How to convince a relative to not go into credit card debt to get an iPhone 6

[mjb59463]

I asked the question here because I think the iPhone 6 in particular present a hard-to-resist purchase, even for those who are in credit card debt, with minimal savings, no 6 month emergency fund, etc. There is more emotional fervor for this piece of tech than any other I've seen in my lifetime. That's my perception, *and*, I feel it too - my iPhone 6+ is an "incredible" (quoting Tim Cook) piece of tech. I watched each UPS status update happen till it arrived at my front door. Kudos to Apple for that.


Starfyre, I do like your modification of what I was proposing.

Maybe something like a skydiving lesson when she gets half way.


Agree. What did you read that made you think I am offering to do that?


Force? Of course not. She's not my daughter, but she is very important to me and we will always be in each other's lives. I just wish I had discovered this sooner - like when she was at $1k.

To those who suggest I not get involved: Advice noted.


Exactly what I'm afraid of. $5k debt can turn into $10k debt and $40k debt in the blink of an eye. And the bankers LOVE it. I was at an event in New York that included people from the banking industry. I learned that some of their most profitable customers are the ones who:
- charge up to their limit of their credit card
- reliably pay the minimum each month
The more people who do that, the more bazillions$ they make... I'm confident that those same bankers are thrilled with the uptick in credit card balances and interest rate income they will see.

And to those card holders, credit card debt becomes an economic death sentence.


This would be an interesting factoid:
How much extra interest payment revenue will Bank of America, Chase, or Capital One receive in 2014 due to iPhone 6 purchases?


This one?
http://www.amazon.com/The-Total-Money-Makeover-Financial/dp/1595555277/ref=cm_cr_pr_product_top

I've heard of him but never seen his show. Is he available via Downcast?
I think I'm getting him confused with the guy on CNN who yells a lot.


Great point! What's missing here is the emotional component - something that makes figuring out a way to get out of credit card debt AND executing on that plan as much fun as ... buying an iPhone 6.

I read your statement about some "early Christmas present".

 

[wxman2003]

If she is making the minimum CC payment each month, then she is in way over her head and can not afford anymore debt. If she pays off her debt relatively quickly, then it's not a problem. If a person needs an incentive from friends or family to not get deeper into debt, then they are not mature enough to have a credit card. Don't reward childish, irresponsible behavior. Sometimes the best way to learn is with a major hit to one's credit. People grow up in a hurry when no one is there to hold their hand every time they have problems.

 

[MareLuce]

I wouldn't offer to pay for her phone with conditions of some online reading and video-watching.

Agree. What did you read that made you think I am offering to do that?

I read your statement about some "early Christmas present".

What did I describe that early Chirstmas present would consist of... i.e., What are the words in the rest of the sentence in the original post? "An early $200 christmas present to be spent on..."

If she is making the minimum CC payment each month, then she is in way over her head and can not afford anymore debt.

I don't think she's at the point of paying the minimums... YET.

 

[Puonti]

Does she subscribe to the Getting Things Done methodology? Does she get satisfaction from reaching Inbox Zero? If she does, you might find a way to tug on the same strings in personal finance and budgeting.

Back when I was making a big lifestyle change I found it helpful to set intermediary goals, but the most important factor was tracking my progress; seeing every day that the effort I was putting into this thing was steadily pushing me in the direction I wanted. To apply this to your relative's situation, that's the difference between her seeing she's paid $50 of her $5000 bill so she still has $4950 to go and seeing that by paying $50 every week in a year she'll be down to $2400. That's assuming, of course, that she doesn't get even deeper into debt in the meanwhile and actually has the income to set $50 aside every week. An Excel / Calc / Numbers sheet with charts can help visualize this, if she's a visual person.

Rewarding progress is OK, I did it too. In the end I was actually skipping most of the rewards I had assigned to certain milestones, because my way of thinking was changing - which was the whole point. The rewards would have appealed to the old me, but skipping them appealed to the new me. I felt that I was getting ahead by "playing the system", even if it was one I had set up myself. In your relative's case she might for example allow herself some extra indulgence that requires spending a limited amount of money when she reaches certain goals.

