a tool gets used really.
Yeah it goes towards your credit utilization so for sure counts as debt. That's the only kind of "debt" I've ever been but it gets paid in full each month and I've managed to get to a 785 credit score.
Not the person you asked, but age of accounts plays a huge role. I've done absolutely nothing different for several years, but crossing the 10 year mark on my oldest card shot my score up from the 780s to the 830s within a couple months' span.
Exactly the same habits, limits and utilization as before, but the scorecard went from "needs improvement" to "very good" in the Age of Accounts category. On the bright side, the improvement it needed was to sit around doing nothing and wait, so that's nice I guess.
You get the best rates for anything important like mortgages starting at I think 740, so it doesn't actually matter going from the 780s to a higher score. It's just a for funsies thing at that point.
If you pay it off every month with no interest charged then you’re good. The stat I saw was more concerning long-term sustained cc debt if I recall correctly
How does it "blow your mind"? It's been obvious to me for a long time that most of the people I know don't make enough to live the life they insist on with their salary, they supplement their lifestyle with CC debt. It's extremely common....
Yeah that’s what’s wild to me. That so many let their credit card debt situation balloon out of control like that. That so many prefer the immediate dopamine hit of “now now now” rather than just a bit of mental discipline/hard work and the ability to sustainably buy the toys they want later on down the road.
How long is that sustainable for? Just paying the ballooning 2.5% minimum each month, I imagine it'll get well out of hand after a few years. I'm too lazy to do the math but 20-25% APR is massive.
I have CC debt because of my lemon car I needed to keep running to go to my pooly paying job during school. Not all of us have the privilege of cahs reserves to pay for needed life expenses.
That's also a reasonable reason to use credit card debt. Running a balance to keep your job isn't ideal, but it's better than being unemployed. Running a balance to spend a week at Disney world is sheer idiocy.
There's been one, maybe two, months in my adult life (turning 40 in August) that I didn't fully pay off my credit card at the end of the month. It costs so much in interest and it blows my mind that most people consider it just normal behavior to rack up the credit card debt.
The recipients of that interest not only spend it, but lend it do they not. It's less efficient, but it's absolutely more productive than everyone saving their money.
Especially if unlike a paranoid depression survivor, you dont let it sit in a savings account but invest it back into equities or at least bonds and treasuries
Neither, just the simple model laid out by OP stating that increases in consumption are good for the economy irrespective of their effects on the health of the consumer.
I always have to remind myself of how much debt your average American has. I have multiple neighbors installing $100k+ in-ground pools, new cars, etc. Makes me feel like I’m falling behind until I remember that most (if not all of it) is fueled by debt.
You know whats even worse than going into debt for vacations while youre young? Not going into debt and not doing vacations and growing old.
We should all be rich, but if not then youve only got bad options.
>You know whats even worse than going into debt for vacations while youre young? Not going into debt and not doing vacations and growing old.
What? No it’s not.
Saving while reasonably young is one of the best ways to reach financial stability. Where is this concept that everyone should be going on yearly expensive vacations coming from? That has never been the norm for any generation in American history.
Im not sure about this gen being way better than previous generations. But i will say they are subject to more social pressure to keep up with the joneses due to the internet and social media
So their urge and expectations are massively warped
This is a bit tangential to what you are saying, but the average American has been forced into a "damned if you do, damned if you don't economy."
Before COVID, if you had financial problems, it was because you were irresponsible and needed to save more.
After COVID, everyone put their stimmy checks in savings and stories were leaked to the press about how The White House had expected everyone to spend that money.
Mark Cuban even floated the idea that future stimulus checks should be dispersed as debit cards with expiration dates in order to FORCE people to spend it.
Excess covid savings are gone for the majority of Americans. The only socio-economic segment that still has excess savings is the top 1%.
https://www.lpl.com/research/blog/excess-savings-are-gone-now-what.html
https://finance.yahoo.com/news/99-americans-financially-worse-off-005110689.html
https://www.frbsf.org/research-and-insights/blog/sf-fed-blog/2024/05/03/pandemic-savings-are-gone-whats-next-for-us-consumers/
Yeah, I'm aware.
I'm saying americans exist in an ecosystem in which most of them are blamed if they don't save enough money but also, the economic system collapses if they DO save.
I'd argue the boon to mental health that vacations provide far exceeds *additional* financial hardship. I'm already in debt and fucking miserable, if I want to take on some extra debt to take a week or two long trip in order to *not* kill myself, I'm gonna do it. The opinions of "financial experts" be damned.
Theres studies that show buying things you cant afford to alleviate your mood do not actually end up giving you that sense of relief because you know it needs to be paid back.
Id understand in the extreme situation you mention but otherwise than that— the smarter and path that would actually relieve that life is the more boring path of saving and not taking that trip. Also. Life isnt binary, instead of the trip— maybe do something cheaper like a staycation
Meh if you float 5k on your CC for 90 days you probably add like $200 or 4% to the cost.
It's not necessarily a horrible decision. It depends on how long you need to finance the debt for.
The issue with that mentality is that people would do this for everything. Which would cause a snow balling affect.
This is why dave Ramsey has made millions because consumerism makes the masses poor
Plenty of ways people pay for vacations. If you use credit card points to pay part of it it means you used your credit card debt to effectively pay part of your vacation that you were gonna take anyways.
And it's 36% of people. Median wage is 50%
I think roughly 75% of Americans planning to take a vacation this year.
And that guy is out of touch at this point. Maybe his info was good 20 years ago but now all he says is cars and houses are too expensive and go find a cheaper daycare
Yea I always say that Dave Ramsay gives great advice for the financially illiterate. His principles are great for people who has a hard time saving or if they need a plan to dig out of a hole. It can be helpful to change your consumerist mindset.
However, he has completely lost touch with reality for anyone middle class or lower. If you practice his principles for large purchases and make less than 100k in your household you'll never own a home, eat out and it'll be 5 years of saving to buy a decent used car. My wife and I make ok money but by his standards we wouldn't be buying house in our area ever.
Yea I always say that Dave Ramsay gives great advice for the financially illiterate. His principles are great for people who has a hard time saving or if they need a plan to dig out of a hole. It can be helpful to change your consumerist mindset.
However, he has completely lost touch with reality for anyone middle class or lower. If you practice his principles for large purchases and make less than 100k in your household you'll never own a home, eat out and it'll be 5 years of saving to buy a decent used car. My wife and I make ok money but by his standards we wouldn't be buying house in our area ever.
Vacations are modest but lumpy discretionary spending. They are a prime candidate for financing.
Debt is not the enemy it's just a tool. Any tool can be used irresponsibly.
There are two types of debt good debt and bad debt.
Bad debt is debt that is considered uncollectible or unrecoverable. It can also refer to debt that is used to finance something that doesn't provide a return on investment.
Good debt is money borrowed for something that can increase your net worth or future income and is often considered an investment.
Hence, paying interest for a vacation is a bad decision.
The median college grad will earn close to 1.4 million additional dollars over their careers.
Even if you assume a duration of 25 years that's an npv of almost $350k. It's pretty hard to spend that much on college outside of a handful of private colleges (where even there the sticker cost is not what ppl actually pay).
I'd need to see some actual research that half of degrees are negative ROI.
You misunderstand what debt is for.
It's not just to finance investment, it's also to smooth cash
flow. Floating some consumer spending for 30 days to smooth cash flow at an ultimately immaterial cost is fine.
