Are You Smarter than a Fifth Grader?

About credit cards, that is.

I found an article over at creditcards.com that actually asked a group of 5^th graders questions about credit cards. There was a fair amount of right answers in the group, but what I found so hilarious is that some of the answers that are funny from kids are the same answers I’ve gotten from adults looking for help when they’re already in trouble. So, to that end I’ll post the questions that were asked and my favorite answers.

I do recommend that you read the full article, though, because it was just so cute! You can read it here. Note: the kids’ names were changed in the original article, so these are the names that they used.

Question # 1: What is a credit card?

Favorite answer: A little girl named Leslie says that a credit card is “something paying double for someone else’s money.”

Ha! Funny how true that almost is.

Question # 2: Why do people use credit cards?

Favorite answer: Again, this one goes to Leslie who says, “People use credit cards because they are lazy to use money [sic].”

Wonder what her parents are teaching her?

Question # 3: Where do credit cards come from?

Favorite answer: This one from Dale who says, “Credit cards come from a bank store or credit store or when you get a license you get a card.”

Can you imagine what it would be like to have to buy credit?! Yikes!

Question # 4: How do you get a credit card?

Favorite answer: Adrian replied, “You get a credit card in the mail when you’re an adult.”

Yup, that’s about right.

Question # 5: Who can get a credit card?

Favorite answer: Dale answered, “Anyone who is legally righted for money.”

What do you even say to that? LOL.

Question # 6: Who can’t get a credit card?

Favorite answer: Dale again. “Anyone who has been like in prison or you’re a felony person or something.”

I’m thinking Dale’s dad is a lawyer.

Question # 7: How can you tell if you need a credit card?

Favorite answer: This one goes to Troy who said, “When you get bored walking around with hundreds of dollars in your pocket.”

If that day ever comes, I’ll eat my shoe!

Question # 8: How are credit cards different than money?

Favorite answer: Tony’s the winner here. “A credit card is different than money because you won’t run out so fast.”

You know, people treat credit cards that way, so I can see why Troy would think that.

Question # 9: Who pays for stuff bought on a credit card?

Favorite answer: This one goes to Jamie. “You or Mom or Dad.”

Remember the days when mom and dad paid for everything? Gosh, I miss those days sometimes!

Question # 10: What happens when your credit card is lost or stolen?

Favorite answer: Again, Jamie’s answer was rather nostalgic. “Look for it and call your Mom and Dad.”

Kids say the darnedest things sometimes, don’t they? But, the lesson here is that teaching kids about credit is important. Some of the kids that took this test were pretty close to having the right answers, which means their parents took the time to explain how money works. But, some of the kids have no real clue and those are the ones that end up running into trouble later on, when the credit cards just show up in the mail. Whether you want your kids to have credit cards or not, they need to understand what they are and the damage they can do.

Ok, feel free to share your favorite answers from the original story if you read it. What can we learn and share with our kids from reading stuff like this? Do you think this helps show why financial education is important to children?

Popularity: 8% [?]

Ode to Getting Rid of Credit Card Debt

After all of the serious discussions on the board, I figured we were due a little lighthearted folly, or in my case, a complete leave of my senses! My sincerest apologies to Salt ‘N’ Pepa! [Sidenote from Jonathan: I think Kristy may have gone insane…]

Let’s talk about debt, baby
Let’s talk about you and me
Let’s talk about all the money
And the fees that you’ve cost me

Let’s talk about debt!
Let’s talk about debt…

Let’s talk about debt for the people at home or in the store
If you use that credit card you’re just gonna pay more
Don’t avoid or ignore the bills coming in the door
Unless you want a drop in your credit score

We talk about debt on the radio and the TV
Ramsey and Orman even have their own CDs
Let’s tell it how it is and how it could be
How it was, and of course, how it should be

Let’s talk about debt, baby
Let’s talk about you and me
Let’s talk about all the money
And the fees that you’ve cost me

Let’s talk about debt!
Let’s talk about debt…

The government says they’re gonna try and regulate
Won’t mean much if you pay your bills late
Some give rewards and super low rates
Just make sure you read what the fine print states

Pay your balances off and watch what you spend
Don’t try to keep up with the Joneses my friend
You’ll find that your debt won’t be nearly as much
You can contribute more to that retirement stuff

Let’s talk about debt, baby
Let’s talk about you and me
Let’s talk about all the money
And the fees that you’ve cost me

Let’s talk about debt!
Let’s talk about debt…

The end. Hope you’ve enjoyed my little parody. Keeping with the theme of lighthearted folly, share some of your ideas on musical parodies as they relate to debt. It can be anything - just try to keep it clean!

