Jennifer L | Blue Wave Studio

When I was in college at Cal, I remember there was always a group of people tabling in front of the campus store often at the beginning of the school year. They would try to get your attention with offers of free stuff if you fill out some forms on a clipboard.

They were credit card applications and who knows how many college students were tricked into applying for various credit cards. I was. At that time, I was lured by the free stuff (hey, I’m Chinese) and I thought I only needed to fill out one form, but after the second form and then the third form and so on, I felt like I had already filled out so many, that I should finish. At the time, I had no idea that each application meant an inquiry on my credit report which negatively impacted the credit score. Luckily, that issue wasn’t problematic.

For the people who were tabling, I’m convinced that they got some sort of money for each approved applicant. Plus, many of those applicants probably ended up with significant credit card debt on those cards later.

It wasn’t until a few years ago that I realized that many people (more than I expected) don’t pay off their credit card balances every month, sometimes only paying the minimum amount and financing the rest of their balance at a high percentage interest rate, with rates like 27% now. This was a foreign concept to me because I had learned that paying the credit card bill in full every time was the way it was done; paying less than the full amount due was never an option to consider.

Yet… “the average household now owes $10,678 in credit card debt, up 29% from 2000,” according to a USA Today article from last November.

Recently, I started watching The Suze Orman Show (she’s got an interesting unique personality, at least on TV) and the other day, she had a guest named Dawn on the show, though it was rerun. Dawn was in financial trouble with $230,000(!) of credit card debt, car loan debt for two luxury cars, and $900,000 mortgage debt and turned to Suze Orman for help. The woman gave a video tour of her Southern California home and had two(!) flat screen TVs in her backyard which also has a pool plus many other additions to their home paid for by credit cards. They were bringing home $9,000 a month, but had $19,000 in monthly expenses. The husband wanted to file for bankruptcy to try to get back on track. Suze recommended that they sell their home immediately (with most of their belongings in it) and do short sale if possible, then with their 7 year old daughter rent a modest apartment and start over with just the things they really need.

Dawn was unwilling to take Suze’s advice because she didn’t want to give up her current lavish lifestyle. She couldn’t grasp the concept that they didn’t own all those material possessions and that they were borrowed from creditors. In the end, Suze didn’t know what else to say… she was left speechless. I just couldn’t believe the situation.

And when I thought $230,000 of credit card debt was unbelievable, there’s a woman with $280,000 in credit card debt, though some of the debt came from medical bills she didn’t anticipate.

It seems a lot of Americans are having a problem with buying things they can’t afford and knowing their limits. If only they followed this:

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