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OUTrageous Debt
The Magic of Plastic or Perils of Credit?

Don't You DARE Touch My Credit Card--MOM!

When Kristin applied for a credit card in the fall of 1995, she never dreamed that her father’s health problems would have such a dramatic impact on her credit history or the relationship with her mother. The oldest of three children, Kristin enjoyed an upper-middle class lifestyle in an affluent, white community of suburban New Jersey. Five-bedroom houses, stay-at-home moms, membership in exclusive country clubs, private prep schools, vacations in Europe, and expensive foreign cars were the norm of her adolescence. Money was not a constraint on the family’s activities as John, her father, was a Vice-President of a large insurance company.

Unfortunately, during her senior year of high school, Kristin’s father suffered a severe heart attack. The timing of his health problems could not have come at a worse time as his company soon embarked on a policy of “downsizing” its workforce. During his convalescence, John was unable to protect his job and he was forced into “early retirement” at only 49 years old. What Kristin did not know at the time, was that the family had been living beyond its financial means. Not only was there little savings but they had accumulated substantial debts from their inflated standard of living.

Kristin’s mother, Mary, did not accept the inevitable consequences of her husband’s medical and career misfortunes. Although Mary reluctantly began to work part-time, while John slowly recovered from bypass surgery, she refused to adjust the family’s upper-middle class lifestyle to these economic realities. For Kristin, her mother’s behavior was a source of mounting tension. After all, she had accepted the responsibility of financing her private college education with student loans and part-time jobs while lowering her standard of living. Furthermore, Kristin was angry that her matriculation at an elite private university in Washington, D.C. would require many years of personal sacrifices after graduation whereas her mother simply portrayed her attendance at American University as a testament to the family’s social status--the equivalent of staying at a three-star hotel. Sadly, the reality of the middle-class squeeze was more quickly understood by Kristin than her mother. While Kristin cautiously budgeted her limited student resources, Mary pretended that the family’s financial woes would soon pass. This fantasy was no different than her denial of the mounting “past due” notices from a plethora of credit card and debt collection companies.

Early in her first semester, Kristin quickly realized that the cost of books, personal items, and weekends “out” were far more than she could afford on her meager savings and university financial aid. In order to stretch her limited resources, Kristin decided to get her own credit card since she no longer had access to her parents’ “plastic.” The “It Pays to Discover” slogan was appealing as the “no annual fee,” “build your own credit history,” and “cash back bonus” features satisfied her need for financial control. When she mailed the application, she unconsciously wrote down her parents’ address. After all, it was her permanent address and she would be living at home over the summer.

As Kristin prepared for her first set of mid-term exams, she forgot about the Discover application. Her finances were tight but she had enough money for the semester and she would get a job over the Christmas holidays. It was not until she received a phone call in early December, from a Discover representative, that she learned that her credit card application had been approved two months earlier. More startling, she was informed that it was “maxed out” and in a delinquent status. Kristin owed over $1,500 and her credit history was already impugned with late and over limit penalties. Convinced that she was a victim of credit card fraud, Kristin demanded that Discover investigate the charges to her account. To her shock, the credit card had been used “and abused” by her own mother. When Kristin returned home for the semester break, she confronted Mary about the unauthorized use of the Discover card. What angered Kristin was her mother’s explanation, “With your father out of work... all of the credit cards were at their limit... I needed [yours] for family expenses.” In fact, Mary scolded her daughter for being so “selfish.” After all, she reminded her, “we provided well for you and we still have to take care of your [two] younger sisters.”

For Kristin, it was her mother’s unrepentant attitude that was most disturbing. Unwilling to accept her husband’s ‘fall from grace,’ Mary embraced the “end justifies the means” mentality for prolonging her upper-middle class lifestyle. As Kristin exclaimed, “can you believe it... she says that I’m selfish but she refuses to give up her Jag(uar), country-club [membership], and shopping sprees.” Unfortunately for Kristin, her well-intentioned strategy of establishing a record of financial responsibility through the cautious use of credit cards backfired through no fault of her own.

The “payback” from Discover was not the promised 1% cash back bonus or a carefully constructed credit history.1 Instead, Kristin discovered that she was contributing financially to her parents’ struggling household and unexpectedly suffering the consequences of their irresponsible credit care use. As a result, Kristin embarked on a nearly one-year “crusade” to restore her financial “honor.” In the process, Kristin confided that the relationship with her mother had deteriorated beyond repair. Mary continues to deny the irresponsibility of her actions or the long-term consequences that may be suffered by her daughter. In the end, this example illustrates that the ‘social cost’ of credit can far exceed its economic value.



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