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Debtor's Prison (3 of 4)
Series: Financial Traps
OPEN: I have a quiz for your today (I found this at two different sermoncentral sermons and I don't know who to it credit to):
1. Ellen is 30 years old. She has a $3,500 balance on her Citibank credit card at 18% interest. She makes the minimum payment each month. How old will she be when her credit card paid off? [70 years old]
2. Susan and Tom needed a new washing machine, so they went to Sears and found one for $299. They got a Sears charge card and made the minimum payment each month. By the time the washing machine was paid off, how much did Susan and Tom actually pay for that washing machine? [$1,199]
APPLY: Debt has become as American as apple pie.
According to one bank's research of 1996 applicants for home loans, they found that:
• 90 % of applicants had a minimum of 4 credit cards
• 3 of the 4 cards were at the maximum allowable limit
• 82 % of the applicants had 2 car payments; the average payment was $326 for 48 months
• 70% of all applicants showed some late payments on their credit reports
• When faced with the decision to keep a new car or sell it in order to qualify for a home loan, 50% of young adult 1st time home buyers chose to keep the car and continue renting
• and 32% of the young adults applying had overdrawn their checking account less than 90 days prior to the date of application
(source: Bob Russell, preaching minister at the SouthEast Christian Church in Louisville, KY)
ILLUS: It reminds me of the true story a meat store owner told some time back:
The owner said: "one day a customer informed me she had gotten some unexpected money and wanted to fill her freezer. She picked out about $200 worth of meat and handed me her credit card."
Laughing, the owner said: "I thought you got some unexpected money."
"I did," she replied. "They raised the limit on my credit card."
Debt, it would seem, has gotten out of control in America.
I. But, ...
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