Sample Chapter #4

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You've Got Mail

An amazing thing is going to happen to you when you reach your late teens. You are suddenly going to have friends that you never even knew you had. They are going to call you and write you, and if you live away from your parents, they might even drop by to see you. When they write and call, they are going to say lots of nice things to you. They will congratulate you for different things and try to make you feel good about yourself.

They will do almost anything to make you believe that they are trying to help you and trying to do something nice for you. Sometimes they will do and say things to you that make you feel like you have won the lottery.


These are NOT your friends. These are NOT people who care about you. These are NOT people who want what's best for you. These are people who want you to spend money that you don't have on things you don't need. These are people who want to help you develop bad spending habits.

I promise you, these are not your friends. If they really were your friends, they would call to check on you when you are sick. If they really cared about you, they would drop by to see you after you break up with your boyfriend or girlfriend.

Who are these people? Why are they writing and calling?

If you're 18 or close to it, keep an eye on your mailbox. It will soon be stuffed with letters from all over the country - letters that will make you believe that money grows on trees in your own backyard. What a joke! These people must think you are really dumb.

These letters will be from companies that want to send you a credit card. Most of them won't even know if you have the money to pay for what they hope you will buy with those credit cards. This is where it gets dangerous and scary and, sometimes, even deadly.

Credit card debt is one of the most serious problems that young people face today. I didn't say owning a credit card or even using a credit card is dangerous. I have nothing against credit cards. I have two of them in my wallet right now. In fact, I've had a credit card since I was 17 years old. Having a credit card is not the problem.

The problems with credit cards start when people, too often young people, use those cards to pay for things they cannot afford - meaning they don't have the money to pay for what they are buying, so they charge it to a credit card and think they will pay for it later.

For too many young people, "later" never arrives.

Do you know Sean Moyer? Are you sure you don't know him?

When Sean Moyer was in high school, he probably felt like most of you feel. You look forward to the day when you no longer live under your parents' roof, and you no longer have to follow all of your parents' rules. That's more than likely true if you are living in a house like the one where I grew up. Almost every time I had a major disagreement with my parents, the whole conflict ended with one of my parents telling me that as long as I lived under their roof, I was going to have to live by their rules. If they said it once, they said it a hundred times, and I never forgot those words. The bottom line was this - whoever owns the house gets to make the rules.

Well, I own my own house now, and so when my parents come to town for a visit, they often stay with me. I always wondered how they would like a taste of their own medicine. So last time they stayed with me, I left them a note to clean all the toilets and showers before they came down for breakfast. They walked into my room with the note and wanted to know if I had lost my mind. I just looked up at them and told them that as long as they were living under my roof, they would have to play by my rules. Guess what they did? Actually, they did nothing. I made that whole story up, but sometimes I wish I had the guts to actually try it!

Back to Sean Moyer... I know you have no idea who Sean Moyer is, but that's not important. Who he is doesn't matter. What happened to him is something you never want to forget.

When Sean was in high school, he was a good student - good enough, in fact, to receive a scholarship to the University of Texas at Dallas. So, he packed his bags, moved out of his parents' house in Oklahoma, and headed off to Texas to get an education. The rest of this story is going to make you sick.

Soon after Sean arrived, he ran into some of those "friends" I told you about earlier in this chapter - so-called friends who convinced Sean that he should have his very own credit card. In fact, they eventually persuaded him to sign up for an even dozen. Now we're not talking donuts and eggs here. We're talking credit cards - 12 of those pitiful, painful pieces of plastic! That's right. A bunch of money-hungry salespeople who could care less about Sean Moyer or you or anyone else convinced that poor college freshman that he needed 12 credit cards. They didn't care that Sean only made about $5 per hour working at the mall, or that he had no stash of cash in the bank and no rich parents that could bail him out. All they wanted to do was sign him up for as many cards as they could because every card Sean signed up for meant more money in the salesperson's pocket.

Signing up for all those credit cards was Sean's first mistake. Using them was his last mistake. Sean got caught up in a spending frenzy just like many young people do. He bought stuff he didn't need with money he didn't have. For some crazy reason, he kept on using those credit cards until he owed a whopping $10,000. That was $10,000 he didn't have, and it was $10,000 he had no idea how to pay back.