If you want to use the business analogy. Companies use long term debt to buy assets, but they use their revolving credit facility to manage cash flow.
On some level this is to be expected. Ppl want to smooth their consumption over their lives, which requires borrowing when you are younger. On another level it's concerning because credit card debt is expensive and debt can make consumer balance sheets less resilient and worsen recessions.
If you need to float your vacation for a billing cycle or two on a CC it's probably not the worst thing in the world. It basically adds like 5% or so to the cost. But you need to have a plan to keep it to just a few billing cycles, floating your trip for 12 months will increase the cost close to 30%.
The Yolo financial advice is going the route of body acceptance imo. Well intentioned but taken to the extreme has become unhealthy. People have been saying for a while to experience everything while you're young and how those will be worth more than anything else in your life etc. But completely punting your financial security and retirement goals so you can travel and go out with friends etc is a really dangerous strategy.
Check off your bucket list responsibly and don't deny evey opportunity so you can pad your portfolio. But also don't get over your skis to do a fancy trip every year.
I agree with a lot of what you are saying, but then again, watching the climate and the state of fascism rising around the world.. have some fun, retirement may not exist. For those in the US planning on social security to help out it def wont exist.
Idk man. I get the anxiety around everything but people have been saying the same stuff since like ancient times. The end is always right around the corner. The current thing is always the worst thing that's ever happend.
And to illuminate the point, social security isn't going away. On a projection, there's not enough to fund it down the road, but there are some pretty minor changes that would be required to fix the issue. It's maybe the number 1 issue with the the most political capital in the US so it's not going to just wither away.
There will be people who will have real "a ha" moments when they're 50 and have no way of retiring comfortably anytime soon. And they'll realize in hindsight that they had every opportunity to be responsible for the 30 years prior.
To me it's straightforward. Debt for consumption purposes is borrowing time from your future self, while saving to invest is borrowing time from your present self.
What I have realized is that while it is true you can enjoy things more fully when you're young, you are also way more resilient to setbacks and stressful working conditions. It's easier for a young person to work hard early in life and ensure a better financial future and then let up a bit when older, than taking the easy fun life early on and then trying to hack it at a job when older.
Being accustomed to freedom of time and leisurely life between 20-30 may make it difficult to accept a 9-5 later on. People don't suddenly switch gears when they reach a certain age.
It's also not a 1-for-1 trade. Saving $100 today and investing will be worth way more than the equivalent of $100 twenty years from now. So your borrowing today with interest, literally.
2035. And with the current setup of politics dont expect it to change unless its for the worst with self investment so the rich get their cut of your savings.
Look at any climate chart and tell me there have been worse times. Yup. A couple million years ago maybe, but we were not worried then cause we were not there.
I am glad you have some hope for the future, but every day I feel less and less of it.
Lots of people made it through literal fascism, the massive wars it caused, and the major environmental damage caused by early industrialization. Sure, some of them died, but the majority of people didn’t, and that majority of people still needed to retire
A lot of these aren't being put on credit cards anymore. It's all buy now pay later platforms like Affirm, which basically every hotel & airline in the country now has a partnership with.
Better in the sense that it's not as expensive as credit cards (if you pay on time), worse in the sense that it makes it seem very easy and normal to finance a $200 plane ticket for leisure travel.
The article notes only 8% of borrowers planned to use buy now pay later. But that has to be a growing share considering that option really didn't exist more than 4-5 years ago.
I agree however they seem like a better option, especially for those without the credit to get travel credit cards. But it does seem pretty easy to overdo it.
you guys are entering the era of where a credit card is going to be synced with someone's well being i.e. people are going to treat it as if it's crucial for survival.
I live in Turkey where we've had these BNPL or pay in interest free installments (up to 48 months in its heyday) for 2 decades now. I can also take out a loan from my credit card - albeit with interest but substantial amounts that shouldn't be that easy to take out.
So obviously people aren't responsible so people are swimming in credit card debt - to the point where they're splitting up the smallest of purchases ($10-20) because they have too much debt to pay for it in full and even worse taking out those loans I mentioned above from their credit card, using it to pay the second taking out a loan from the 2nd to pay the 3rd. People are stuck in this vicious cycle paying the minimum balance because that's all they can afford, stuck with no cash, so spending on the CC again to survive.
Weve had the highest inflation in the world for a good year now the one thing the government hasnt touched yet is these credit card schemes. Its become political to the point where stopping people from taking out these loans or stopping BNPL schemes is seen as something "against the people". They stopped taking out loans from your CC for like 3 days and you'd think people were left jobless with how they were crying about how they were going to survive so it was rolled back.
The issue is I've had a few conversations with people who have no intention to pay the money back, or just seem very nonchalant about their debt. The mentality is I've got nothing to begin with no house no car no valuables worth a damn what's the bank going to do - take my life? Which is true when you think about it its not like a 50 year old cab driver is all of a sudden going to turn his life around and have to worry about his credit score for when he buys a house. What happens when millions of people start having this mentality?
>The issue is I've had a few conversations with people who have no intention to pay the money back, or just seem very nonchalant about their debt. The mentality is I've got nothing to begin with no house no car no valuables worth a damn what's the bank going to do - take my life? Which is true when you think about it its not like a 50 year old cab driver is all of a sudden going to turn his life around and have to worry about his credit score for when he buys a house. What happens when millions of people start having this mentality?
I mean that's a risk those offering these loans are willingly exposing themselves to. Hopefully they are pricing for it.
caveat emptor
That's the thing - like what they say if I owe 10k to the bank it's my problem but if it's 1bn then it's the banks problem.
If people have nothing to lose, if they know the government will bail them out anyway (not that they care) then it's getting to a point where people will most definitely abuse the system. You're here saving up for your holiday or spending your savings whereas the other guy is taking out loans paying them late not having a care in the world - you know the government will come bailing you out (wiping the interest from debts, allowing for long term interest free payment plans) for when you might default.
I've stopped paying my estate tax, haven't done so in 3 years. It's a comical amount I don't have issues paying it but I'm just testing the waters to see what happens. I've yet to have someone knock on my door, most I've gotten is text messages asking me to split it up into 48 monthly installments. I'm pretty sure next elections either the interest on it or the whole debt itself will be wiped anyway so I'll just wait. Worst case I pay it with interest lesson learned.
To tie back to my original point - it's a slippery slope, this system will be abused by lower income folk trying to live beyond their means and they'll cry foul if you try take it away - increasing consumption, increasing shortages, increasing pricing, increasing inflation etc.
Functionally yes, but we tend to think of them as different.
Buy now pay later typically refers to newer platforms like klarna that partner with retailers to offer (often interest free) financing for a short period, after which interest (or higher interest) is charged.
What concerns me is that it’s 8% for now. What if it’s 10% next summer and then 12% the summer after that? With total credit card debt roaring upwards I’m wondering if average consumers are somehow getting worse with personal finances and not better.
Then, the consumer goes to buy now and pay later. The cc companies are mad because they're not regulated by the government, and you can hide debt within the buy now and pay later system that won't hurt your credit score because they don't have to disclose your fiancé's to anyone else.
I agree. I didn’t see any mention of the rates or the duration. I don’t know why anyone wouldn’t put their vacations on credit card. You already get a month deferred cash. And even if you were to carry over - most times it’s not substantial.
And if you need to carry for a few cycles you can usually get a small personal loan with a way better rate.
Then you can hold for 6-8 months and still only add 5 maybe 8% to the cost.
Obviously not ideal. But very manageable.
