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The Blame Game: Poor Money Management, Part 1

This article was written by in Credit, Education, People. 14 comments.


There’s a discussion at StopBuyingCrap about credit card companies’ evil tacticts. In fact, Cap comes clean with this humble admission:

No body forced me to buy the mountains of Japanese comic books, computer hardware, and automotive parts. Sure, the credit card made it easier for me to spend money I didn’t have — but the reason why I spent frivolously was because I was a complete moron.

An anonymous commenter responded to Cap’s post:

Yes, personal responsibility is important. Many young people, however, have never been taught thing one about managing money. They simply don’t understand how it works. The companies take advantage of that. There are thousands of people who sit in their offices all day thinking up new ways to take advantage of that.

Teens ShoppingI tried to respond with my thoughts, but it was 3:45 am, so it didn’t come out completely the way I intended. So I’ll expand on this a bit.

This is an age-old debate. Whose fault is it that people go deeper into debt? Is it the young adult who lacks the basic math skills to understand the effects of compound interest? Perhaps it is the credit card companies whose marketing efforts, especially on college campuses, may be excessive? Can we turn to the primary and secondary school administrators who feel that money management cannot be shoved into an already-packed schedule? And then there are the parents, who perhaps fail to model appropriate behavior (implicit teaching) or explicitly teach their kids about handling money.

Obvisouly someone should be blamed when college students graduate with thousands of dollars in credit card debt, debt they have little to show for as it the money probably went to clothes that don’t last, food, entertainment, and status symbols that become old quickly.

I’ll pose this question to my readers before going any further. Who deserves all of the blame? If not all, who deserves most of it? Are the credit card companies and marketers evil when they prey on young “minds?” I touched this topic a while ago when I asked the question of the day, but now I want to know exactly what is wrong with society, where it fails, so we can fix the problem and move on.

Please share your opinion, and in a follow-up post, I’ll write a bit about what I believe, hopefully more coherently than how I commented on StopBuyingCrap.

Updated May 26, 2009 and originally published October 7, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 14 comments… read them below or add one }

avatar broadway

I believe that any blame must be assigned equally to all parties. Attempting to point a finger at one entity and assigning all or most of the blame to it is what is wrong with society. There are no quick fixes or easy solutions. Society is complex. There are competing interests, multiple agendas, and conflicting rules.

With that said, one of my concerns with society (sadly, corporations must be included) is that many entities seem to believe that if an action is justifiable then it is okay. Let’s take Enron as an easy example. Mr. Lay, et. al., spent copious amounts of time, energy, and money analyzing in the law in detail to make sure that they careful avoided violating it. The failure was that those involved did not pay attention to the intent of the law. I believe it is wrong to take the mindset of “if the government didn’t want me to do X, then it would have passed a law.” The other justification I see over and over is, “If I/we don’t do X, then someone else will.” I say, then let them. Let the other guy be (ethically, morally, societally) wrong even if he makes more money. But that is not my impression of how most of society thinks. We are always quick to point to someone else and say, “If they are allowed to do it, then I should be able to too. It’s only fair.” What a sad concept of fair….

The above are perhaps symptoms of what is wrong with society. One solution that I believe will attack the cause(s) is to teach critical thinking skills early (and often) in our educational system. I encounter few people that know how to properly analyze a situation. Most people look at a situation only from their viewpoint, occasionally from a polarized version of an opposite viewpoint, but fail to consider the myriad of others that lie between the extremes. That’s the immature, self-centered member of society coming through: what is best for me? I submit that there is a way to succeed while considering others; yes, one might not be as successful as one possible could, but the overall society may advance instead of just one individual.

That’s sounds socialist, I know. But in our hearts I think most of are socialist. It strikes me as the underpinnings of a Judao-Christian society. It’s not a bad thing, and we can still have our capitalism and republic. It comes down to individual responsibility and decision.

So to the original question, I would blame those that take advantage of unprepared individuals, and I would blame those individuals that have not prepared themselves. But each group is being blamed for different reasons because their contributions to the defined problem of debt are different.

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avatar S/100/30

I think it is really the fault of anyone who encourages superficiality. There’s a lot of discussion about how parents don’t teach their children “about money”, but I think the problem goes far beyond whether parents fail to explicitly discuss compounding interest with their children — the astounding number of parents who *actively* encourage their children to spend money foolishly on image.