At some point she might realize that if she puts the money (or even part of it) into paying off her debt instead, she's getting ahead twice as fast because A) she's not creating new debt, even if small, which slows her down and B) she's paying off old debt. That's a powerful realization and could be a step towards a new way of looking at credit; not as extra money, but as a means to stabilize expenditure of money you already have. The point here is not to make credit into a bogeyman just to get her to change her ways; that's probably not going to work.

 

[MareLuce]

First of all, thanks Puonti for your thoughtful reply. I realize that replying as you did takes a lot more brain cells and effort than a knee jerk unhelpful one-liner.

Does she subscribe to the Getting Things Done methodology?

I'm believe not, though she is doing well at work.

Back when I was making a big lifestyle change I found it helpful to set intermediary goals, but the most important factor was tracking my progress; seeing every day that the effort I was putting into this thing was steadily pushing me in the direction I wanted. To apply this to your relative's situation, that's the difference between her seeing she's paid $50 of her $5000 bill so she still has $4950 to go and seeing that by paying $50 every week in a year she'll be down to $2400.

Agreed. Making this visual and fun somehow. (though Excel looks pretty boring usually...)

Rewarding progress is OK, I did it too. In the end I was actually skipping most of the rewards I had assigned to certain milestones, because my way of thinking was changing - which was the whole point. The rewards would have appealed to the old me, but skipping them appealed to the new me.

That is such an interesting insight. Congratulations to you.

At some point she might realize that if she puts the money (or even part of it) into paying off her debt instead, she's getting ahead twice as fast because A) she's not creating new debt, even if small, which slows her down and B) she's paying off old debt.

I'm going to use this. Thanks.

That's a powerful realization and could be a step towards a new way of looking at credit; not as extra money, but as a means to stabilize expenditure of money you already have.

Not sure I understand what you mean by the part in blue above.

The point here is not to make credit into a bogeyman just to get her to change her ways; that's probably not going to work.

Yea. I wish I could find someone else (bad cop) to do that. I can fantisize about getting Suze Orman to show up at her doorstep for that job .

Plan B scare tactic would be to create an Excel graph to show
IF she did buy an iPhone 6 on credit, and paid for it via interest rates $ over time, how much would the iPhone 6 actually cost her over 10 years?

(Do calculators like that exist? I'd guess the Credit card companies don't want you to know that...)

ps: Puonti, if you happen to be able to make use of a iPad Mini Apple blue cover, PM me with your mailing address. I promise I'm not a female axe murder .

 

[Puonti]

Agreed. Making this visual and fun somehow. (though Excel looks pretty boring usually...)

We all respond to different kind of stimuli of course, but something like this doesn't necessarily have to look "fun" (unless you know your relative and think she absolutely needs it to be fun). For me the important part was visually seeing the trend my changed behavior was creating. A bar chart did the trick, displaying my progress.

That's a powerful realization and could be a step towards a new way of looking at credit; not as extra money, but as a means to stabilize expenditure of money you already have.

Not sure I understand what you mean by the part in blue above.

In short it means that instead of paying for expensive items with cash and thus making that money unavailable should you suddenly need it for something else, you pay with credit and pay it back over time, thus never going below a certain level of liquidity.

In other words you already have the money you're spending (a very important part of this whole exercise), you're just using a CC as a means to spread out the expenditure to keep your financial situation healthy. Depending on your wealth, the price of what you're buying and how much money you regularly spend in a month you might not even need to pay interest.

Plan B scare tactic would be to create an Excel graph to show IF she did buy an iPhone 6 on credit, and paid for it via interest rates $ over time, how much would the iPhone 6 actually cost her over 10 years?

(Do calculators like that exist? I'd guess the Credit card companies don't want you to know that...)

Knowing the actual cost of an item when bought on credit, or the actual cost of that credit ($5000) as a whole over time, would be good information to bring to the table. I'm pretty sure there are calculators for this stuff available online.

ps: Puonti, if you happen to be able to make use of a iPad Mini Apple blue cover, PM me with your mailing address. I promise I'm not a female axe murder .

This personal opinion / insight is free of charge, but thanks for the offer