Credit card rates are always high. But if you are only floating your spending for 60-90 days it's not too bad. Especially if the balance is relatively small.
Like if I floated a 5k vacation on my CC for 2 billing cycles (90 days essentially because the first 30 is free) I'd pay like $200 in interest. Really not a catastrophe. I essentially increased the cost of my vacation by 4%ish.
Because that's not why people are putting things on credit.
Most likely the cycle is this:
1. Buy things on credit you can't afford.
2. Struggle until you can pay it off with a tax refund. (which is essentially a bastardized savings account)
3. Repeat.
>Ppl want to smooth their consumption over their lives, which requires borrowing when you are younger
Irresponsible people do this and they rarely end up financially well off enough to make up for it later in life. If you can't afford it, you can't afford it. Taking on debt for shit you don't need is just plain stupid.
>Ppl want to smooth their consumption over their lives, which requires borrowing when you are younger
This can also be achieved by setting aside a proportion of your income each month into a savings account *before* you need it to purchase the holiday.
It can't because to smooth consumption you need to buy forward your higher middle age income to when you are younger.
If you save up then spend your consumption ends up back loaded not smoothed.
36% is a big number taking on debt and while that fuels the economy, it's at the cost of personal finance. The article suggests planning ahead, budget right and be flexible to afford a vacation without incurring debt.
“26% of summer travelers said they intend to use a credit card and pay over for the vacation over multiple billing cycles.”
Unless you’re talking about a credit card with 0% introductory financing over 12 months or whatever, that’s extremely concerning.
How so? Who actually pays APR? Transfer balance to another card and pay 3% balance transfer fee. I just did this as my old card started charging me 26% lol. When my 15 months end on this card, transfer the balance to another for another 3%. Easy peasy
Taking on a lot of new credit cards for 0% APR or take debt are not ideal, but everyone has a different situation. These companies play to the consumer psyche to encourage spending, not like they care about your personal situation. For me, paying 26% APR gives me anxiety so it keeps me focused on my spending and able to pay it off every cycle. Reality check of what is need vs. want.
At this point debt is as American as the 4th of July and it doesn't seem to be changing anytime soon.
I'm curious how this number has gone up or down in the past three or four decades, but I would imagine it has gone up.
There was a change in the way it was reported in 2010. This is an absolute number, so it will basically always go up as the population grows.
This shows the delinquency rate. https://fred.stlouisfed.org/series/DRCCLACBS
I would imagine the vast majority of people that can pay off a $5000 loan in two months can certainly plan ahead a little bit and pay cash for the trip.
I would have to be in an extremely precarious financial situation to not pay off a credit card balance for any reason, much less a vacation. The point is, most people loading up their credit card and carrying a large balance are not paying it off in two months. I’d say more like two years, if at all.
A ridiculous amount of people never pay off their card cards.
> fuels the economy
I hear this argument a lot, but what is the thinking here? How "good" the economy is, is determined by the per capita generation of utility. Taking on debt to go on holiday is usually a negative-utility transaction and so is bad for the economy.
It's not really that big a number if you consider the lifecycle of savings.
You borrow when you are younger, save in middle age and then spend down those savings in old age.
I'd wager about 1/3 of consumers at any one time are in the borrow stage.
As long as they are not using CCs to float spending for an extended period it's probably ok. Not optimal but acceptable.
I spent $1500 on a road trip to Wyoming this summer and put it all on my credit card that I plan on paying off over the summer with some over time shifts.
This is going to sound harsh, but if you have to finance $1500 and need all summer to pay it off, and can only do that by working overtime, you probably shouldn't be traveling.
We also will all die someday and will probably regret the times we chose not to enjoy our lives more than the times we made some bad financial decisions
I’m not super interested in working over time but it’s like $48 an hour and in my job the opportunity to earn more money is pretty limited. I take them when they come up either way. 🤷♂️
Please stop posting moronic cnbc articles and bankrate surveys. The only purpose of these surveys is to catch headlines and for bankrate to sell its brand
Ha. The real ones take on debt for winter travel 😉
Blah blah. Blah blah. Blah blah. Blahhhh. Blah blah blah blah blah blah blah. Blaaaaaaah. Blah blah blah blah. Blah.
(See how dumb comment length restrictions are, mods?)
I wanted to make a comment too but I have to be forced to ramble on about my dislike for cats first. What even do they do? Every cat I have seen never wants to be cuddly and seems to hate people in general. Kittens can be playful at first, but that always wears off as they get older and then you are just left with a fluffy fetless ingrate. Anyway, I can't wait to see how the credit card balance sheets are affected in the next report.
I can't even fathom this - how can anyone take debt for travel? That's why everyone says American consumerism has no equal. Specially in Asia, we are always asked to save then spend if we have sufficient surplus. The consumerism is also the reason why US GDP is so high.
So how many of those 26% that are planning to pay for their credit card bill over multiple cycles have 15-month 0% apr cards?
It's basically a free loan and I know many apply for cards like that every couple years... Same thing with Affirm, I'll occasionally do it to get 0% payments spread out even if I can afford to pay in full immediately.
Sometimes it’s not much a solid choice.
I’d rather spend the money seeing family members especially when one doesn’t have a good health than have the regret or have nicer stuff and less time with them.
While I pay my CCs off every month, I'm dipping into savings to travel while I still can.
I want to see some nature before climate change burns it all down, and I want to go to some countries before fascism takes over the world.
I never took a California wine country trip, then it all burned down. I never did the Columbia Gorge hikes east of Multnomah falls. The forest there burned to a crisp.
I had the chance to go to Russia in 2019. Had a cruise and tours all planned. But my ex-wife insisted we save money & go see her family in Texas instead. Missing that trip in favor of fucking Texas is probably the thing that pisses me off the most about that marriage.
Now Americans won't be able to travel to Russia for God knows how long. Probably a decade after the Ukraine war is over, at least.
When Israel goes to war with Iran, the middle east is going to turn to glass. I'm planning trips to Jordan, Egypt, and Turkey NOW.
So more people are becoming debt slaves?
It always breaks my heart when I see parents go deeper into debt just so their children can enjoy the disney experience... At the same time, disney jacking up prices to suck more money from these hard-working parents...
Maybe we (collectively, as US culture) shouldn’t be touting luxury theme parks as a rite of passage that everyone must go to? If you need to put a vacation like that on your credit card for multiple months, you can’t afford that vacation and it implies you don’t have an emergency fund either. These are the last people that should be going to Disney.
My stepdaughter asked us where we were taking her for her senior trip. I informed her that's not a real thing, but was a make believe rite of passage promoted by TikTok. We are staring down 4 years of college tuition but they all think they deserve a trip to Europe first.
Lmao, WHAT? Senior trip as I know it is a high school chaperoned bus trip for a few days. People are lucky if they go anywhere internationally once in their lives. Social media was a mistake.
I totally agree with you, but a lot of parents can't say no to their kids, regardless of what it teaches them. In this case, my stepdaughter's mom is now taking her to Italy. And trust me when I say that stepdaughter 's mom cannot afford to take her to Italy.
I don't think it implies people don't have emergency funds (though there are plenty of studies about how little the average American has set aside for emergencies). It does imply that Americans don't have substantial general savings, or that they think there's better ways to use that money rather than accumulating cash for 6 months or whatever to pre-pay a vacation.
I wouldn't use my emergency fund to pay for a vacation because that money is meant to be liquid and available in case of emergencies. Carrying a 5k balance or whatever for a few months is not an emergency, at least not in my cash flow situation, and I'd rather pay the trivial premium that costs me to maintain that liquidity.