I see this even a little bit from my parents, who are generally reasonable about money. To avoid being house poor, we live in a much more working-class neighborhood than we could afford, but it’s not the sort of neighborhood that inspires envy when discussing your children with your bridge club. So we’ve received comments that are sort of backhanded encouragement to buy a more expensive that we don’t need.

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avatar Pete

I really do not like thinking about it from a point of blame. When we get tied up in blame (pointing fingers), we can get lost going around in circles. Look at the movie industry and violence. Parents blame movie industry. Industry blame parents. Teens also get blamed. Yet, where has it gotten us? In the end, we each are responsible. Even as bloggers, we have some responsibility for teaching about debt and using credit wisely. So are we to blame?

From my perspective, there is a lot of information out there about using credit wisely. No one taught our parents how to use the first credit cards and many of them did not get into trouble. So why is it now that teens need to be taught about credit, or it is parents or school fault? The issue goes beyond credit cards.

Money is energy. We give energy and are able to buy things that we need and want to live on. Yet, with the prosperity that we have seen over the last few decades, the idea of withholding energy has gotten more pervasive. We are looking to retire earlier and earlier by making money work for us so we do not have to. This is great in theory, yet what is it teaching our younger generation? Many people think they have more of an entitlement attitude, yet where have they gotten this from? Us?

So, this is not a straight forward blame issue. We each have a hand in how we live as a nation. We can have more financial education in high school. We can continue to blame credit card companies. We can blame parents and teens. We can blame government who doesn’t show us how to live on a budget either. Yet, when we each see how our actions effect the whole situation, this is where we can start to change how we live.

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avatar Brian

This is from earlier which no one answered yet:

Had a question: I was wondering for Chase credit cards (cause I have one), if the denominator for the utilization was not the actual credit limit, but the credit SPENT. There were previous posts for Capital One where this was the case. I was wondering if this was the same for Chase and which banks or credit card companies we have to watch for that do that.

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avatar Kira

I think S/100/30 has a good point – we talk about how somebody, ANYBODY, should be teaching people about money and how to responsibly use credit cards, etc etc, but nobody makes the connection between responsible use of credit cards and NOT SPENDING WITH THEM. There is little discussion about WHAT responsible spending is, just a lot of people saying that this nebulous concept should be taught by somebody.

In our society “responsible” spending means spending to look like you have the money you’ve got, or will get, or will someday make, or your parents make – no one champions the idea that responsible spending means that you live on less what you make. I think if you polled average people they would agree that responsible spending means not spending more in a month than you make, without thinking of what you spent it on or what better uses you could have put that money towards.

Cap’s example is pretty apt – what would those kids have done if the credit card companies would not have given them a card because they didn’t know how to responsibly use it? They would have complained about the evil credit card companies who wouldn’t give them a card.

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avatar MillionDollarCountDown

From my point of view its personal responsibility. No one forces me to buy anything. Yes, I know there are advertisements and the peer pressure. But all said and done its me who pulled out the credit card.

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avatar Anonymous

I am truly amazed at the level of ignorance here. Are the banks to blame? credit cards to blame? Is it the persons fault? Are the marketing gurus to blame?

CIVILIZATION ON THE PLANET SURVIVED TO 100,000+ years but it is all coming to an end because of high interest rates on credit cards. It is so laughable and pathetic at the same time.

There is ONLY ONE THING TO BLAME (if you must call it that) and it is GREED!

Radix malorum est cupiditas

It is man’s greed that created “interest” and it is the same greed that will undo him. It is YOUR current greed to earn “great returns” on your “investment” portolio that drives the problem: GREED.

http://en.wikipedia.org/wiki/Usury
Usury (in the original sense of any interest) is scripturally and doctrinally forbidden in many religions. Usury was denounced by countless spiritual leaders and philosophers of ancient times, including Plato, Aristotle, Cato, Cicero, Seneca, Plutarch, Aquinas, Muhammad, Moses, and Gautama Buddha.

The only person to blame is the person you look at in the mirror on any given day.

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avatar mba online

The credit card companies are evil in a way, because they are out to make money. Plain and simple. But the people that are buying all of this stuff…don’t they realize money isn’t free? You can’t keep buying stuff and not eventually have to pay it back. Granted, college-aged people aren’t yet savvy consumers, but you can’t put all the blame on the card companies.