As you can imagine, Sean was scared to death. He felt like a failure. He decided the only way to solve the problem was to move back home to Oklahoma and live with his parents, which he did. He quit school and headed home. He even got two jobs to try to pay off his debts, but it just wasn't enough. He couldn't make enough money to get ahead of the payments that needed to be made. The stress was incredible, and he couldn't see any light at the end of this horrible tunnel of credit card debt.

Soon after moving back in with his parents, the pressure and stress from all of his credit card debt finally took its toll on Sean Moyer. He walked into his bedroom one night and hanged himself. His mother found him dead in his closet the next morning.

Sean Moyer is no longer with us because he made a decision to spend money he didn't have on things he didn't need. The real truth, though, is that the $10,000 debt he ran up on his credit cards is not what pushed Sean over the edge. If everybody he bought stuff from had told him that he could pay for those purchases over a period of time without interest, he might have been able to do it. But, unfortunately, that's not the way it works in the real world of credit cards.

Every time you use a credit card, you are borrowing money from someone who doesn't even know you and who probably doesn't care a whole lot about you. If they did care about you, they would make sure you were able to pay off your debts before they sent a credit card to you in the first place. The sick thing about this whole deal is that credit card companies actually hope you can't afford to pay for what you buy with their credit card because that's how they make their money - big money!

It's called double-dipping, and here's how it works. You take your shiny new credit card to the mall, buy a DVD player, and charge it on your credit card. As soon as you sign that credit card receipt, the store has to pay a percentage of the sale price to your credit card company for the privilege of accepting credit cards. That percentage varies, but it's usually two to three percent of the sales price. So the nice guys at the credit card company get their first chunk of cash before you even get out of the mall.

Then they send a bill to you at the end of the month for everything you charged on your credit card that month. They hope you can't afford to pay the bill in full. They even offer to let you pay what they call the "minimum payment." That's all they hope you decide to pay, because if you pay your bill in full, the credit card creeps don't get a chance to rip you off with ridiculous interest rates and finance charges. That's where they hope to make their second chunk of cash - the second dip of double-dipping.

Check this out. Let's say you run up $1,000 on your credit card, buying everything from shoes to DVD's to pizza, and then never charge another dime on that card. Instead of paying off that $1,000 when your credit card bill comes in, you decide to pay only the minimum payment of $20. Big mistake. If you keep doing that, just making the minimum payment month after month, it will take you almost 20 years to pay off that $1,000. Not only that, but over that 20 years you will have paid back the $1,000 you spent plus an additional $2,000 in interest (based upon an 18% interest rate). That's the great American rip-off. Don't be weak and get caught in this rip-off. If you do fall into this trap, you could still be paying for that stupid pizza you bought with your credit card 20 years after you ate the last slice of pepperoni and cheese.

Just as important, don't be fooled by companies that promise super-low interest rates or even "no" interest for a few months. That's another trap, just bait to hook you so they can reel you and your hard-earned cash in at a later date. As you go through life, some things will seem too good to be true - like "no" interest for six months on a credit card. Usually, when something seems too good to be true, it's probably not a good deal for you in the long run.

The bottom line is this: don't ever sign up for a credit card unless you are prepared to and are capable of paying off the total balance at the end of every month - not most of the balance, but every dime of the balance, and not most of the months, but every month.

Credit card companies hate it when young people pay off their total balance every month. Why? It's simple. When you pay the total balance every time you get your monthly statement, you are basically borrowing money from the credit card company for free. That's right. You don't pay one penny for the convenience of using a credit card. No interest, no fees, and no getting ripped off.

Don't spend money that you don't have on credit card purchases, even if all your friends are doing it, and, yes, even if your parents are doing it. Just because they are your parents does not mean that you have to make the same stupid mistakes that they make! When those credit card salespeople come knocking at your door, ask them if they have ever heard of Sean Moyer, the kid who hanged himself in his closet.

The time will come when it might make good sense for you to have a credit card. If you need to make a big purchase, a credit card can protect you from having to carry around too much cash. Most important, when you do use a credit card and then pay your bill on time (every time!), you will be establishing a good credit record which will help you later on when you want to rent an apartment or buy a car.

It works both ways, though. Good credit will help you when you get out on your own. Bad credit will make your life miserable. You only have to mess up a couple of times - pay a bill late or write a bad check - and the world will never let you forget it.

Your credit report is like a report card that never goes away. And your credit rating is a lot like your reputation. It's tough to survive with a bad one, but life can be pretty sweet with a good one.

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