1. Debit Card Drawbacks

    I’ve mentioned it numerous times on IYM: Debit cards are a great tool, but they have serious drawbacks, too. And there are some things for which they’re totally unacceptable.

    Cue the piece from USA Today:

    USA Today: Debit Card Holds Can Derail Travel Plans

    Dave Ramsey loves to talk up debit cards, but as the article tells us, there are times (vacations, for one) when you really ought to keep that particular slab of account-zapping plastic tucked in your pocket.

    What makes debit cards even worse? Well, as my daily dealings with Joe Q. Public have taught me, there are still a great many folks who have no idea how debit-card daily limits and hold policies actually work. (Though, to be fair, most people also have no idea how their credit-card policies work, either, so why would it be any different for debit cards?)



  2. Survey: Debt Gives Young Adults Self-Esteem Boost

    I suspect that most of this has to do with the fact that young people tend to feel “invincible,” but it’s pretty interesting nonetheless:

    OSU: Young Adults Get Self-Esteem Boost From Debt

    From the article:

    For this study, the researchers examined data on two types of debt: loans taken out to pay for college, and total credit-card debt. They looked at how both forms of debt were related to people’s self-esteem and sense of mastery – their belief that they were in control of their life, and that they had the ability to achieve their goals.

    …Researchers found that the more credit card and college loan debt held by young adults aged 18 to 27, the higher their self-esteem and the more they felt like they were in control of their lives. The effect was strongest among those in the lowest economic class.

    Only the oldest of those studied – those aged 28 to 34 – began showing signs of stress about the money they owed.

    If anyone wondered just why it is that lending institutions make such an effort to get young adults into debt, well, wonder no more. You can build up an immense pile of debt between the ages of 18 and 28. By the time the invincibility of youth has worn off and reality has set in, your next 20 or 30 years of payments are already set in stone.

    Then, when that “expected future income” thing doesn’t pan out, you get a host of nasty little outcomes — like one in five student loans being in default.

    More from the study:

    But how debt affected young people depended on what other financial resources they had available, the study found.

    Results showed that those in the bottom 25 percent in total family income got the largest boost from holding debt – the more debt they held, both education and credit card, the bigger the positive impact on their self-esteem and mastery.

    Those in the middle class didn’t see any impact on their self-esteem and mastery by holding educational debt, perhaps because it is so common among their peers that it is seen as normal. But they did see boosts from holding credit-card debt – the more debt, the more positive effects.

    Whoopee. And the debt-induced beat goes on … so long as you get ’em hooked young!

    EDIT: A more in-depth opinion on this study can be found right here . . ..



  3. Student Loans For the Win

    Mary Pilon at the Wall Street Journal tells us that total outstanding student-loan debt has now overtaken total outstanding credit-card debt:

    WSJ: Student Loan Debt Surpasses Credit Cards

    As of June, there was roughly $830 billion outstanding in student loans, compared to $826 billion in credit-card debt.

    Swell, ain’t it? I tell you, this country can strap on the anchors and leg chains of debt like nobody’s business.