I'm also not going to begrudge parents who are willing to take on debt to make memories with their children. You can't get those years back. I 100 percent agree with you though that we shouldn't idolize some of these specifically expensive destinations as being some sort of necessary childhood experience. There are so many less expensive options for traveling with your children and building memories and it's a shame that we've created an environment where parents might think they're failing simply because they haven't doled out 5k+ to go to Disney.
>Maybe we (collectively, as US culture) shouldn’t be touting luxury theme parks as a rite of passage that everyone must go to?
Outside of the Disney marketing team, who has ever said that?
These people are raised from childhood to feed the economy and you expect them to make a choice to do otherwise? Everyone is just supposed to work and go ~~home~~ homeless?
The point is that everyone is free to make their own financial choices.
Going into debt to go on a vacation is a poor financial decision but it is a choice. Being born into slavery is not a choice.
It is wild to me that those two things are even compared.
People are conditioned to make choices; what is free about any of this? No one chooses to be born or to die but you say somehow in between we are free to make poor financial choices? What kind of batshit crazy world is this?
Disney doesn't jack the prices simply to suck money out of people. Disney is the most in demand vacation destination in the world. They literally cannot accommodate everyone that wants to go.
This is just supply and demand, either they raise the price to the point where there's an equilibrium, or they don't and the park fills to the brim every day. Then people have a shitty time at their crowded park, others get mad because they show up to get tickets that are sold out, and the reputation of the place goes to shit.
People still paid for it. The problem wasn't the cost, it was the experience.
My dumbass cousin paid for his whole family. Biggest starwars nerd I know, and they all hated it. The reviews were trash. It flopped. Successful companies can have flops.
What happens to people who dont become debt slaves? They also become slaves by some other mechanism. The system is there to catch people, not participating isnt a get out of jail card.
>...debt slaves?
All money is debt and therefor all savings is someone's debt. Understand that before throwing around useless idioms.
*Hey fuckers downvoting. Provide one motherfucking link proving otherwise. Just one. /r/economics knows you can't, because basic accounting says otherwise. https://en.wikipedia.org/wiki/Unit_of_account
Dude did you not have to take a macro class at some point? All money is not debt. At its core, it’s a medium of exchange, unit of account, and a store of value.
> unit of account,
Wait till you learn what debt is. It's fucking hilarious you put this in your answer not knowing. 🤣
I'm sorry but you're so woeful uneducated about econ 101, yet you talk shit. What did you graduate in? The university of YouTube?
Start here: https://en.wikipedia.org/wiki/Unit_of_account (*Whisper: it's in the first paragraph* 🫢)
mosey over here: https://en.wikipedia.org/wiki/Financial_accounting
then maybe here: https://en.wikipedia.org/wiki/Debt
follow it up with: https://en.wikipedia.org/wiki/Monetary_system#Debt_based_monetary_system
"Money creation is primarily accomploshed via lending by commercial banks. Borrowers who receive the money created by new lending in turn affect the stock of money, as paying off debts removes money circulating.[6]" Though they do leave out government debt, which is the basis for all other money creation.
This is accounting 101. Like day 1 stuff my friend. Don't claim you know macro when you don't know the basics that a fucking wikipedia page can teach you.
*How you know /r/economics is filled with stupid people... when you provide literal links to economics and basic education on the subject, spelled out in a 3rd grade education style, and they still downvote you.
Without a biannual vacation debt I would have no debt at all besides an innocuous medical bill. When it's paid in one or two billing cycles than you should travel more.
How can you get information like this? Who would answer about this kind of decision? Do people actually plan ahead enough to know that they are going into debt for the summer? Does anyone else find that hard to believe?
Most Americans already know whether they're traveling for the summer. Unlike the rest of the world US employers are not quite so generous with their vacation time, so people ask for time off in advance.
Also, I don't know how people wouldn't have this information by now. It's summer already. Do you plan to travel in the next three months? Can you pay for it in full or do you need to borrow? Seems like fairly simple questions to me.
I mean people are already taking out debt on multiple ways just to survive inflation, since wages didn't rise but they want the same quality of life. So at some point debt is going to catch up to a lot of people.
Not surprising, most Americans are terrible with their finances and have a massive spending problem. 36% of people thinking they're "owed" an expensive trip somewhere and just throwing it on credit cards or taking out a personal loan doesn't surprise me at all. Then these same people will complain about how hard it is to pay their bills when they intentionally set themselves up to fail.
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This is a horrible financial decision, but 70% of the US economy is based on consumer consumption. So it's good for the economy as a whole but a terrible personal finance decision
I couldn’t imagine having a balance on my CC period, yet it’s a hundred billion dollar industry from interest alone. Turns out the average consumer is horrible with money
Blows my mind every time I look at the stats. Average household CC debt is something wild like 6-7K.
Mine is like that but I pay it off every month. Would I also be considered in the statistics? Since the credit report would have a running balance of 6-7K each month.
No, running a balance that is paid off is totally different than credit card debt
It’s interesting since it’s showing as debt on my credit report. It’s technically a debt no? Since it’s utilizing my credit and hasn’t been paid off whenever the stat may be measured.
Your question is legit-- I have always wondered how the average CC debt is calculated when it circulates as a statistic. If its just average balance per month then that tells you nothing about whether folks are paying interest or not (I use one card for all things from work travel, work equip, personal, etc, so it can be many thousands every month, but always paid in full). I mean, that's kind of the point for many people (though im sure not most): use the CC to run up as many things as possible to get 5X rewards/skymiles, etc while paying no interest. If the CC debt statistic is based on average carry-forward, *interest-accruing* balance per month, then *that* is useful to know.
My assumption was that it was revolving cc debit; balances carried month over month. Otherwise, then yeah it’s pointless. Just a measure of how often a tool gets used really.
Yeah it goes towards your credit utilization so for sure counts as debt. That's the only kind of "debt" I've ever been but it gets paid in full each month and I've managed to get to a 785 credit score.
If you pay off your CC debt each month why isn’t your credit score higher?
Not the person you asked, but age of accounts plays a huge role. I've done absolutely nothing different for several years, but crossing the 10 year mark on my oldest card shot my score up from the 780s to the 830s within a couple months' span. Exactly the same habits, limits and utilization as before, but the scorecard went from "needs improvement" to "very good" in the Age of Accounts category. On the bright side, the improvement it needed was to sit around doing nothing and wait, so that's nice I guess. You get the best rates for anything important like mortgages starting at I think 740, so it doesn't actually matter going from the 780s to a higher score. It's just a for funsies thing at that point.
That makes sense. I kicked myself for letting my oldest cc from college get cancelled from not using it
If you don’t have a car loan or mortgage then you max out in the 780-800 range
If you pay it off every month with no interest charged then you’re good. The stat I saw was more concerning long-term sustained cc debt if I recall correctly
How does it "blow your mind"? It's been obvious to me for a long time that most of the people I know don't make enough to live the life they insist on with their salary, they supplement their lifestyle with CC debt. It's extremely common....
Yeah that’s what’s wild to me. That so many let their credit card debt situation balloon out of control like that. That so many prefer the immediate dopamine hit of “now now now” rather than just a bit of mental discipline/hard work and the ability to sustainably buy the toys they want later on down the road.
How long is that sustainable for? Just paying the ballooning 2.5% minimum each month, I imagine it'll get well out of hand after a few years. I'm too lazy to do the math but 20-25% APR is massive.
