credit card

February’s Credit Card Statement: NT$26,413 in 31 days!

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Or in other words, how to break the bank!

My wife was standing over my shoulder last time I wrote my very uneventful credit card statement for January 2008. She said in pointed tones: “Who cares about your credit card spending?”… Well, of course, I do!

I usually include the credit card spending report for three reasons:

1. to encourage me to pay off the entire amount regularly;
2. to share with my readers different parts of my life, because each of my purchases has a story of some sort; and
3. to encourage readers to share their spending habits, so that we can all learn from our mistakes.

So here goes, February’s spending… And it isn’t pretty.

First, I racked up NT$26,413 worth of spending, some of related to our vacation in TaiChung and Tainan. Some of it related to business expenses. And some of it related to personal expenses.

Business Stuff
During Chinese New Year we reorganized our school space yet again. This enabled us to improve our computer resources, expand our library area a little and make things more customer friendly. But it entailed some expenses, of which NT$7082 involved a trip to the local Ikea, where we purchased a much-needed IKEA office chair, valued at nearly $5000 (est.). We’d been eyeing that chair for a while, but had passed on it several times due to its relative expense. Other little things included picture frames for the walls, and other knick-knacks.

Online Stuff
I purchased a link on Linkworth to increase link sales last week. It wasn’t particularly expensive at US$8.50 for a featured link for seven days. But it coincided with a long weekend in the US. And generated no responses at all. I won’t bother with that avenue again.

Personal Stuff
Somehow because we had nearly two weeks vacation at Chinese New Year, we really spent a lot more on clothes, vacations, and food! I spent NT$4119 buying two sweaters, two shirts, socks, underwear, and some other clothes for winter in Taichung. And Christine also spent NT$3924 on clothes and trainers for herself.

Then in IKEA we additionally spent another NT$2330 on house stuff: none of which I can remember right now. And on the first day of our holiday, we ate out at TienMou Mitzukoshi Department store in the Thai Restaurant on the top floor. The food was excellent, and the weather was AWFUL, so we were so happy to eat something hot, delicious, and spicy! That was NT$1667.

And I nearly forgot we spent a night at a hotel in Taichung, called The Splendor. The room was quite big, and view was excellent as you saw in the competition. Even the breakfast was great, but the price was nearly double the price we paid for a much more pleasant hotel. It cost NT$3589 for one night in a double room.

Regular Expenses
Our regular expenses included three items: our CIGNA life insurance policy, but no mobile phone bill (they now only bill every 2nd month), and our interest payment of NT$64. Yes, I did it again: I didn’t pay the entire amount. I underpaid NT$1364 this time, and it cost an extra NT$64. Wow!

So that’s February’s expenses on my credit card.

Are you a credit card slave? Part 4

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In this series, I’m looking at our changing attitudes to money, and answer the simple question: are we all credit card slaves now? Part 1 was entitled Where did our attitudes to money come from?. Part 2 is Credit Cards, Bank Accounts and Salaries. Part 3 was The Credit Card Cascade and the Madness of Spending. This is the fourth installment in this week’s series.

What is a credit card slave?

In Taiwan, a few years ago, many banks started promoting a new form of credit loan that was a cross between a credit card and a traditional bank loan. After being approved, consumers were issued with ATM cards that could be used to withdraw cash at machines around the world; of course, the ATMs attracted fees, and the interest rates were high. Slowly, the banks pitches become more and more aggressive and the advertisements more and more outrageous. One bank called in Chinese ‘Wan Tai Bank’ or Cosmos Bank ran such a successful ad campaign that they become almost a household name in Taiwan. The cards were called George and Mary…

g&m

But many borrowers were unable to pay back the loans they had made, and the interest rates (now regulated) stood at more than 18% apr. Prior to regulation, rates had been much higher, and newspapers reported many stories of individuals and families killing themselves and their offspring as a result of their debts. There are quite a few stories in the Taipei Times about this issue:

In fact, an article last year cited over 3,000,000 credit card slaves (about 1 in 8 of the population!), and more than 400,000 Taiwanese have been declared bankrupt because they are unable to clear their credit card debts. (cited: The Asian Pacific Post Newspaper)

Slavery is defined by Wikipedia as: “Slavery is a social-economic system under which certain persons — known as slaves — are deprived of personal freedom and compelled to perform labour or services. “

While the definition is rather narrower than would warrant, it is possible to characterize credit card debt as a form of slavery, simply because the high interest rates deprive customers of their personal freedom as they struggle to pay off their debts.

To some ‘credit card slaves’, it seems they are indentured to the financing companies, and some financing companies don’t hesitate to employ less than orthodox means to ensure repayment. However, to suggest that credit card debt is a form of slavery is to underestimate one important factor: it is the borrower who incurred this debt, in the first place. The compounding factor of course is the high level of interest and penalties that are imposed subsequently on the borrower.

While this may depress many creditors who stare at the pile of mounting debts, this thought should encourage because if it’s something that was done by you, then it can be fixed, too, no matter the scale of the challenge.

Credit Cards, Bank Accounts and Salaries Part 2

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In this series, I’m looking at our changing attitudes to money, and answer the simple question: are we all credit card slaves now? Part 1 was yesterday: entitled Where did our attitudes to money come from?

Credit Cards, Bank Accounts and Salaries

Suddenly from subsisting from week to week on wages became more challenging as we were all forced to wait four calendar weeks plus some for our paychecks. And wow! Didn’t it feel good having that much cash in your bank account? Didn’t it?

“You bet. And so, you’d splurge a little here and a little there. You’d write a few checks (‘cheques’ to all you Brits!) to buy the groceries, and hope the store didn’t cash them too early, or that the overdraft fee wasn’t too much. You’d be all right because payday was just a few days away anyway!”

When credit cards were first invented, they were primarily intended for luxury consumption for business travelers and ‘wealthy’ travelers, too. American Express, MasterCard, Visa, etc, Classic, Gold, Platinum, Clear cards

All were designed to create the impression of wealth. Unfortunately, the banks’ pursuit of profits above customers hastened the degrading of the higher value lines, while forcing banks to create ever new ‘brands’ at the premium or private finance end of the spectrum. Meanwhile, for ordinary consumers the presence of credit cards in your wallet went from a sign of wealth to a sign of status to a mere sign of credit worthiness.

Thereby, the credit card industry created a whole new language of ‘apparent’ wealth, where terms like independent income were replaced by disposable income; net worth became credit worth; rate of return became APR; and business deals became ‘transaction fees’. The whole language of wealth was corrupted in such a way that on graduation, students are now told to build your credit history, to check your credit ratings, and to manage your credit score successfully. What happened to building your wealth, checking your investments returns and managing your portfolio?

Has credit card ‘wealth’ affected your ability to build real wealth? Did you borrow too much or pay too much interest? I would love to hear your comments on this…