I turned on Suze Orman this weekend for a few minutes. The segment of the show I turned on was a woman hiding $87k in credit card debt from her new boyfriend. She wasn’t sure if she should reveal it or not. She was wondering how and when to tell him. Suze said she needed to “come clean, everyone already knows.”
This made me start to think do people really know if you’re in debt? I can’t believe that they are able to tell you are overspending and charging on a credit card. Or have a massive mortgage, student loan debt, or car loan. Or if your business is bleeding money. How do others know?
Suze implied that your spending habits will let others know you are in debt. But I don’t think that’s necessarily the case. For example I had a roommate, whose parents declared BK for one business, while their other 2 businesses were thriving. I never would have guessed they needed to declare BK except my roommate told me. And they were still making a great living, but one business failed (bakery). But they still had her dad’s engineering consulting business and mom’s medical clinic going great. So who would have guessed these two successful people declared BK? Or were in debt?
Another case and point, my mom’s best friend from high school had done very well in real estate. She had “retired” from selling real estate to open a new business of selling furniture. Then after 5 years they declared BK, had run up credit cards, mortgaged her paid for home, in the name of trying to save their business. My mom said she would never have guessed her friend was in so much financial trouble because she had been doing so well.
So can you really tell people are in debt? What if you know they earn a good salary, and sure they eat out a lot, take fancy trips. But they have a cheap apartment, no car, and can afford it? Or they are able to pay off most of their credit card every month, except a $100 here and there? And they slowly nickel and dime their way into debt?
Can you really tell by a person’s spending habits whether they are in debt? What about the cheapest person you know with $100k in student loans? Or $100k in failed business expenses on credit cards (I heard about this on a message board)?
I have to wonder, isn’t it possible that you can’t tell someone has $10k in credit card debt? And $30k car loan? And $30 student loans? But it all adds up? That their seemingly normal lifestyle doesn’t strike you as extravagent yet they are in debt?
I agree about coming clean, like Suze suggested, but I doubt it’s as easy as she makes it seem. Nor do I think the others will really be able to guess what sort of debt you are in before you make the announcement.
9 responses so far ↓
1 devil // May 22, 2008 at 10:59 pm
Perhaps Suze thinks that anyone who could rack up 87K in cc debt must be a crazy-obvious spending monster?
The 87K figure just didn’t shock me. These days that just isn’t THAT much money. I can see how charging stuff here and there could add up to that amount. That said, I’d NEVER marry someone with that much debt. Marriage is challenging enough.
Anyone considering marriage should run a credit check on their future spouse. They should check a few other things too. There’s too much at stake to rush in blindly.
2 zeromoney // May 23, 2008 at 12:36 pm
I don’t think it’s that hard to hide, I have a pretty good idea of which of my friends are in debt. IE the one who works in sales, but manages to purchase a couple new tv’s, a car the same day he decides he needs a new one, bedroom sets, living room sets, renovations on his house etc etc.. all in one year.
I asked him about it, and yup, he’s run up over 25k in the past year alone
3 vipness // May 23, 2008 at 2:41 pm
Seems that people are hiding this skeleton in the closet very easily. I think the party’s over and the hangover is beginning to show… could be wrong though.
4 Baz L // May 23, 2008 at 6:10 pm
There might be something wrong with your first example of the folks that have 3 businesses.
Depending on how a business is set up, it can be its own entity. IE, if you have 1 Million in your personal account, your business could still go bankrupt.
But anyways…You never know who’s in debt. There are good indications, but they only serve to help you guess. It’s just too easy to get stuff on credit these days that some people don’t really understand that credit is real money.
When you can get a full furniture set for $25 downpayment and “no payments for 2 years”…you can’t help but have that idea. On the flip side, there are still tons of people that buy things when they can afford it, so it’s hard to guess.
You can no longer tell a person’s financial situation based on the type of life they live. Credit these days enables you to live waaaay beyond your means.
5 Baz L // May 23, 2008 at 6:11 pm
forgot to subscribe
6 Mrs. Micah // May 23, 2008 at 7:14 pm
A spouse might have a better idea of the picture, and perhaps close family members. I doubt they know, but they may occasionally feel that something’s not quite lining up.
7 The Baglady // May 23, 2008 at 7:45 pm
Yeah, I agree it’s pretty hard to tell who is in debt just by their spending habits. I knew a guy that bought all kinda useless crap but he actually had a lot of savings and paid off all his credit cards. He just bought things to amuse himself, but he could definitely afford it. On the other hand, it’s pretty easy to tell that someone is in debt when they buy a 2 million dollar house and they don’t make more than $100k a year.
8 LivingAlmostLarge // May 23, 2008 at 9:58 pm
It’s just hard to tell whose really in debt. There is not set formula nowadays. You could be rich beyond belief, a friend was a gradute student but her parents had died while she was in college. She was a multi-millionaire, hence her lifestyle in college/graduate school was better than a normal student.
So you can’t really tell I think.
9 Simon // May 29, 2008 at 2:38 pm
I think that more people than not are in debt, not just mortgages, but CC’s, car loans etc. I see lots of plastic whipped out when i am out shopping or eating and just look at the national numbers of debt owed per capita - cant recall the exact figure, but its high enough that even if not everyone has it, some people most be really extended. My wife and i have some debts, but we have two well paying jobs, some savings and practically everything is with 0% for a fixed term within which we pay off the debt, thus keeping the money in our pockets. Its a risk to take, but in the 6.5 years i have had of credit history since moving to this country, i have only had one late payment (bill arrived and was due within the 3 weeks we had away for our honeymoon) and never run out of these interest free periods with a balance. I am almost certain most people in my company, subdivision and that i know in other ways have enough debt to deal with as do we, but it doesnt keep me up as i dont pay any interest or fees on it. I would love to do it all in cash like my Father, however at only 30 its hard to save up every penny and still have a life worth enjoying. He says he envies us as we are able to strike a balance of living for today and working on saving for tomorrow, when he and my Mother were our age, they put aside as much as they could in savings for a house etc, and didnt enjoy the time they had - personally i dont know what i would prefer the money or the enjoyment of life with a little less money set aside.
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