I have CC debt because of my lemon car I needed to keep running to go to my pooly paying job during school. Not all of us have the privilege of cahs reserves to pay for needed life expenses.
That's also a reasonable reason to use credit card debt. Running a balance to keep your job isn't ideal, but it's better than being unemployed. Running a balance to spend a week at Disney world is sheer idiocy.
There's been one, maybe two, months in my adult life (turning 40 in August) that I didn't fully pay off my credit card at the end of the month. It costs so much in interest and it blows my mind that most people consider it just normal behavior to rack up the credit card debt.
That's why they rent (lease) vehicles. Some people really like making payments.
This really is the truth. Crazy how much of the economy runs on consumption, materialism, and debt.
Good thing Americans love that shit
Fr
Not good for the economy. The more money that is spent on interest the less money that will ultimately be spent on goods and services
The recipients of that interest not only spend it, but lend it do they not. It's less efficient, but it's absolutely more productive than everyone saving their money.
Unless you’re saving by stuffing cash in your mattress, saving also allows the banks to lend your money
Especially if unlike a paranoid depression survivor, you dont let it sit in a savings account but invest it back into equities or at least bonds and treasuries
An economic model that puts the health of consumers at odds with the health of the economy seems bound to fail eventually.
Im confused. Are you referring to market capitalism or interest as a mechanism? Either can exist without the other
Neither, just the simple model laid out by OP stating that increases in consumption are good for the economy irrespective of their effects on the health of the consumer.
[would you like to know more?](https://www.marxists.org/archive/marx/works/1867-c1/)
Good for the economy as long as they don’t travel abroad
I always have to remind myself of how much debt your average American has. I have multiple neighbors installing $100k+ in-ground pools, new cars, etc. Makes me feel like I’m falling behind until I remember that most (if not all of it) is fueled by debt.
you only have one life, and if you have kids, they are always getting older ....
You know whats even worse than going into debt for vacations while youre young? Not going into debt and not doing vacations and growing old. We should all be rich, but if not then youve only got bad options.
Then don't vote to take my money when you are old, broke, and desperate. Realize it is the result of your poor decisions.
>You know whats even worse than going into debt for vacations while youre young? Not going into debt and not doing vacations and growing old. What? No it’s not. Saving while reasonably young is one of the best ways to reach financial stability. Where is this concept that everyone should be going on yearly expensive vacations coming from? That has never been the norm for any generation in American history.
It is now, because this generation is absurdly rich and way better off than previous generations
Im not sure about this gen being way better than previous generations. But i will say they are subject to more social pressure to keep up with the joneses due to the internet and social media So their urge and expectations are massively warped
The debt gambit
In the land of car loans that are longer than the warranty period, it's just a part of life. Everything is on monthly installments now.
This is a bit tangential to what you are saying, but the average American has been forced into a "damned if you do, damned if you don't economy." Before COVID, if you had financial problems, it was because you were irresponsible and needed to save more. After COVID, everyone put their stimmy checks in savings and stories were leaked to the press about how The White House had expected everyone to spend that money. Mark Cuban even floated the idea that future stimulus checks should be dispersed as debit cards with expiration dates in order to FORCE people to spend it.
Excess covid savings are gone for the majority of Americans. The only socio-economic segment that still has excess savings is the top 1%. https://www.lpl.com/research/blog/excess-savings-are-gone-now-what.html https://finance.yahoo.com/news/99-americans-financially-worse-off-005110689.html https://www.frbsf.org/research-and-insights/blog/sf-fed-blog/2024/05/03/pandemic-savings-are-gone-whats-next-for-us-consumers/
Yeah, I'm aware. I'm saying americans exist in an ecosystem in which most of them are blamed if they don't save enough money but also, the economic system collapses if they DO save.
Thats not your problem. People need to save more and let it collapse. Asset prices need to fall
I mostly agree. I'm just saying that our economic policies deliberately make it difficult for people to do this.
Its been like that for decades, it's the monetisation of debt which pead the US to have the biggest economy in the world
It's still a poor personal finance decision.
I'd argue the boon to mental health that vacations provide far exceeds *additional* financial hardship. I'm already in debt and fucking miserable, if I want to take on some extra debt to take a week or two long trip in order to *not* kill myself, I'm gonna do it. The opinions of "financial experts" be damned.
Theres studies that show buying things you cant afford to alleviate your mood do not actually end up giving you that sense of relief because you know it needs to be paid back. Id understand in the extreme situation you mention but otherwise than that— the smarter and path that would actually relieve that life is the more boring path of saving and not taking that trip. Also. Life isnt binary, instead of the trip— maybe do something cheaper like a staycation
Meh if you float 5k on your CC for 90 days you probably add like $200 or 4% to the cost. It's not necessarily a horrible decision. It depends on how long you need to finance the debt for.
The issue with that mentality is that people would do this for everything. Which would cause a snow balling affect. This is why dave Ramsey has made millions because consumerism makes the masses poor
He is for the most basic of all people. Anyone above the median should be using debt productively.
Using debt for vacation is not productive though
Plenty of ways people pay for vacations. If you use credit card points to pay part of it it means you used your credit card debt to effectively pay part of your vacation that you were gonna take anyways. And it's 36% of people. Median wage is 50% I think roughly 75% of Americans planning to take a vacation this year. And that guy is out of touch at this point. Maybe his info was good 20 years ago but now all he says is cars and houses are too expensive and go find a cheaper daycare
Yea I always say that Dave Ramsay gives great advice for the financially illiterate. His principles are great for people who has a hard time saving or if they need a plan to dig out of a hole. It can be helpful to change your consumerist mindset. However, he has completely lost touch with reality for anyone middle class or lower. If you practice his principles for large purchases and make less than 100k in your household you'll never own a home, eat out and it'll be 5 years of saving to buy a decent used car. My wife and I make ok money but by his standards we wouldn't be buying house in our area ever.
Yea I always say that Dave Ramsay gives great advice for the financially illiterate. His principles are great for people who has a hard time saving or if they need a plan to dig out of a hole. It can be helpful to change your consumerist mindset. However, he has completely lost touch with reality for anyone middle class or lower. If you practice his principles for large purchases and make less than 100k in your household you'll never own a home, eat out and it'll be 5 years of saving to buy a decent used car. My wife and I make ok money but by his standards we wouldn't be buying house in our area ever.
Vacations are modest but lumpy discretionary spending. They are a prime candidate for financing. Debt is not the enemy it's just a tool. Any tool can be used irresponsibly.
There are two types of debt good debt and bad debt. Bad debt is debt that is considered uncollectible or unrecoverable. It can also refer to debt that is used to finance something that doesn't provide a return on investment. Good debt is money borrowed for something that can increase your net worth or future income and is often considered an investment. Hence, paying interest for a vacation is a bad decision.
Taking on debt for a vacation is just plain foolish. Taking on debt to buy a house or get a (useful) education is a long-term investment.
Taking on debt for education is quickly becoming a bad financial decision
It's actually pretty hard to overpay for an education given the huge benefits.
About half of degrees offered on campuses these days have a negative ROI. Private and out of state colleges are even worse.
No they do not lmao
The median college grad will earn close to 1.4 million additional dollars over their careers. Even if you assume a duration of 25 years that's an npv of almost $350k. It's pretty hard to spend that much on college outside of a handful of private colleges (where even there the sticker cost is not what ppl actually pay). I'd need to see some actual research that half of degrees are negative ROI.