Popularity: 15% [?]

Why Use a Few Sheets When A Wad Will Do?

I can’t even begin to take credit for this cheeky (quite literally, thank you) post when Paul Michael over at Wisebread elevates toilet humor to a whole new level! So, this post is indeed inspired by him and his insightful thoughts to the use of toilet paper. May I do it justice!

We all know that times are tough and most of us are cutting corners where we can. But have you ever really stopped to think about how much toilet paper you use? I mean, really? All I know is even those double rolls never seem to last long in my household, and I don’t have kids! But, I’m sure any mother with potty trained children can certainly attest to the fact that kids are quite happy to yank the paper from the roll - and as Paul says, watch the cardboard spin on the holder for a good 10 seconds. Anything less is considered a horrible pull and it must be done over…except they have to start with a new roll. But this epidemic of TP overuse isn’t reserved just for children. Even the most staunchly frugal seem to lose themselves in the stall, as though the toilet paper beckons to be pulled en masse and wadded up for personal use.

I long ago discovered that buying the fancy toilet paper was quite a waste of money - I mean we’re literally flushing it down the toilet. Do you suppose the fellow who coined that phrase was referring to toilet paper? At any rate, while it’s obviously ridiculous to assume that you can micromanage your family’s use of TP - unless you really are that anal, in which case all I can say is WOW! - it is possible to save a little money when it comes time to buy toilet paper…again. Besides, we can’t not buy toilet paper. Well, I suppose you could, but that would be gross and no one would talk to you. Besides the smell, the fact that you’re scratching your behind in public just makes you look weird. So, people will buy TP until a better method is discovered.

How then can we save money on such a disposable product? As given by Paul (sorry, I wasn’t really that creative to come up with some of my own - so I borrowed with integrity!):

1.) Don’t buy the expensive stuff.

The expensive stuff doesn’t really make sense if you think about it. Kids are happy to use whatever kind of paper you have up there and they’ll use the same amount whether it’s luxurious or plain. You’re better off sticking to the regular stuff. Anything more is really catering to the vanity - unless you have allergies or something, but that’s a whole can of worms I don’t want to open.

2.) Stick with store brands.

I admit I’m a bit of a Charmin junkie and find this one particularly difficult. However, if you’re having to buy TP for the third time this month, consider the cost on that. A store brand may not seem like such a bad idea after all!

3.) Don’t waste your money on double rolls.

The subconscious mindset is to use more when there is more. By limiting yourself to the regular rolls, you actually conserve more. I don’t care what those cute, fuzzy Charmin bears say - you’ll still use more if it’s available. But, ever notice that as it gets lower and lower the less it goes? Yeah, that’s because no one likes to refill the damn thing so they wait as long as they can and when it’s gone, they hope you’ll notice and refill it for them. Argh! Ahem…sorry, where was I? Oh yes, less is more!

What other ways can you think of to save on toilet paper? Do you have a rule in place with how toilet paper should be used in your house?

Popularity: 15% [?]

7 Ways to Stay in Debt Forever

For Dillon Debton, it was love at first sight. He pulled the envelope out of the mailbox and held it up to the gleaming sunlight. His name marched across the front of the envelope in bold black letters and “special offer inside” was scrawled in red script. A special offer for him? His heart leapt as he raced to the house. His trembling fingers opened the envelope to reveal the contents: a letter offering him a $5000 line of credit and a low introductory interest rate for the first six months!

Dillon snatched a pen and filled out the application. He daydreamed of the new possibilities that were opening up to him. With $5000 he could buy snazzy new clothes; he could purchase that high-definition big screen TV; he could even buy tickets to the Barry Manilow concert! He stuffed the application into the postage-paid envelope and sent it on its way.