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avatar Special Ed

It’s funny that people try to shift the blame for their own irresponsible behavior to big, bad companies. In most of these cases, someone applied for credit, used the credit, and enjoyed the material things they purchased on credit. Looking in the mirror and blaming the person responsible is difficult, but necessary for the person to learn and change his behavior. I have wasted plenty of money and I learned my lesson years ago. I am glad that I wasn’t allowed to blame someone else for my lazy, stupid behavior. Once I figured finances out things got much easier and Now I’m living the good life.

Parents need to tech their children about money and credit. Don’t let your children wander through life buying lottery tickets and living paycheck to paycheck. And if you think the govt. should teach children about money, take a look at the $8.5 trillion mess they have gotten us into. You may not want the government to mention finances to your kids.

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avatar Miguel

Maybe there really is nobody to blame. CC companies operate within the law. They’ve made it easy for regular people to access credit, which has actually made our society much more democratic. Good things can come of credit, when properly utilized to say get an education or purchase a home, or start a business, or get thru an emergency, etc. It used to be that you had to be rich in order to have this kind of access to capital. Access to capital can be beneficial – just ask any CEO looking to expand a business or invest in a new product line.

CC companies don’t necessarily tell people what to do with the credit, they just make it easy for them. Likewise, do bars cause drinking problems? Is McDonalds to blame for obesity? Do gun manufacturers kill people? Does violence on TV cause murders? Your answers probably depend on the extent to which you believe in individual responsibility.

While our society should promote values that are beneficial, whose duty is that? I don’t think you can blame for-profit businesses for pushing their own interests. Heaven help us if we think we should leave responsibility for our cultural values in the hands of industry. I think it’s the responsibility of parents and our educational system to do a better job of teaching people how to manage their finances. Certainly, that is where you have to start. By the time people are adults, the self-destructuve habits of credit overuse are firmly ingrained.

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avatar Ken

It’s immaterial who is to blame. Yes, the CC companies are taking advantage of people that simply are not educated on the issue of personal finance. But is it really their responsibility to ensure that their customers do not abuse the credit they have? It’s like blaming McDonald’s because you can’t resist the Big Mac and are fat.

What we CAN do is address the issue of not educating our population about the matter of personal finance. I attended a top notch private college preparatory school and am very thankful for what they taught me, but in retrospect it is inexcusable that they never touched on the issue of personal finance. I think it should be mandatory. It’s just that important. But in college as well, there was nothing in the curriculum on this subject. It’s just as important as your state’s history or english composition, and those are required (at least in Texas.)

Even the very highly educated often have no exposure to personal finance education. My wife has a PhD in Chemistry and is at the top of her field. Her colleagues often say she’ll likely earn a nobel prize for her work. She’s extremely gifted in her narrow field of expertise, but is ill equipped to handle her finances. She doesn’t understand the subject and until she met me she didn’t see why she should spend her valuable time on it.

Now we have two children and I hope I can communicate the importance of understanding their own finances and being responsible with them because I don’t believe anyone else (including their schools) will bother to educate them on this.

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avatar S/100/30

Parents need to tech their children about money and credit. Don’t let your children wander through life buying lottery tickets and living paycheck to paycheck. And if you think the govt. should teach children about money, take a look at the $8.5 trillion mess they have gotten us into. You may not want the government to mention finances to your kids.

Yes, but normative claims don’t really get us anywhere. This reminds me of claims by people who dislike welfare like: “Poor people shouldn’t have kids they can’t afford.” Yes, everyone can agree that it’s not a smart thing for them to do, but just stating it doesn’t do anything; the poor are still going to have children, and we’re certainly not going to let those children starve.

Yes, people shouldn’t buy put things they can’t afford on credit. Yes, it is their “fault”. But that line of thinking is actually counter-productive, because unless we do something to change the sort of thinking that says new clothes are more important than a $0 balance, the debtors are going to outweigh the rest of us. And once they’re in the majority, once the moral compass of the nation starts to want to excuse and legitimize the debt, what do you think is going to happen?

I certaintly don’t think that we should shame people in debt, but I do think that we should call out anyone who reinforces the hegemony of consumption. Have you ever had a friend make fun of the outfit on someone across the bar? Ever make a snide comment about someone’s ’84 Ford? These are, IMO, the real problems.

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avatar S/100/30

Sorry, that first paragraph above was supposed to be italicized to indicate that I quoted Special Ed!!

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avatar Jersey Jen

The so-called “gen x” and “gen y” are bad with money. But there are so many new forms of “money” available out there and people think money is easy to get. No wonder people graduate college with huge credit card debt. Maybe credit card companies should stop promote heavily to college students?

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