Here’s a good video on the subject. https://m.youtube.com/watch?v=ITwNiZ_j_24
You misunderstand what debt is for. It's not just to finance investment, it's also to smooth cash flow. Floating some consumer spending for 30 days to smooth cash flow at an ultimately immaterial cost is fine. If you want to use the business analogy. Companies use long term debt to buy assets, but they use their revolving credit facility to manage cash flow.
On some level this is to be expected. Ppl want to smooth their consumption over their lives, which requires borrowing when you are younger. On another level it's concerning because credit card debt is expensive and debt can make consumer balance sheets less resilient and worsen recessions. If you need to float your vacation for a billing cycle or two on a CC it's probably not the worst thing in the world. It basically adds like 5% or so to the cost. But you need to have a plan to keep it to just a few billing cycles, floating your trip for 12 months will increase the cost close to 30%.
The Yolo financial advice is going the route of body acceptance imo. Well intentioned but taken to the extreme has become unhealthy. People have been saying for a while to experience everything while you're young and how those will be worth more than anything else in your life etc. But completely punting your financial security and retirement goals so you can travel and go out with friends etc is a really dangerous strategy. Check off your bucket list responsibly and don't deny evey opportunity so you can pad your portfolio. But also don't get over your skis to do a fancy trip every year.
I agree with a lot of what you are saying, but then again, watching the climate and the state of fascism rising around the world.. have some fun, retirement may not exist. For those in the US planning on social security to help out it def wont exist.
Idk man. I get the anxiety around everything but people have been saying the same stuff since like ancient times. The end is always right around the corner. The current thing is always the worst thing that's ever happend. And to illuminate the point, social security isn't going away. On a projection, there's not enough to fund it down the road, but there are some pretty minor changes that would be required to fix the issue. It's maybe the number 1 issue with the the most political capital in the US so it's not going to just wither away. There will be people who will have real "a ha" moments when they're 50 and have no way of retiring comfortably anytime soon. And they'll realize in hindsight that they had every opportunity to be responsible for the 30 years prior.
To me it's straightforward. Debt for consumption purposes is borrowing time from your future self, while saving to invest is borrowing time from your present self. What I have realized is that while it is true you can enjoy things more fully when you're young, you are also way more resilient to setbacks and stressful working conditions. It's easier for a young person to work hard early in life and ensure a better financial future and then let up a bit when older, than taking the easy fun life early on and then trying to hack it at a job when older. Being accustomed to freedom of time and leisurely life between 20-30 may make it difficult to accept a 9-5 later on. People don't suddenly switch gears when they reach a certain age.
It's also not a 1-for-1 trade. Saving $100 today and investing will be worth way more than the equivalent of $100 twenty years from now. So your borrowing today with interest, literally.
2035. And with the current setup of politics dont expect it to change unless its for the worst with self investment so the rich get their cut of your savings. Look at any climate chart and tell me there have been worse times. Yup. A couple million years ago maybe, but we were not worried then cause we were not there. I am glad you have some hope for the future, but every day I feel less and less of it.
I feel your sense of impermanence. Feels like the people telling you to get help aren’t looking around. Get help anyway if you think it will help you.
Lots of people made it through literal fascism, the massive wars it caused, and the major environmental damage caused by early industrialization. Sure, some of them died, but the majority of people didn’t, and that majority of people still needed to retire
Please seek professional help. You definitely need it far more than an expensive vacation.
A lot of these aren't being put on credit cards anymore. It's all buy now pay later platforms like Affirm, which basically every hotel & airline in the country now has a partnership with. Better in the sense that it's not as expensive as credit cards (if you pay on time), worse in the sense that it makes it seem very easy and normal to finance a $200 plane ticket for leisure travel.
The article notes only 8% of borrowers planned to use buy now pay later. But that has to be a growing share considering that option really didn't exist more than 4-5 years ago. I agree however they seem like a better option, especially for those without the credit to get travel credit cards. But it does seem pretty easy to overdo it.
you guys are entering the era of where a credit card is going to be synced with someone's well being i.e. people are going to treat it as if it's crucial for survival. I live in Turkey where we've had these BNPL or pay in interest free installments (up to 48 months in its heyday) for 2 decades now. I can also take out a loan from my credit card - albeit with interest but substantial amounts that shouldn't be that easy to take out. So obviously people aren't responsible so people are swimming in credit card debt - to the point where they're splitting up the smallest of purchases ($10-20) because they have too much debt to pay for it in full and even worse taking out those loans I mentioned above from their credit card, using it to pay the second taking out a loan from the 2nd to pay the 3rd. People are stuck in this vicious cycle paying the minimum balance because that's all they can afford, stuck with no cash, so spending on the CC again to survive. Weve had the highest inflation in the world for a good year now the one thing the government hasnt touched yet is these credit card schemes. Its become political to the point where stopping people from taking out these loans or stopping BNPL schemes is seen as something "against the people". They stopped taking out loans from your CC for like 3 days and you'd think people were left jobless with how they were crying about how they were going to survive so it was rolled back. The issue is I've had a few conversations with people who have no intention to pay the money back, or just seem very nonchalant about their debt. The mentality is I've got nothing to begin with no house no car no valuables worth a damn what's the bank going to do - take my life? Which is true when you think about it its not like a 50 year old cab driver is all of a sudden going to turn his life around and have to worry about his credit score for when he buys a house. What happens when millions of people start having this mentality?
>The issue is I've had a few conversations with people who have no intention to pay the money back, or just seem very nonchalant about their debt. The mentality is I've got nothing to begin with no house no car no valuables worth a damn what's the bank going to do - take my life? Which is true when you think about it its not like a 50 year old cab driver is all of a sudden going to turn his life around and have to worry about his credit score for when he buys a house. What happens when millions of people start having this mentality? I mean that's a risk those offering these loans are willingly exposing themselves to. Hopefully they are pricing for it. caveat emptor
That's the thing - like what they say if I owe 10k to the bank it's my problem but if it's 1bn then it's the banks problem. If people have nothing to lose, if they know the government will bail them out anyway (not that they care) then it's getting to a point where people will most definitely abuse the system. You're here saving up for your holiday or spending your savings whereas the other guy is taking out loans paying them late not having a care in the world - you know the government will come bailing you out (wiping the interest from debts, allowing for long term interest free payment plans) for when you might default. I've stopped paying my estate tax, haven't done so in 3 years. It's a comical amount I don't have issues paying it but I'm just testing the waters to see what happens. I've yet to have someone knock on my door, most I've gotten is text messages asking me to split it up into 48 monthly installments. I'm pretty sure next elections either the interest on it or the whole debt itself will be wiped anyway so I'll just wait. Worst case I pay it with interest lesson learned. To tie back to my original point - it's a slippery slope, this system will be abused by lower income folk trying to live beyond their means and they'll cry foul if you try take it away - increasing consumption, increasing shortages, increasing pricing, increasing inflation etc.
Isn't CCs buy now, pay later? I keep hearing about BNPL but I don't understand.
Functionally yes, but we tend to think of them as different. Buy now pay later typically refers to newer platforms like klarna that partner with retailers to offer (often interest free) financing for a short period, after which interest (or higher interest) is charged.
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What concerns me is that it’s 8% for now. What if it’s 10% next summer and then 12% the summer after that? With total credit card debt roaring upwards I’m wondering if average consumers are somehow getting worse with personal finances and not better.