Dillon watched the mailbox every day until it finally came: his plastic ticket to fun had arrived. Dillon took his beloved plastic everywhere he went. He bought lunch at fancy restaurants and bought gizmos and gadgets. He and his plastic stuck together like a wad of gum sticks to the underside of a school bus seat.

About a month later, Dillon received his first bill. He opened it and laughed out loud as he saw all the things he had bought and the stuff he had done. Now he actually had a life! Man, he thought, the chicks will really dig me now! He would now have a monthly reminder of what a groovy man he had become. He smiled as he looked at the small minimum payment.

Mr. Debton loved his plastic card and he wanted to have it as his constant companion. Dillon took out a piece of paper and made a list of how he could insure his monthly “reminder” of his absolute coolness would continue to make its appearance.

7 Ways to Stay in Debt Forever

1- Use the credit card at every opportunity. After all, he could really rack up some bonus points – maybe he could earn enough for some free french fries or something.

2- Only make the minimum payment. He knew that bill would keep on coming, month after month, if he just paid the minimum payment.

3- Send payments late. At $30 a pop, those late fees could really add up fast!

4- Use the cash advance option - a lot. With a cost of $25 and a 25% interest rate on the money advanced, that balance might not ever go away.

5- Pay by phone. He could get a $10 fee every time he paid by phone.

6- Go over the limit. Another fee! A whopping $39 for going over the limit.

7- QVC, The Shopping Network, late-night infomercials – now you’re talking, baby!

Day by day, month by month, Mr. Debton’s balance grew and grew as his wallet shrank down to almost nothing. Suddenly, he saw the light: his plastic “friend” wasn’t giving him a better quality of life; it was robbing him of it. Suddenly, he didn’t feel the love for the plastic anymore.

Dillon pondered his relationship with his card as he sharpened the large kitchen shears. He really didn’t like how the fun things he had bought with his card had worn out or had broken months ago, yet he would still be paying for them for years and years. His credit limit was maxed and so he couldn’t buy any more fun.

Dillon pulled the plastic out of his wallet and held it for one brief moment before chopping it to bits. He tossed the sad remains into the trash, walked away, and never looked back.

Popularity: 12% [?]

Credit Card Execution (Part 2)

General Fritz and Gary are no more.

Warning: The following photos are explicit and disturbing - do not click unless you have a strong stomach!

Read the rest of this entry »

Popularity: 8% [?]

Weekly Credit Card execution!

It’s hard to know just who you should cheer for in this week’s Credit Card showdown.

In the left corner, we have General Fritz. Herr Fritz served in the German Infantry in World War II and was unsuccessfully tried for war crimes in the late 40’s. His favorite food is the German delicacy Labskaus (http://en.wikipedia.org/wiki/Labskaus), indicating that he is mentally unsound and thus may be unfit for trial.

In the right corner we have one of my Credit Cards, Gary. Gary has much to answer for including leaving me with a several thousand dollar debt, an ongoing interest rate of %21.99 and roughly $370 in assorted fees. He is also a known liar and very cunning - he often manipulated me into certain ‘unwholesome’ activities (like purchasing things I didn’t need and/or couldn’t afford) under false pretences. Gary promised me the world and delivered nothing but pain, sorrow and regret.

Case for execution (based on the level of suffering relative to the seriousness of the offense):

Time served

General Fritz – None officially, but is being pursued by the Mossad for suspected criminal activities during WW2

Gary – No charges pending, and thus not currently being pursued by any intelligence agencies

Conclusion: There’s no doubt the general has the best of it on this one. While he’s had to live his life on the run, Gary lived in a cushy little nook in my wallet for virtually his whole life, and he clearly needs a taste of his own medicine.

Image

General Fritz – Usually referred to as ‘The Butcher of Berlin’

Gary – Usually referred to as ‘My Credit Card’

Conclusion: Once again, the evidence indicates Gary is more deserving of execution. Barring a few people who assume Fritz is a purveyor of meat goods, he has a far more serious image problem than Gary. Do you know how hard it is to get a date with a nickname like ‘The Butcher of Berlin’?

