Fiscal Fitness

Among the better pieces of advice I got from my dad was: “The only two things worth borrowing money for are an education and a house.” I took that advice. It took ten years to pay off the education; I’m still paying on the house.

When I landed my first job as a newspaper reporter, I spent every nickel I had moving and getting an apartment. I borrowed 50 bucks from my boss to feed myself until I got my first paycheck ($169.15 a week). Later that summer, I applied for my first credit card ($500 limit) and I’ve been paying the balance every month since.

The point here is not to brag about my fiscal competence. I knew early on I was destined for a low-wage career, so I knew fiscal fitness would be as important to me as physical fitness is to an athlete. My version of stomach crunches.

The serendipitous benefit is that I built a good credit rating. The interest rate on my credit card, through the years, swelled along with everyone else’s but it didn’t matter, because I paid it off every month. By the early ’90s I was no longer paying an annual fee and soon after I was getting cash back.

In San Francisco, in 1996, I placed an urgent call to my card’s 800 number.

“I need a temporary increase in my line of credit.”

“OK. How much do you need?”

“Twenty-five thousand dollars.”

“What’s it for?”

“Bail.”

Long silence. (I had five activists sitting in jail after hanging a banner.)

“OK, can I put you on hold?” After a long period, the customer service rep came back on the line.

“OK, you’re approved.” To her credit, she never asked me any details about the bail. (Ah, the benefits of fiscal discipline. Thanks, Dad.)

Now, it seems, that’s all over for me. Credit card legislation sailing through Congress will make it harder for banks to continue the outrageous con games they’ve been playing on people who don’t pay off their monthly balances. No more skyrocketing the interest rates or changing rates in the middle of the month. No more contracts that require three lawyers and a linguist to decipher. No more hidden fees (although I’ll believe that when I see – or don’t see – it). That’s all good for those folks.

For people like me, not so good. Because I pay my balance every month, the banks don’t make much off me, so they refer to people like me as “deadbeats.” (Go figure.) Now that Congress is preventing the banks from ripping off the folks who don’t pay off each month, they’re going to come looking in pockets like mine to recoup their profits. So, hello again to annual fees, goodbye cash back.

Hey, that’s the way it goes. I’m sure my bank has always liked me personally, but this is business. I have options – cash, check, debit cards. For the fiscally fit, using a credit card is a convenience, not a survival strategy.

This could be a good deal for America as a whole. This is one of the many ways in which this economic crisis will force us to step back and take a hard look at the ways we’ve slowly lost control of our personal finances. A little externally-applied discipline may well result in people suddenly realizing they have more cash in hand at the end of the month than they used to and that delayed gratification is more gratifying than impulse buying.

Let’s hope so.

© Mark Floegel, 2009

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