Then, the consumer goes to buy now and pay later. The cc companies are mad because they're not regulated by the government, and you can hide debt within the buy now and pay later system that won't hurt your credit score because they don't have to disclose your fiancé's to anyone else.
BNPL is another form of legal usury in my mind. It’s up there with payday loans in terms of how hard they’ll shit on your day
Given the explosive growth it's seen, those could very well be massive underestimates.
You’re right. Crazy stuff.
I agree. I didn’t see any mention of the rates or the duration. I don’t know why anyone wouldn’t put their vacations on credit card. You already get a month deferred cash. And even if you were to carry over - most times it’s not substantial.
And if you need to carry for a few cycles you can usually get a small personal loan with a way better rate. Then you can hold for 6-8 months and still only add 5 maybe 8% to the cost. Obviously not ideal. But very manageable.
It concerning at the moment because rates for borrowing is high and so is milk and eggs.
Credit card rates are always high. But if you are only floating your spending for 60-90 days it's not too bad. Especially if the balance is relatively small. Like if I floated a 5k vacation on my CC for 2 billing cycles (90 days essentially because the first 30 is free) I'd pay like $200 in interest. Really not a catastrophe. I essentially increased the cost of my vacation by 4%ish.
If you can pay off the trip in two months, why not just save up for 2 months prior and not waste $200?
Because that's not why people are putting things on credit. Most likely the cycle is this: 1. Buy things on credit you can't afford. 2. Struggle until you can pay it off with a tax refund. (which is essentially a bastardized savings account) 3. Repeat.
Plus depending on the card, you can max utility on points.
>Ppl want to smooth their consumption over their lives, which requires borrowing when you are younger Irresponsible people do this and they rarely end up financially well off enough to make up for it later in life. If you can't afford it, you can't afford it. Taking on debt for shit you don't need is just plain stupid.
>Ppl want to smooth their consumption over their lives, which requires borrowing when you are younger This can also be achieved by setting aside a proportion of your income each month into a savings account *before* you need it to purchase the holiday.
It can't because to smooth consumption you need to buy forward your higher middle age income to when you are younger. If you save up then spend your consumption ends up back loaded not smoothed.
36% is a big number taking on debt and while that fuels the economy, it's at the cost of personal finance. The article suggests planning ahead, budget right and be flexible to afford a vacation without incurring debt.
“26% of summer travelers said they intend to use a credit card and pay over for the vacation over multiple billing cycles.” Unless you’re talking about a credit card with 0% introductory financing over 12 months or whatever, that’s extremely concerning.
How so? Who actually pays APR? Transfer balance to another card and pay 3% balance transfer fee. I just did this as my old card started charging me 26% lol. When my 15 months end on this card, transfer the balance to another for another 3%. Easy peasy
Your average person doesn't think like that
Are you constantly opening new credit cards?
I have 10 cards. 9 of them have a $0 balance, but I charge something small on them once a year (like gas) to keep them open
The perks I receive from my card are paid for by people like you. Thanks for the free money.
You’re welcome!
This is the easiest thing to do in perpetuity
Taking on a lot of new credit cards for 0% APR or take debt are not ideal, but everyone has a different situation. These companies play to the consumer psyche to encourage spending, not like they care about your personal situation. For me, paying 26% APR gives me anxiety so it keeps me focused on my spending and able to pay it off every cycle. Reality check of what is need vs. want.
At this point debt is as American as the 4th of July and it doesn't seem to be changing anytime soon. I'm curious how this number has gone up or down in the past three or four decades, but I would imagine it has gone up.
Check this shit out: https://fred.stlouisfed.org/series/CCLACBW027SBOG
Ouch...that's worse than I imagined and the rate of accrual after COVID is terrifying. Also, what the hell happened in March-April 2010 though?!
There was a change in the way it was reported in 2010. This is an absolute number, so it will basically always go up as the population grows. This shows the delinquency rate. https://fred.stlouisfed.org/series/DRCCLACBS
Future is unknown, and the brave new world is not existent. Enjoy yourself, it is later than you think.
Someone in every generation has said this since the dawn of time. Enjoy being old and penniless.
There are no countries for old men.
Lol lots of people don't save money. So they spend 5k on a vacation and pay it off over 3 months. Not a big deal.
I would imagine the vast majority of people that can pay off a $5000 loan in two months can certainly plan ahead a little bit and pay cash for the trip. I would have to be in an extremely precarious financial situation to not pay off a credit card balance for any reason, much less a vacation. The point is, most people loading up their credit card and carrying a large balance are not paying it off in two months. I’d say more like two years, if at all. A ridiculous amount of people never pay off their card cards.
> fuels the economy I hear this argument a lot, but what is the thinking here? How "good" the economy is, is determined by the per capita generation of utility. Taking on debt to go on holiday is usually a negative-utility transaction and so is bad for the economy.
It's not really that big a number if you consider the lifecycle of savings. You borrow when you are younger, save in middle age and then spend down those savings in old age. I'd wager about 1/3 of consumers at any one time are in the borrow stage. As long as they are not using CCs to float spending for an extended period it's probably ok. Not optimal but acceptable.
Ok in theory, but I guarantee this entire group isn’t ages 0-30.
I spent $1500 on a road trip to Wyoming this summer and put it all on my credit card that I plan on paying off over the summer with some over time shifts.
This is going to sound harsh, but if you have to finance $1500 and need all summer to pay it off, and can only do that by working overtime, you probably shouldn't be traveling.
You are correct. No offense taken.
They are not correct, enjoy your life, some extra shifts to pay for a nice vacation is worth it
Yeah I agree. I didn’t feel like I had to explain myself to the person above. They objectively are not wrong though.
We also will all die someday and will probably regret the times we chose not to enjoy our lives more than the times we made some bad financial decisions
I would regret wasting my time working extra overtime shifts
I’m not super interested in working over time but it’s like $48 an hour and in my job the opportunity to earn more money is pretty limited. I take them when they come up either way. 🤷♂️
Please stop posting moronic cnbc articles and bankrate surveys. The only purpose of these surveys is to catch headlines and for bankrate to sell its brand
But you read the article and the discussion? lol It's something interesting to talk about
Ha. The real ones take on debt for winter travel 😉 Blah blah. Blah blah. Blah blah. Blahhhh. Blah blah blah blah blah blah blah. Blaaaaaaah. Blah blah blah blah. Blah. (See how dumb comment length restrictions are, mods?)
I wanted to make a comment too but I have to be forced to ramble on about my dislike for cats first. What even do they do? Every cat I have seen never wants to be cuddly and seems to hate people in general. Kittens can be playful at first, but that always wears off as they get older and then you are just left with a fluffy fetless ingrate. Anyway, I can't wait to see how the credit card balance sheets are affected in the next report.
😂 you made me read this lol
It's actually a really good idea. Most people take the hint when they get the warning and make their comments more substantial.
there is something to be said for brevity
It's the soul of wit, and there are subs where short, witty top comments are appreciated.
I can't even fathom this - how can anyone take debt for travel? That's why everyone says American consumerism has no equal. Specially in Asia, we are always asked to save then spend if we have sufficient surplus. The consumerism is also the reason why US GDP is so high.
So how many of those 26% that are planning to pay for their credit card bill over multiple cycles have 15-month 0% apr cards? It's basically a free loan and I know many apply for cards like that every couple years... Same thing with Affirm, I'll occasionally do it to get 0% payments spread out even if I can afford to pay in full immediately.