History

General Frtiz – Forced to pose as an Argentinean cabaret dancer for over half a century to elude his captors

Gary – Continues to grow richer and more powerful every year and has never had to suffer for his crimes

Conclusion: Do you even need to ask?

Severity of crimes

General Frtiz –Perpetrated crimes against humanity over 60 years ago

Gary – Perpetrating crimes against humanity today

Conclusion: Gary takes a clean sweep. While the general has ‘allegedly’ committed some crimes in the past, Gary (and those like him) is doing harm every day.

Verdict: Both guilty. Even though the evidence presented indicates Gary is far more deserving of execution, we just plain don’t like the General. Sound mind or otherwise, no one who actually enjoys the taste of Labskaus deserves to live.

Come back for the execution tomorrow!

Popularity: 7% [?]

The wonderful world of Credit Card Arbitrage! (Pt. 1)

A number of readers have asked me what I think about credit card arbitrage. My personal feeling is that I wouldn’t touch it with a 40 foot pole, but I can’t deny that some people can make it work spectacularly well for themselves. Ultimately it’s a fairly high risk strategy and whether you’ll be able to pull it off depends almost entirely on your level of financial discipline and organization. Here’s a quick breakdown for your perusal:

What is it?

Credit card arbitrage, or ‘stoozing’ as it is sometimes known, is the process of using temporarily free credit to make a short term deposit in a high interest savings account. The initial debt is then repaid or transferred to another 0% balance transfer card shortly before the ‘honeymoon period’ expires, and the arbitrager pockets any interest they’ve made along the way. Sound complicated? Perhaps an example will clear things up:

William - Master Credit card arbitrager

William is approved for an ‘ObamaCard’ – a credit card with a $20,000 credit limit and an introductory 0% balance transfer offer for 6 months. On receiving his new card, he tells the ObamaCard people that, coincidentally, he’s got an outstanding balance of $20,000 on his ‘HillaryCard’ that he’d like them to pay off. As good as their word (and, perhaps more importantly, eager to acquire his debt from their competitors), they quickly transfer $20,000 into his HillaryCard account and correspondingly debit the same amount from his new ObamaCard.

Simple, right? But what the ObamaCard people don’t know is that William doesn’t really have $20,000 in debt on his HillaryCard. In actual fact, being the savvy credit card user that he is, he pays off his bills in full every month and isn’t carrying any debt at all. This means that the folks over at HIllaryCard now owe HIM $20,000, which he can request at any time he likes. In effect, William has scored himself a $20,000 interest free loan for 6 months!

He then opens an account with RomneyBank, who are offering 6% interest per annum in their high yield savings account, and has the HillaryCard people transfer the money they owe him straight into it. George is now earning interest with ObamaCard’s money, and so long as he repays the $20,000 he owes them before the 0% introductory rate expires (either by transferring the money back out of his savings account, or by using another balance transfer offer on a different card) and meets all of their other terms and conditions, he’ll wind up ahead.

Sounds great – What’s the catch?

There are several.

First of all, doing this kind of thing on a consistent basis will bruise your credit score. In the example above, William will have technically ‘maxed out’ his ObamaCard for several months (even though he could theoretically pay it off at any time), and that makes potential creditors quite nervous. The other possibility is that lenders will get wise to what he’s doing and refuse to play along when he tries to transfer his balance to their card – after all, the only reason they offer such competitive rates in the first place is because they expect most people will hang around after the introductory offer ends and wind up paying interest.

The second catch is that should you breach any of the terms and conditions on the offer, the jig is up. The fine print varies from card to card so you’ll need to examine each offer individually, but one thing you should definitely watch out for are minimum repayments. Even though you won’t be charged any interest on your balance transfers directly, you’ll still have to meet certain repayment requirements and missing even a single one usually means the end of your low interest rate. In some cases, you might even get charged interest retroactively - In the example above, if William misses or underpays even a single repayment, he could potentially have to pay fees on the balance he carried prior to losing his introductory rate.

The third catch is that you’ll need to be dead on with your dates and organization.

Come back for the rest tomorrow!

Popularity: 13% [?]