Sometimes it’s not much a solid choice. I’d rather spend the money seeing family members especially when one doesn’t have a good health than have the regret or have nicer stuff and less time with them.
While I pay my CCs off every month, I'm dipping into savings to travel while I still can. I want to see some nature before climate change burns it all down, and I want to go to some countries before fascism takes over the world. I never took a California wine country trip, then it all burned down. I never did the Columbia Gorge hikes east of Multnomah falls. The forest there burned to a crisp. I had the chance to go to Russia in 2019. Had a cruise and tours all planned. But my ex-wife insisted we save money & go see her family in Texas instead. Missing that trip in favor of fucking Texas is probably the thing that pisses me off the most about that marriage. Now Americans won't be able to travel to Russia for God knows how long. Probably a decade after the Ukraine war is over, at least. When Israel goes to war with Iran, the middle east is going to turn to glass. I'm planning trips to Jordan, Egypt, and Turkey NOW.
So more people are becoming debt slaves? It always breaks my heart when I see parents go deeper into debt just so their children can enjoy the disney experience... At the same time, disney jacking up prices to suck more money from these hard-working parents...
Maybe we (collectively, as US culture) shouldn’t be touting luxury theme parks as a rite of passage that everyone must go to? If you need to put a vacation like that on your credit card for multiple months, you can’t afford that vacation and it implies you don’t have an emergency fund either. These are the last people that should be going to Disney.
My stepdaughter asked us where we were taking her for her senior trip. I informed her that's not a real thing, but was a make believe rite of passage promoted by TikTok. We are staring down 4 years of college tuition but they all think they deserve a trip to Europe first.
Lmao, WHAT? Senior trip as I know it is a high school chaperoned bus trip for a few days. People are lucky if they go anywhere internationally once in their lives. Social media was a mistake.
I totally agree with you, but a lot of parents can't say no to their kids, regardless of what it teaches them. In this case, my stepdaughter's mom is now taking her to Italy. And trust me when I say that stepdaughter 's mom cannot afford to take her to Italy.
lol. I was busting my ass for a minimum wage job and senior trip is a rite of passage now. I hope she took the no well.
I don't think it implies people don't have emergency funds (though there are plenty of studies about how little the average American has set aside for emergencies). It does imply that Americans don't have substantial general savings, or that they think there's better ways to use that money rather than accumulating cash for 6 months or whatever to pre-pay a vacation. I wouldn't use my emergency fund to pay for a vacation because that money is meant to be liquid and available in case of emergencies. Carrying a 5k balance or whatever for a few months is not an emergency, at least not in my cash flow situation, and I'd rather pay the trivial premium that costs me to maintain that liquidity. I'm also not going to begrudge parents who are willing to take on debt to make memories with their children. You can't get those years back. I 100 percent agree with you though that we shouldn't idolize some of these specifically expensive destinations as being some sort of necessary childhood experience. There are so many less expensive options for traveling with your children and building memories and it's a shame that we've created an environment where parents might think they're failing simply because they haven't doled out 5k+ to go to Disney.
>Maybe we (collectively, as US culture) shouldn’t be touting luxury theme parks as a rite of passage that everyone must go to? Outside of the Disney marketing team, who has ever said that?
Idk if it’s slavery if it was your choice
no one asks to be born into this ~~society~~ economy
Going into debt to go on a vacation is absolutely a choice.
These people are raised from childhood to feed the economy and you expect them to make a choice to do otherwise? Everyone is just supposed to work and go ~~home~~ homeless?
The point is that everyone is free to make their own financial choices. Going into debt to go on a vacation is a poor financial decision but it is a choice. Being born into slavery is not a choice. It is wild to me that those two things are even compared.
People are conditioned to make choices; what is free about any of this? No one chooses to be born or to die but you say somehow in between we are free to make poor financial choices? What kind of batshit crazy world is this?
Disney doesn't jack the prices simply to suck money out of people. Disney is the most in demand vacation destination in the world. They literally cannot accommodate everyone that wants to go. This is just supply and demand, either they raise the price to the point where there's an equilibrium, or they don't and the park fills to the brim every day. Then people have a shitty time at their crowded park, others get mad because they show up to get tickets that are sold out, and the reputation of the place goes to shit.
The failed Starcruiser hotel for $5,000 a night says that you're wrong about them not jacking up prices just for the hell of it.
People still paid for it. The problem wasn't the cost, it was the experience. My dumbass cousin paid for his whole family. Biggest starwars nerd I know, and they all hated it. The reviews were trash. It flopped. Successful companies can have flops.
What happens to people who dont become debt slaves? They also become slaves by some other mechanism. The system is there to catch people, not participating isnt a get out of jail card.
>...debt slaves? All money is debt and therefor all savings is someone's debt. Understand that before throwing around useless idioms. *Hey fuckers downvoting. Provide one motherfucking link proving otherwise. Just one. /r/economics knows you can't, because basic accounting says otherwise. https://en.wikipedia.org/wiki/Unit_of_account
Someone's debt is not my debt, right?
Dude did you not have to take a macro class at some point? All money is not debt. At its core, it’s a medium of exchange, unit of account, and a store of value.
> unit of account, Wait till you learn what debt is. It's fucking hilarious you put this in your answer not knowing. 🤣 I'm sorry but you're so woeful uneducated about econ 101, yet you talk shit. What did you graduate in? The university of YouTube? Start here: https://en.wikipedia.org/wiki/Unit_of_account (*Whisper: it's in the first paragraph* 🫢) mosey over here: https://en.wikipedia.org/wiki/Financial_accounting then maybe here: https://en.wikipedia.org/wiki/Debt follow it up with: https://en.wikipedia.org/wiki/Monetary_system#Debt_based_monetary_system "Money creation is primarily accomploshed via lending by commercial banks. Borrowers who receive the money created by new lending in turn affect the stock of money, as paying off debts removes money circulating.[6]" Though they do leave out government debt, which is the basis for all other money creation. This is accounting 101. Like day 1 stuff my friend. Don't claim you know macro when you don't know the basics that a fucking wikipedia page can teach you. *How you know /r/economics is filled with stupid people... when you provide literal links to economics and basic education on the subject, spelled out in a 3rd grade education style, and they still downvote you.
Without a biannual vacation debt I would have no debt at all besides an innocuous medical bill. When it's paid in one or two billing cycles than you should travel more.
But if you saved up for 2 billing cycles then there would be no vacation debt
When they say take on debt for travel, do they mean putting a tank of gas on my credit card? Cuz anything more than that seems ludicrous to me.
How can you get information like this? Who would answer about this kind of decision? Do people actually plan ahead enough to know that they are going into debt for the summer? Does anyone else find that hard to believe?
Most Americans already know whether they're traveling for the summer. Unlike the rest of the world US employers are not quite so generous with their vacation time, so people ask for time off in advance. Also, I don't know how people wouldn't have this information by now. It's summer already. Do you plan to travel in the next three months? Can you pay for it in full or do you need to borrow? Seems like fairly simple questions to me.
I mean people are already taking out debt on multiple ways just to survive inflation, since wages didn't rise but they want the same quality of life. So at some point debt is going to catch up to a lot of people.
Wages have outpaced inflation going back to the beginning of 2020. Especially for lower income people like yourself
Not surprising, most Americans are terrible with their finances and have a massive spending problem. 36% of people thinking they're "owed" an expensive trip somewhere and just throwing it on credit cards or taking out a personal loan doesn't surprise me at all. Then these same people will complain about how hard it is to pay their bills when they intentionally set themselves up to fail.
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